Tourist Market Watch

Sector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our tourism sector coverage, we produce a monthly Tourism Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.

For Georgia Today by Kakhaber Samkurashvili

Georgia’s air connectivity set to expand significantly in the coming months

Wizzair announced flights from Kutaisi to London starting June 2017, while Georgian Airways will also be adding flights from Tbilisi to London, Prague, and Beirut in the near future. Notably, none of those markets are currently served via direct flights from Georgia. The low-cost airline, Fly Dubai, has announced its intention to launch seasonal flights from Batumi to Dubai in the summer of 2017. Intensified air transportation with the Middle East can be attributed to the growing number of visitors from that region. The number of international arrivals from the Middle East was up 55.7% y/y to over 88,000 in 2016.

Branded hotel supply in Georgia set to increase further in the coming years

Alliance Group, a major player in the Georgian real estate and hospitality sectors, has announced plans to construct a Wyndham Garden hotel on Chavchavadze Avenue. The premium class project will be the group’s first in the capital city of Georgia, with most of its projects to date located in the Adjara Region. A 100-room Courtyard by Marriott is expected to start operating in the Alliance Palace in Batumi by 2018. Furthermore, Alliance Group plans to build a 4-star, 100-room Ramada Resort hotel by 2018 in the newly established winter resort Goderdzi, which currently only features about 100 hotel rooms in total.

Several new hotels will be opened in Georgia under Golden Tulip management. An 80-room Golden Tulip hotel in Tbilisi is set to open in the summer of 2017. US$ 12mn was invested in the project, which will be Louvre Hotel Group’s second hotel in Georgia after Golden Tulip Borjomi started operating in 2016. Another hotel under Golden Tulip management is expected to open in Telavi, in the former Intourist hotel, by end-2017. Other Golden Tulip projects were announced for Tskaltubo and Borjomi in 2017-2018. In addition to the strong branded hotel development pipeline, a 40-room,5-star, local luxury boutique hotel, Plaza de Liberte, is set to open in the summer of 2018 in Freedom Square, diversifying the Tbilisi boutique hotel offering.

Number of hotel rooms in Tbilisi up 19.5% y/y in 2016, with bed capacity up 12.7% y/y

Overall, 29.0% of Georgia’s room supply is located in Tbilisi, with international branded hotels comprising 22.3% of the Tbilisi room stock. Hotel turnover increased 9.4% y/y to US$ 220.4mn (13.7% y/y to GEL 520.1mn) and accounted for 41.6% of total HoReCa turnover in 2016.

Number of international arrivals up 2.1% y/y to 0.37mn in February 2017

Of the top five source markets, there was growth from Armenia (+7.7% y/y), Russia (+31.4% y/y), and Ukraine (+10.6% y/y), while arrivals were down from Azerbaijan (-6.6% y/y) and Turkey (-21.0% y/y). Arrivals from the EU were up 18.5% y/y to over 12,000 visitors.

Number of international arrivals up 10.5% y/y to 0.76mn visitors in January-February of 2017

The number of visitors increased from all major countries except for Turkey (-11.6% y/y), while the number of visitors from Azerbaijan was flat (+0.1% y/y). Russia and Ukraine posted double-digit growth rates, while Armenia (+18.2% y/y) was the single largest contributor to overall growth.

While top 4 source markets accounted for 86.1% of international arrivals in January-February of 2017, secondary source markets also posted robust performances

The number of Iranian visitors is up almost 5.4x to over 15,000, while the number of Israeli visitors during the same period is up 65.0% y/y to over 3,000 visitors. Arrivals from the EU were up 21.9% y/y in the first two months of 2017 with Germany (+35.4% y/y), Poland (+30.2% y/y), and UK (+26.2% y/y) driving the growth.

Tourist category continues to drive arrival growth in February 2017

The number of overnight visitors (‘tourist’ category) was up 16.4% y/y and accounted for 38.0% of total international arrivals. Same-day arrivals were down 9.1% y/y, while the number of transit visitors was up 7.6% y/y in February 2017. The number of tourist arrivals is up 24.3% y/y to 0.29mn in January-February of 2017, compared to 0.27mn in 2016. The number of same-day visitors is down 2.1% y/y, while the number of transit visitors is up 19.9% y/y in the first two months of 2017.