Tourism 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.

International branded hotel projects in Georgia behind schedule

Of the 27 international branded hotels in our 2016-2018 pipeline (see our June 2016 tourism report, Shifting into High Gear), only four have been completed, while three projects have been cancelled. Of the remaining 20 projects, only four are expected to be finished on time. Delays are geographically distributed as follows – 10 of 13 hotels in Tbilisi, three of four in Batumi, and all three in other regions. The delays can be largely attributed to regional turbulence, coupled with currency fluctuation, in recent years. Nonetheless, international branded hotel stock is expected to increase by 1,371 rooms (+79.7%) in Tbilisi, 440 rooms (+44.9%) in Batumi, and 706 rooms (+142.3%) in other regions by end-2018. The updated 2018-2020 pipeline now includes 19 projects in Tbilisi, seven in Batumi, and 10 in other regions.

5 international midscale branded hotels added to Georgian market in 2017

Last year saw five new branded hotels added to the Georgian market. Notably, only one of them, the 3-star Ibis Styles, was opened in Tbilisi. The 5-star Wyndham Hotel and 4-star Best Western Plus opened in Batumi, while the 4-star Golden Tulip was added to the international hotel stock in Borjomi. The first international branded hotels were opened in Kutaisi and Bakuriani in 2017 – the 3-star Best Western in Kutaisi, with 45 rooms, and the 4-star Best Western Plus in Bakuriani, with 70 rooms. These six hotels added 447 rooms to Georgia’s international branded hotel stock, bringing the total to 25 properties with 3,346 rooms.

International travel inflows to Georgia increase 27.0% y/y to US$ 2.75bn in 2017, according to NBG’s preliminary estimates

Foreign card operations in Georgia were up 30.3% y/y to GEL 1.9bn in the first 11 months of 2017. Tourism value added was up 11.5% y/y to GEL 1.5bn in the first nine months and accounted for 7.0% of GDP. Accommodation units subsector was the main driver, with 32.6% y/y growth. Travel companies, which account for 31.9% of tourism value added, posted modest 1.1% y/y growth.

Number of int’l arrivals up 23.3% y/y to 0.6mn in December 2017

Of the top four source markets, Russia was the top performer (+45.4% y/y), while Armenia (+13.7% y/y) and Azerbaijan (+15.7% y/y) also posted double-digit growth rates. The number of visitors from Turkey has been on the rise for six consecutive months, with growth in December coming in at 33.4% y/y. Arrivals from the EU were up 9.6% y/y to nearly 15,000 visitors.

Number of int’l arrivals up 18.8% y/y to 7.6mn visitors in 2017

The number of visitors increased from all major source countries, except Turkey (-0.8% y/y). The largest individual contributor to overall growth was Russia (+34.1% y/y), while Armenia and Azerbaijan also posted double-digit increases. The number of Iranian visitors was up 2.2x to nearly 323,000 visitors and surpassed the number of Ukrainian visitors (193,002) in 2017.

Secondary source markets posted robust performances in 2017

Arrival growth from secondary (non-EU) source markets contributed 3.5ppts to the overall growth of 18.8% y/y. The number of Israeli visitors increased 35.9% y/y to over 125,000 visitors, while the number of visitors from Saudi Arabia was up 164.6% y/y to over 56,000. Arrivals from the EU were up 21.9% y/y to over 322,000 visitors in 2017, with Germany, Poland, and UK accounting for a third of the growth.

Tourist category continues to drive arrival growth in December 2017

The number of overnight visitors (‘tourist’ category) was up 31.7% y/y and accounted for 39.2% of international arrivals. The transit category was also a major contributor (+54.9% y/y), while the number of same-day arrivals was up 6.7% y/y. The number of tourist arrivals in 2017 is up 27.9% y/y to 3.5mn, surpassing the annual figure for 2016 by 0.8mn tourists.

Kakhaber Samkurashvili