HOSPITALITY SECTOR Review of Georgia, 2017 - BDO
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Review of
HOSPITALITY
SECTOR
Georgia, 2017
27 March 2018
INTRODUCTION
Key macroeconomic indicators in Georgia
Indicators 2017 Comment
Georgia is a popular tourist destination GDP at current prices (mln. USD) 15,165 Increase by 5% compared to 2016
based on her unique natural and resort
conditions, especially resorts along the
GDP per capita (USD) Increase by 6% compared to 2016
Black Sea coast such as Batumi and in 4,079
the mountains like Bakuriani and Gudauri.
The tourism market has continued to
present a growing industry in Georgia and Foreign Direct Investments 1,863
Increase by 16% compared to 2016
(FDI) (million USD)
is expected to follow a similar trend. With
the ambition of becoming a tourism hub
and due to the government's extensive FDI per capita (USD) 501 Increase by 16% compared to 2016
incentives together with the country's
strong tourism potential, Georgia has
achieved the following performance Index of Economic freedom
indicators in hospitality sector. (The Heritage Foundation 16
123rd place in the world in 1996
ranking for 2017 year)
Ease of doing business
(World Bank ranking for 2017 year) 9 112th place in the world in 2006
International tourism arrivals Inflows from international tourism
created USD2.2 bln in three quarters The number of accommodation
more than doubled in 2017
of 2017, increased by 29% compared units has reached up to 1,958
compared to 2010 amounting
to same period in 2016 (1,7 bln) that with the total number of rooms
to 7,554,936 visitors in 2017.
made the tourism sector one of the amounting 27,288 and the
Compared to 2016, international
key pillars in Georgian economy number of beds amounting
tourism arrivals showed an increase
(reaching up to 7% of GDP in three 66,078 units.
of 18.8%.
quarters of 2017).
2
The Government is actively working on development of tourism infrastructure as well as the diversification of existing services and
the promotion of new initiatives. Moreover, the following events will further boost Georgia's tourism sector:
The state recently announced the budget for The new arrivals terminal at the International A recent article from National Geographic
tourism development in Georgia to amount Tbilisi airport, opened in 2017, increased the ranked Georgia 3rd out of 21 as a top
to GEL52,115 thousand, which will be terminal capacity to 3.5 million passengers destination to visit, which will potentially
dedicated to campaigns in other countries, annually, leading to an increased number of increase the number of incoming tourists
for events, activities and infrastructural charter flights resulting in a significant rise of from 2018.
development, for advertisements and the number of tourists. Consequently, this fact
commercials and for international fairs and will lead to an increased demand and
exhibitions. occupancy rates.
The tourism boom in Georgia is at its high level in recent years and service supply grows based on demand too, but still there are
opportunities of development and investment in this sector. As a result, international brand operators already presented in the
market are expanding and also new players are preparing to enter. International upscale hotel chains, such as Radisson, Hilton,
Rixos, Biltmore, Sheraton, Mercure, Best Western, etc. have entered the Georgian market, many of them still increasing supply by
adding new hotels to reinforce their position on market and to diversify on various segments. Also, building of several new
international hotel brands (Intercontinental, Hyatt Regency, Pullman Hotels & Resort, etc.) are work in progress.
Georgian accommodation sector is diversified through different segments of consumers by supplying different types of hotels
which offer various levels of services, capable of satisfying demands of visitors as with low budget as well as the visitors that
desire all-inclusive, full-service accommodation.
3
TYPES OF VISITS
2017 2016
2015 2014
2013
24 HOURS 46%
AND MORE 43%
39%
40% According to the data presented, total number of visitors
38%
TRANSIT 22% 21% 24%
grew in recent years. The share of visits for 24 hours and more
20%
22%
has increased from 2013 until 2017 when the number of
SAME-DAY 32%
VISIT 36% 38% 39% 40% arrivals for 24 hours and more peaked up to 3,479 thousand
(46% of total visits). The trend indicates that the demand for
TOTAL 7,554,936 6,360,503 5,901,094 5,515,559 5,392,303
longer stay accommodation units is increasing.
Source: GNTA
HOTEL STAY DURATION, 2017
Upscale Mid-scale Low-budget Chart shows that hotel visitors choose
hotels hotels hotels low-budget hotels for longer stays more often
than mid-scale or upscale hotels, that is quite
10% 12% 17% Long Stay logical - upscale hotels are too expensive for
(8 days+) longer stays and in order to save money,
27% 27% 26%
Medium Stay
tourists visit low-budget hotels. While in opposite
(4-7 days) visiting Georgia up to 3 days, visitors prefer to
stay at upscale hotels rather than at mid-scale or
63% 62% 55% Short Stay
(up to 3 days) low-budget hotels.
Source: GNTA and BDO analysis 4
ARRIVALS FROM NEIGHBOURING VS
NON-NEIGHBOURING COUNTRIES
The same trend is indicated through the statistics of
arrivals from neighbour vs non-neighbour countries.
The chart below shows that the share of visits from
neighbour countries in total visits has decreased from
88% to 80%, while the share of visits from non-
neighbour countries has increased up to 20% from
12%, amounting 1,511 thousand visitors in 2017.
As probability of longer stays is higher for visitors
from non-neighbour countries, this increase may be
considered as a prerequisite to higher demand on low-
budget hotels.
Average length of stay of international visitors
Number of days (24 hours)
2016 2015 2014 2013
6.5 5.1 5.6 4.8
Source: GNTA
Georgia has an increasingly diverse tourism offer,
which has driven the average length of stay of
visitors from 4.8 nights in 2013 to 6.5 nights in 2016. 2017 2016
2015 2014
2013
Neighbour 80% 84% 88% 88% 88%
Non- 20% 16% 12% 12%
neighbour 12%
7,554,936 6,360,503 5,901,094 5,515,559 5,392,303
Source: GNTA
5
ARRIVALS BY BORDER TYPE
LAND AIR RAILWAY SEA
TOTAL
5,880,354 1,565,264 73,385 35,933
2017 7,554,936
78% 21% 1% 0.5%
5,182,780 1,066,597 60,389 50,737
2016 6,360,503
81% 17% 1% 1%
5,034,368 764,588 62,664 39,474
2015 5,901,094
85% 13% 1% 1%
4,757,264 643,088 71,515 43,692
2014 5,515,559
86% 12% 1% 1%
4,699,361 585,727 62,976 44,239
2013 5,392,303
87% 11% 1% 1%
Source: GNTA
Increase of the share of arrivals through air borders may be linked to the increased proportion of visits for longer stays.
6
NET EXPORT OF TOURSIM (MLN. GEL) INCOME PER VISITOR (USD)
2017 2017
(3Q) 2016 (3Q) 2016
2015
2014 2015
2013 2014 2013
1,832 1,780 1,606 1,488 1,426 373 341 328 324 325
Source: National Statistics office of Georgia Source: GNTA
Income from tourism is connected to not only the
The chart shows increase in net export of tourism
number of tourists that enter the country, but also how
in resent years. This indicator grew from 1,426 mln
much each of them spends. The chart shows increase of
to 1,832 mln from 2013 to 2017 (3Q), which can be
income per visitor in the past years. This indicator grew
seen as a result of growing number of international
from USD325 to USD373 from the year 2013 to
tourists in indicated years.
2017 (3Q).
7
Role of each sector in economy can be seen
Average Monthly Wage and by how many people the sector employs
and how much is an individual paid. The charts
Employment in hospitality sector in Georgia show number of employees in hospitality sector
and average monthly wage for the years through
2013-2017.
2017 2016 2015 2014 Source: National Statistics office of Georgia
1,077 816 763 647
13,506 14,072 11,731 9,155 8
3,614
18,029 5,360
BED CAPACITY
BY REGION, 12,126
12,126
2017
4,564 485 5,227
4,952
9,820
The number of accommodation units
Racha-Lechkhumi,
Lower Svaneti registered in the database of GNTA is
554 1,960, with a total of 66,154
1,423 beds.
Tbilisi has the largest numbers of
beds - 18,029 (27%),
followed by the Adjara region with
12,126 beds (18%).
Source: GNTA and BDO analysis 9
AVERAGE OCCUPANCY RATE IN TBILISI
Upscale hotels Mid-scale hotels Low-budget
hotels*
2017 2016 2017 2016 2017 2016
68% 70% 64% 70% 67% 60%
Source: BDO analysis
The growth in demand was matched by hotel supplied in Tbilisi in the end
of 2016 and throughout 2017, which is evidenced by the fact that occupan-
cy rates in mid-scale hotels have seen a little decrease in 2017 (for example:
Ibis Styles Tbilisi Center, IOTA Hotel Tbilisi, Ameri Plaza and Gallery Palace
opened in this period supplied total 641 beds).
Low-budget hotels in Tbilisi have slightly higher occupancy rates compared
to mid-scale hotels and nearly the same as upscale hotels. Generally, high
demand and low supplied of hotel rooms result in higher occupancy rates.
*Does not include family-type hotels 10ADR (USD excl. VAT) IN TBILISI, 2017
$184
Upscale hotels
$106
Mid-scale hotels
$59
Low-budget
hotels*
Source: BDO analysis
RevPAR (USD excl. VAT) 2017
$126
Upscale hotels
$68
Mid-scale hotels
$39
Low-budget
hotels* Source: BDO analysis
*Does not include family-type hotels 11FUTURE SUPPLY
The supply for future planned hotels in Georgia reflects a substantial rise in market confidence. Recent announcements of the
budget for tourism development, as well as the fact that Georgia was listed as a top tourism destination in the National Geographic
will further fuel the increasing demand of tourists and consequently, increase the supply of future hotels.
In total, there are 35 known hotels across the upscale and midscale sector in stages of planning or construction in Georgia for 2018
and 2019, which is estimated to provide over 5,500 additional rooms. The upscale sector will see the highest volume of development
with 23 new hotels planned and over 4,000 rooms, while 12 additional hotels will be provided in the midscale sector with
a total of 1,574 rooms.
12Future Supply
Openning Number of Bed
Hotel Region Type
year rooms capacity
Babylon Tower Adjara Upscale 2018 168 336
Le Meridien Adjara Upscale 2018 110 230
Pulmann Hotels & Resort Adjara Upscale 2018 310 -
Metro Sky Tower Adjara Upscale 2018 150 250
Twin Tower Adjara Upscale 2018 350 -
Marriott Autograph Collection-Hotel & Spa Resort Guria Upscale 2018 220 440
Radisson BLU Tsinandali Kakheti Upscale 2018 111 200
Holiday INN Kakheti Upscale 2018 85 160
Rooms Hotel Samtskhe-Javakheti Upscale 2018 100 200
Rixos Tbilisi Tbilis i Upscale 2018 143 300
Pullman Hotels & Resort Tbilisi Upscale 2018 234 400
Radisson BLU Telegraph Tbilisi Upscale 2018 189 350
Marriott Autograph Collection-Panorama Freedom Square Tbilisi Upscale 2018 220 440
Marriott Autograph Collection-Panorama Sololaki Tbilisi Upscale 2018 187 400
Tabori Ridge Recreation & Golf Resort Tbilisi Upscale 2018 100 200
Ramada Resorts Adjara Mid-scale 2018 115 200
Best Western Plus Mtskheta-Mtianeti Mid-scale 2018 60 240
Hilton Garden Inn Tbilisi Mid-scale 2018 165 330
Radisson Park Inn Tbilisi Mid-scale 2018 200 400
Moxy by Marriott Tbilisi Mid-scale 2018 130 260
Ramada Encore Tbilisi Mid-scale 2018 152 250
Golden Tulip Tbilisi Mid-scale 2018 80 160
Holiday Inn Express Tbilisi Mid-scale 2018 121 240
Stamba Tbilisi Mid-scale 2018 205 400
Courtyard by Marriott Adjara Upscale 2019 150 300
Courtyard by Marriott Adjara Upscale 2019 - -
Swissotel Adjara Upscale 2019 186 360
Interstate Hotels and Resorts Adjara Upscale 2019 220 -
Wellness Resort & Spa on Mtsvane Kontskh Adjara Upscale 2019 280 -
Hilton Tbilisi Adjara Upscale 2019 200 350
Radisson Blu Gudauri Adjara Upscale 2019 105 240
Hyatt Regency Tbilisi Upscale 2019 170 340
Ramada Adjara Mid-scale 2019 125 190
Ramada Encore Adjara Midscale 2019 120 240
Golden Tulip Adjara Mid-scale 2019 101 200
Source: GNTA
13CONTACT This publication has been carefully prepared, but it has been written in general terms
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Maia Khachidze
Copyright © 2018 BDO LLC. All rights reserved. Published in Georgia.
Partner, Corporate Finance
Mkhachidze@bdo.ge
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