Hotel Market in Georgia | 2019 - PREPARED FOR
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Hotel Market
in Georgia | 2019
PREPARED FOR:
Photo: Sheraton Grand Tbilisi Metekhi Palace
Photo: Radisson Blu Iveria Hotel Tbilisi
CONTENTS
Executive Summary 3 Appendix 1 - Real Estate Registration 90
and Construction Permits
Country Profile 4
Appendix 2 - Primary Information Sources,
International Rankings 6 data used for the study and definitions 94
Economic Overview 7 Disclaimer 96
Tourism Overview 14 Project Team 97
Tbilisi Hotel Market Overview 26 Colliers Global Stats at a Glance 98
Batumi Hotel Market Overview 39
Kutaisi Hotel Market Overview 52
Seaside Resorts Hotel Market Overview 57
Mountain Resorts Hotel Market Overview 64
Spa and Wellness Hotel Market Overview 78
Destination Hotel Market Overview 86
Conclusions 89
Colliers International Georgia 2
EXECUTIVE SUMMARY
Tourism In 2019, Batumi International Hotels Performed
Well
In 2019, the number of Georgia’s international
inbound travelers grew by 7% year-over-year from The occupancy rate for Batumi’s internationally-
7.2 million to 7.6 million. Tourist arrivals increased branded hotels has maintained its stability at 65%,
by 7% from 2018 to 2019, reaching 5.1 million while the figure in local upscale and middle-class
visitors. hotels declined by 7%. RevPAR in local upscale
and midscale hotels remained stable at USD 27,
Hotel Supply Trend
while the figure in international hotels has merely
The hotel industry in Georgia comprises decreased by 2.6%. The ADR at internationally
approximately 33,460 rooms. The supply is branded hotels decreased slightly by 3%. In
expected to increase roughly by 7K new rooms by contrast, the ADR at local upscale and middle-class
2024. hotels grew by 14% .
Tbilisi and Batumi – Main Suppliers of Hotel Rooms Overall, the occupancy rates at Tbilisi’s hotels
decreased across all classes in 2019. International
The supply of Tbilisi and Batumi hotel rooms has
and local upscale &midscale hotels held an
increased significantly during the past few years. In
occupancy rate of 62%. The ADR and RevPAR in all
2019, the total number of hotel rooms in Tbilisi
segments dramatically declined compared to 2018.
increased by 23%, amounting to 12,430 units.
Batumi’s supply rose to 6,341 rooms, reflecting a Spa and destination resort hotels are characterised
13% increase. Taking the pipeline into with their high-performance indicators. The total
consideration, these two cities will remain occupancy rate at spa resorts was 49% in 2019,
Georgia’s top suppliers over the next five years. while that of destination hotels was 57%. The ADR
at spa resorts stands at USD 68, while the same
International Operators Continue to Expand in
figure at destination hotels amounts to USD 85.
Georgia
Georgian ski resorts have hosted more than
Substantial growth of the Georgian hotel market is
550,000 visitors during the 2017-2018 winter
expected during the next few years. Several major
season. Among other ski resorts, Mestia hotels
international brands will open hotels in not only
recorded the highest occupancy rate (48%) in 2019.
Tbilisi and Batumi, but also in Kutaisi, and Georgia’s
While Gudauri has the highest ADR at USD 83. Ski
seaside and mountain resorts. The first
resorts are characterised by increasing
internationally-known midscale brand, Best
competitiveness of the Airbnb market, reflected in
Western, already opened a 45-room hotel in
the substantial growth of its revenue.
Kutaisi. Another international brand, Ramada
Encore, is expected to open a hotel in Kutaisi in
2021, adding another 124 rooms.
Internationally-branded hotels have not entered
Batumi’s hotel market since 2017. But the number
of international hotel rooms is expected to grow
by 1,600 units by 2024.
Today, internationally-branded hotel rooms
represent 21% of Tbilisi’s total supply. There are 18
international hotels in the current pipeline with a
total investment volume of approximately USD 700
million.
Photo: The Biltmore Hotel Tbilisi
Colliers International Georgia 3
COUNTRY PROFILE
Background
At the crossroads of Europe and Asia, Georgia POPULATION AREA
borders Turkey, Armenia, Azerbaijan, and Russia. The
3.7mln 69.7K km
country occupies an area of 69,700 square kilometers
(sq km) and is home to a population of 3.7 million 2
people. The country’s land borders run a length of
1,839 kilometers (km), while the Black sea coastline is
315 km. CAPITAL CITY OF GEORGIA TBILISI
During last two decades, Georgia has implemented OFFICIAL LANGUAGE GEORGIAN
large-scale reforms that have led to political and
economic transformation. It has strengthened its CURRENCY GEORGIAN LARI (GEL)
democracy and furthered its relationship with the GDP PER CAPITA, 2019* USD 4,763
European Union (EU). The Association Agreement
with EU was signed and ratified in 2014. Georgia has REAL GDP GROWTH RATE, 2019 5.1%
also made business development within the country a
UNEMPLOYMENT RATE, 2019 11.6%
top priority through encouraging entrepreneurship,
attracting private investments, and shifting tax AVERAGE MONTHLY SALARY, 2019* USD 567.9
incentives, thereby positioning itself as an attractive
LIFE EXPECTANCY, 2018 74 years
option to the international business world.
Source: Geostat (preliminary data)
With its unique cultural heritage and exuberant
hospitality, Georgia’s tourism industry continues to
grow and thrive, further bolstering economic growth.
Government
Georgia is a parliamentary republic. Parliamentary
elections are held every four years. In 2018, Georgia’s
parliament relocated to Tbilisi from Kutaisi. It acts as
the representative body for the country, exercising
legislative power and developing domestic and
foreign policy. As an executive council of government
ministers, Georgia’s cabinet is headed by Giorgi
Gakharia, a member of the majority ‘Georgian Dream
Party.’ Based on accountability, citizen participation,
technology, and innovation as its guiding values,
today’s government continues to make European and
Euro-Atlantic integration a primary strategic
objective.
Colliers International Georgia 4
Legal Framework Tax Climate
The Georgian Constitution, adopted in 1995, lays out To stimulate investments and boost economic
the structure of the national government and defines growth, developing an attractive tax system is one of
its authority and function. Georgia’s court system has the main goals of the Georgian government. With
three branches: the Courts of First Instance (District or only six flat-rate taxes (Personal Income Tax – 20%,
City Courts), the Appellate Courts, and the Supreme VAT – 18%, Profit Tax – 15%, Import Tax – 0%, 5%, or
Court. The Courts of First Instance have jurisdiction 12%, Excise Tax – on a few selected goods, and
over all civil, criminal, and administrative cases. Property Tax – up to 1%) and the Estonian tax model
Decisions from the Courts of First Instance may be implemented in 2017 that exempts undistributed
appealed at the Appellate Courts and further earnings from profit tax, has made Georgia one of
appealed at the Supreme Court. the most competitive places to invest in. Georgia’s
liberal trade regimes include: “Double Taxation
As an alternative to litigation, Georgian laws allow Avoidance” 56 countries and the DCFTA with the EU
arbitration both in local as well as international (since 2014).
arbitration institutions. Georgia is a member of the
International Centre for Settlement of Investment In January 2019, a new pension fund system was
Disputes (ICSID). The Public Service Hall in Georgia launched in Georgia that is compulsory for every
provides customers with state services, including hired person under the age of 40. For self-employed
business registration and property registration people and those above the age of 40, engagement
through the ‘one-stop-shop’ principle that ensures in the system is optional. The methodology of the
efficient service delivery. reform is a 2+2+2 scheme, meaning that employer,
employee, and government transfer 2% of the gross
volume of the employee’s income on a personal
account.
Colliers International Georgia 5
International Rankings
Georgia has improved its status as a free economy EASE OF DOING BUSINESS
thanks to its fiscal policy, regulatory efficiency, and
open market policies. According to the World Bank’s
Doing Business report 2020, Georgia ranks 7th for
“ease of doing business” among 190 economies, 2nd
for “ease of starting a business”, and 5th for “ease of
registering property”.
In 2019, Fitch Ratings upgraded Georgia's Long-Term
Foreign-Currency Issuer Default Rating from 'BB-' to
'BB' with a stable outlook. As Fitch explains, it was
due to the country maintaining a resilient economy
during the regional shocks in 2018 and adds that
Georgia ranks above the current medians of 'BB'
category peers. Standard & Poor’s also raised
Georgia’s ranking from ‘BB-’ to ‘BB’, while Moody’s
credit rating for Georgia remains at ‘Ba2’.
Registering a new business takes a maximum of two Source: World Bank, Colliers International
days and requires no minimum capital requirements.
GLOBAL COMPETITIVENESS INDEX
According to the ‘Heritage Foundation Index of
Economic Freedom 2020,’ Georgia’s economy is
categorized as Mostly Free, ranking 12th across 180
countries.
Georgia remains the least corrupt country in
the region. According to Transparency
International, Georgia is the top performer
among the Eastern European and Central
Asian countries.
Foreign investors in Georgia are guaranteed equal
rights to those of Georgian citizens. After payment of
Source: World Bank, Colliers International
taxes, foreign investors are entitled to repatriate the
earnings (income) gained from investments and other
funds abroad.
Property Ownership & Non-agricultural Lands
In Georgia, property rights are recognized and protected by the Law. An owner has the right to possess, use
and dispose of his or her property. The rights of individual owners to possess, use and dispose of land are
regulated by the land legislation. There is no restriction on non-agricultural land ownership in Georgia.
According to the Heritage Foundation Index, Georgia has substantial improvement in property rights in 2020
and is 21% above the world average.
THE WORLD CORRUPTION RANKING
Georgia
44
Belarus Romania
66 Bulgaria Armenia
70 74 77 Turkey
91
Moldova
Ukraine Azerbaijan
120
126 126
Source: World Bank, Colliers International
Colliers International Georgia 6
ECONOMIC OVERVIEW
Gross Domestic Product
In 2019, according to the preliminary data of Geostat, GDP AT CONSTANT PRICES BY YEARS (GEL, BLN)
the gross domestic product of Georgia reached an
all-time high of GEL 40.4 billion. Despite the political
and economic difficulties at the edge of the 2nd and
3rd quarters of 2019, the real GDP growth reached its 40.4
38.4
36.6
maximum after 2015 at 5.1%, well above the 33.9 34.9
Caucasus (Russia, Azerbaijan, Armenia, Georgia)
region average of 3.7%.
As of 2019, according to the Ministry of Finance of
Georgia, the ratio of total government debt to
nominal GDP is 40.6%, well below the euro area
average (86.4% - 2019 Q2). During the last eight years
(up to and including 2018), the budget deficit has 2015 2016 2017 2018 2019
remained under 4%. As of 2018, the budget deficit
constitutes only 2.9% of the nominal GDP. Source: Geostat, Colliers International
Fast-growing Sectors
Despite the political and economic difficulties at the
edge of the 2nd and 3rd quarters, strong growth in
the professional, scientific and technical activities
Georgia has recorded the highest
(26% YoY), administrative and support activities (20% real GDP growth of 5.1% since 2012.
YoY) and information and communication (19% YoY),
as well as art and entertainment (19% YoY) sectors
contributed positively to the real GDP growth.
REAL GDP GROWTH (%) GDP STRUCTURE
Georgia Caucasus
5.1
4.8 4.8
3.0 2.9 3.7
3.5 13%
3.3
Trade Public Administration
1.3 Real Estate Financial Activities
Industry Accommodation
0.1 Transport & Communication Education
2015 2016 2017 2018 2019 Construction Health & Social Work
Agriculture Other
Source: Geostat, Colliers International Source: Geostat, Colliers International
Colliers International Georgia 7
Exports
The main exporting partners for the country in 2019 MAIN EXPORT COUNTRIES, 2019 (MLN,USD)
were Russia, Azerbaijan, Armenia, Bulgaria, and
Ukraine. In 2019, based on the preliminary data, total
498 497
exports grew by 12% YoY. This figure is significantly
lower compared to the previous years, when the 412
growth rate was above 20%. The increase in exports
to EU countries was also 12% YoY and represented
22% of the total exports. For CIS countries, it grew by 284
245
20% YoY, making up 53% of total exports. 228
202
178
132
The high volatility and depreciation
of the Georgian national currency is Azerbaijan Bulgaria Turkey
one of the main challenges in Russia Ukraine Romania
recent years. Armenia China USA
Source: Geostat, Colliers International
Currency Fluctuations
Depreciation and high volatility of the Georgian national currency was one of the main issues of the first half
of 2019, seeing it reach a peak in August when, after the effects of flight ban from Russia were fully realized, 1
USD was exchanged for 2.97 GEL. However, as the negative expectations eventually dissipated following
intervention by the National Bank of Georgia in the FX market, and the fundamental macroeconomic
indicators showed a positive trend, the GEL quickly strengthened and at the end of 2019, 1 USD was traded
for 2.82 GEL.
CURRENCY FLUCTUATIONS (LCU vs. USD)
Azerbaijan Armenia Ukraine
100%
Georgia Russia Turkey
80%
60%
40%
20%
0%
2015 2016 2017 2018 2019
-20%
Source: Geostat, Colliers International
Colliers International Georgia 8
Unemployment Rate
Georgia’s labor force comprises approximately UNEMPLOYMENT RATE IN GEORGIA (%)
1,911,200 people. The unemployment rate is 11.6%,
which is the lowest it has been for more than a
decade. Since 2013, the unemployment rate in urban
areas has declined by approximately 10%; however,
the flat trend in rural areas indicates the fact that the
main cities of Georgia remain the gravitational centre
for businesses and are more attractive places to 14.1% 14.0% 13.9%
invest in. The distribution of hired people in the labor 12.7%
11.6%
force for Tbilisi and rest of the country is significantly
different.
Remittances
In 2019, the total number of 2015 2016 2017 2018 2019
remittances amounted to USD 1.73 Source: Geostat, Colliers International
billion, reflecting a 10% growth
compared to 2018. REMITTANCES (USD), 2015-2019
The main source markets are Russia (25%), Italy 2.0 25%
(14%), Greece (11%), USA (10%), Israel (9%), and 20%
Turkey (6%). 20%
1.5
14%
Billion (USD)
15%
1.0 10%
Inflation 7%
10%
The annual inflation rate in 2019 was 4.2% (IMF 0.5
5%
estimate). The main source of inflationary pressure on
prices was the depreciation of the nominal currency. 1.08 1.15 1.39 1.58 1.73
As a result, the monetary committee of the central 0.0 0%
bank raised the monetary policy rate from 6.5% 2015 2016 2017 2018 2019
(September) to 9.0% (December). It is expected that Remittances Growth y-o-y
during the year, the refinancing rate will decrease as
Source: National Bank of Georgia, Colliers
mid-term inflation expectations become positive. International
CONSUMER PRICE INDEX (INFLATION, %)
Headline Inflation Core Inflation
6.9
6.4 6.4
6.1 6.0
4.6
4.3 4.1
3.9
2.8 4.7
4.3 4.4 2.5 2.3 4.4
2.2
3.6 3.4
3.3
2.8 3.0
1.8 1.7 1.7
1.4
Jan 2017 Apr 2017 Jul 2017 Oct 2017 Jan 2018 Apr 2018 Jul 2018 Oct 2018 Jan 2019 Apr 2019 Jul 2019 Oct 2019 Jan 2020
Source: Geostat, Colliers International
Colliers International Georgia 9
FOREIGN DIRECT INVESTMENT (FDI)
According to the preliminary estimates of Geostat, in FDI INFLOWS BY YEARS (MLN, USD)
2019, the volume of FDI increased by a modest 0.2%
(amounting to USD 1,268 million) compared to the 1,963
previous year, while dramatically decreased 1,729
1,650
compared to 2017. Among the reasons for the
decline may be the completion of magistral gas 1,265 1,268
pipeline project, the transfer of several enterprises to
the ownership of Georgian residents, as well as the
reduction of non-resident direct investors liabilities.
The United Kingdom, Turkey, and Ireland were the
main investors, with shares of 19.5%, 18.7%, and
10.5%, respectively. As for the sectoral distribution, 2015 2016 2017 2018 2019
20.6% of total FDI was invested in the financial sector, Source: Geostat, Colliers International
while the second and the third were the energy and
manufacturing sectors with 15.4% and 13.4%, FDI BY SECTORS (MLN, USD)
respectively.
262 253
In 2019, unlike other sectors, FDI in real estate
experienced a significant decrease and recorded a
negative figure. The first quarter of 2019 was 194
171
particularly remarkable in terms of decline as the 158
number stood at USD -125 million. The most likely
118 117
reason for such a sharp decline in 2019 was the fact
that companies moved to ownership by residents,
from non-residents.
14 14 -32
In 2019, Financial, Energy &
Manufacturing were the key sectors
Financial Transport & Communication
that attracted around 50% of total Energy Health & Social Work
FDI. In 2020-23, around USD 1 billion Mining & Manufacturing Agriculture
is expected to be invested in the Hotels & Restaurants
Construction
Real Estate
Other
construction of hydroelectric power
stations. Source: Geostat, Colliers International
Colliers International Georgia 10Covid-19 Effects & Economic Outlook
Exposure Of Economic Sectors Towards Covid-19
Georgia’s economic sectors are exposed to the crisis on different scales.
The Hotels, Food & Beverage and Entertainment sectors are highly
exposed; however, in total, their share in the GDP amounts to 10%. Trade
(14%) and Construction & Development (8.6%) have a relatively larger
share in the GDP, yet both fall into the category of highly exposed sectors.
GROSS DOMESTIC PRODUCT, COVID-19 IMPACT ON SECTORS (2019)
Very Exposed Exposed Partially Exposed
Neutral/Limited Impact More positive, than negative
Other Sectors
Professional, Scientific & 6.7%
Technical Services
2.9%
Information & Wholesale & Retail
Communication Trade
3.0% 14.4%
Arts, Entertainment &
Recreation
3.2%
Health & Social Work
Activities
Real Estate
4.3%
Activities
11.5%
Education
4.5%
Accommodation &
Food Service Activities
4.8%
Manufacturing
Financial & Insurance Activities 10.1%
5.4%
Transportation &
Storage Construction
6.5% 8.6%
Public Administration &
Defence Agricalture, Forestry
6.8% & Fishery
7.2%
Source: Geostat, Colliers International
Colliers International Georgia 115 2,084
km
AMBROLAUR
AIRPORTS RAILWAY
I
1,603 5,298
km km
INTERNATIONAL INTERNAL
ROADS STATE ROADS
TRANSPORT & LOGISTICS INFRASTRUCTURE
While already contributing roughly 9% to the Georgia has 1,603 km of international roads, 5,298
country’s Gross Domestic Product (GDP), Georgia’s km of internal state roads, and 2,084 km of railway
manufacturing sector is poised to provide further lines. Construction of Georgia’s central highway is
significant investment opportunities. Greenfield one of the top priorities in the government’s
investments are expected to rise in the export- infrastructure rehabilitation program. Since 2005,
oriented manufacturing sectors, for which access to most of the country’s significant roads for
the European market would be attractive. Together international trade have been upgraded or are now
with international and local experts, Georgia’s under reconstruction.
government is performing a deep analysis of the
competitive sectors, and seeking new ways to Poti Sea Port is the largest port in Georgia. Currently
stimulate foreign investment, attract new technology serving as the European gateway for international
and know-how, and create high value-add trade in Georgia, Armenia, and Azerbaijan, it is
production in the country. ideally located to become a future hub for trade with
central Asia. Together with the Georgian
From the transport and logistics perspective, government, the Chinese conglomerate CEFC China
Georgia can serve as a gateway for foreign Energy group recently signed a cooperative
companies interested in the Caucasus/CIS region agreement regarding the construction of a Common
due to its geographic location and open business Market Zone in Poti that will actively promote the
environment. Georgia is uniquely positioned to export of advanced technologies, production
capitalize on the increasing trade flows between capacity, and products from China to countries in
Europe, the Caspian Region, Central Asia, and China. the Eurasian region, and build a new Eurasian land
With a transport system that functions as a key link bridge that will function as an economic corridor
in the historic “Silk Road,” it offers the shortest route between China, Central Asia, and Western Asia.
between the Black and Caspian seas.
Georgia’s five airports are located in various regions,
In October 2017, leaders of Georgia, Azerbaijan, and with the largest - operated by TAV Airports - in
Turkey officially opened the Baku-Tbilisi-Kars (BTK) Tbilisi. The Ambrolauri airport opened in December
railway as a part of Iron Silk Road project. The 826- 2016; it serves smaller aircraft with a 30-50
kilometer (km) / 513-mile line has the capacity to passenger capacity. Georgia’s additional airports are
transport one million passengers and 6.5 million in Batumi, Mestia, and Kutaisi.
tons of freight per year. The project will deepen
trade relations between Georgia and China, making A recent governmental initiative regarding the
the country a primary link between Europe and Asia. establishment of logistic centres in Tbilisi and Kutaisi
Additionally, the government is investing heavily in created substantial interest from investors. Along
road infrastructure, including highways and local with several Georgian companies, applications from
roads. It is believed that long-term growth will stem companies registered in China, Switzerland, Turkey,
from Georgia’s role as a transit state for pipelines. and others were received. The anticipated
Three pipelines currently exist: development of infrastructure and manufacturing in
Georgia, combined with its increasingly recognized
• The Baku-Supsa pipeline; strategic location at the crossroads of Europe and
• The Baku-Tbilisi-Ceyhan oil pipeline; Asia, will open up opportunities for modern
• The South Caucasus pipeline (operated by industrial and logistics real estate investments.
BP).
Colliers International Georgia 12The Influence of Covid-19 on Foreign Direct Investments
LARGEST DIRECT INVESTOR COUNTRIES
According to the national statistics (USD,MILLIONS), 2019*
office, in 2019 the foreign direct
investments (FDI) slightly increased by
0.2% and amounted to USD 1,267.7 UNITED KINGDOM 247.8
million. Around 50% of the
investments are coming in from the
UK, Turkey and Ireland (preliminary TURKEY 236.5
data, Geostat). The way these
countries tackle the spread of Novel
Coronavirus, and their investing IRELAND 132.7
strategy, will be critical for the inflow
of future investment in Georgia. USA 99.0
The crisis of 2008-2009 had a
negative impact on direct foreign PANAMA 78.1 NETHERLANDS 52.9
investment inflows in Georgia,
recording a 60% decrease compared
RUSSIA 40.4
CHINA 50.5 JAPAN 39.2
to the previous year.
Source: Geostat, Colliers International
FOREIGN DIRECT INVESTMENT BY LARGEST
SECTORS IN THE ECONOMY, 2019*
Agriculture, Mining &
Forestry and Quarrying
Other Sectors
Fishing 5.4% In 2019, (preliminary data)
1.1%
18.5% Manufacturing
8.1%
investments were made in the
given sectors: Finance (20.6%),
Electricity, Gas, Steam and Air
Conditioning supply (15.3%),
and Hotels & Restaurants
Electricity, Gas,
Steam and Air (12.4%). Hotels & Restaurants
Conditioning
Supply and Construction sectors fall
15.3%
into the very exposed and
Financial exposed category, respectively.
Sector
20.6%
In the period of isolation, it is
expected that investments in
Construction
9.3%
Hotels & Restaurants and
Construction sectors will
dramatically decrease.
Transport and Hotels and
Communications Restaurants
9.2% 12.4%
Very Exposed Exposed Partially Exposed Neutral Other
Note: *Preliminary data
Source: Geostat, Colliers International
Colliers International Georgia 13TOURISM OVERVIEW
Tourism in Georgia
In 2019, the number of international traveller trips INTERNATIONAL ARRIVALS BY YEARS (MLN)
grew by 7.8% YoY from 8.7 mln to 9.4 mln, of which
83% were international visitor trips (7.7 mln.).
The number of tourist arrivals increased by 8.3%,
constituting 65.7% (5.1 mln) of the total number of
5.1
international visits, while same-day trips stood at 4.8
4.1
about 34.2%.
3.0 3.3
Citizens of 98 countries can travel to Georgia without
a visa and stay up to one full year. In addition,
foreigners who hold a visa/residence permit of 50 5.2 5.3 6.4 7.2 7.7
countries can enjoy visa-free travel to Georgia.
2015 2016 2017 2018 2019
Visitors who need to obtain a visa can take advantage
of the e-visa portal to get a short-term visa. International arrivals Tourist arrivals
Simplified travel and visa-free regimes build on the
strong growth of inbound tourism. Source: Geostat, Colliers International
Road travel remains the main means of transport for INTERNATIONAL ARRIVALS BY TYPES OF VISIT (MLN)
international arrivals due to the large share of
travellers from neighbouring countries in the total
number of visitors. In 2019, this increased by 8.7%,
representing 74.8% of the total. Air travel, the second 2.6
2.4
most popular choice among travellers, increased 2.4
modestly by 2.3%, and constituted 23.7% of the total. 2.2 2.0
4.8 5.1
3.3 4.1
3.0
In 2019, the number of international
arrivals as well as the number of 2015 2016 2017 2018 2019
tourists increased by modest 7%. Tourist arrivals Same-day visit
Source: Geostat, Colliers International
Colliers International Georgia 14Source Markets
In 2019, the number of tourist arrivals amounted to SHARE OF MAIN SOURCE MARKETS
5.1 million. Most tourist visits originated from Russia
(23%), Azerbaijan (19%), Turkey (13%), EU countries
(12%), and Armenia (11%). Despite difficulties related 13%
to US sanctions on Iran, the country remained in the
23%
list of top 15 countries of international visitors.
5.1
Remarkably, in recent years, Georgia has become
more attractive to the western Europeans, as the 12%
number of visits from EU countries increased by
21.9%. July and August remained the most popular
1%
months for visiting Georgia.
4%
From July 8, 2019 Russia has banned direct flights to
Georgia due to extended street protests. After the 4%
MLN 19%
flight bans the number of international visits by
Russian citizens decreased by 20.6% in Q3 2019, 11%
when compared to Q3 2018. The annual figure 13%
marked an insignificant 0.6% decline. However, the
strong growth of the number of tourists visits from
Israel (31%), Ukraine (20%), Armenia (12%) mitigated
Russia Armenia Iran
the shock and the total annual number of tourist
Azerbaijan Ukraine EU
visits increased by 6.8%.
Turkey Israel Other
NUMBER OF TOURIST VISITS FROM RUSSIA IN Q3 Source: Geostat, Colliers International
2019 vs. Q3 2018 (THOUSAND)
Even though the number of tourist
20.6% visits dropped by 20.6% in Q3 2019
456 362 due to flight bans from Russia, the
annual figure marked an
Q3 2018 Q3 2019
insignificant decline.
Source: Geostat, Colliers International
Colliers International Georgia 15Map Of Top 15 Source Markets
DYNAMICS OF INTERNATIONAL TRIPS FROM TOP 15
SOURCE MARKETS (THOUSAND) Georgia’s tourism market is sourced
COUNTRY 2015 2016 2017 2018 2019 dominantly by neighbouring countries
Azerbaijan 1,156 1,076 1,302 1,425 1,527
(71% of tourist trips in 2019). However,
Russia 763 849 1,135 1,405 1,472
there’s significant increases shown from
Armenia 1,192 1,152 1,287 1,269 1,365
other non-neighbouring countries.
Turkey 1,074 988 1,007 1,099 1,157
Ukraine 127 152 170 177 208 DISTRIBUTION OF INTERNATIONAL TRIPS FROM
Israel 55 85 115 157 205 NEIGHBOURING AND NON-NEIGHBOURING
Iran 22 130 283 291 142 COUNTRIES
Kazakhstan 31 41 47 59 104
20.4% 24.6% 27.0% 27.9% 28.6%
Germany 30 33 43 64 89
Poland 39 42 49 67 88
Saudi Arabia 8 18 46 52 75
79.6% 75.4% 73.0% 72.1%
Belarus 26 33 42 60 66 71.4%
India 8 26 43 51 55
China 7 11 18 32 48
USA 25 27 34 42 47 2015 2016 2017 2018 2019
Neighbouring countries Non-neighbouring countries
Source: GNTA, Colliers International Source: Geostat, Colliers International
Colliers International Georgia 16Economic Impact of Tourism
The tourism industry accounted for 8.1% of Georgia’s STRUCTURE OF TOURISM VALUE ADDED, 2019
economy in 2019. The same year, tourism value added (USD)
grew by 16.9% YoY and amounted to USD 1.3 billion 3%
(GEL 3.53 billion). Tourism value added reflects the
economic activity generated by industries such as
22%
1.3
hotels, food and beverage (F&B), travel agencies,
airlines and other transportation services. The transport 38%
category, which represents 38% of the total value
added, grew by 20% YoY. The F&B industry grew by
23%, while the travel agencies and the accommodation
categories increased by 17% and 11%, respectively.
Travel industry supported 123 million jobs in 2018. BLN
Revenues from inbound tourism have been growing
rapidly over the past five years. In 2018, revenues rose
by 17% YoY and amounted to USD 3.22 billion. The 37%
volume of foreign card operations by international
travellers has also grown - by 3.7%, hitting 2.14 billion Transport Food & Beverage
GEL in 2018. Spending volume is expected to increase Accommodation Travel Agencies
as Georgia continues to attract travellers with higher Source: GNTA, Colliers International
holiday budgets.
TOURISM REVENUE BY YEARS (USD, BLN)
EXPENDITURES PER TOURIST VISITS BY YEAR (USD)
2019 3.27
645 658 665 677 644 2018 3.22
2017 2.70
2016 2.17
2015 1.94
2015 2016 2017 2018 2019
Source: GNTA, Colliers International Source: GNTA, Colliers International
TOURISM VALUE ADDED AND SHARE IN GDP BY YEARS (USD, BLN)
8.1%
7.6%
7.1% 6.9%
6.7%
0.86 0.83 1.03 1.19 1.27
2015 2016 2017 2018 2019
Tourism value added Share in GDP
Source: GNTA, Colliers International
Colliers International Georgia 17Types of Tourism
Winter tourism is becoming ever more popular. HOTEL INDUSTRY REVENUES (USD, MLN)
The Mestia-Hatsvali cableway construction was
completed in 2017. Goderdzi ski resort in
Adjara and Tetnuldi ski resort in Mestia both
opened in recent years. Two cableways were 363
added to Goderdzi resort and in 2023, the 331
world championship in freestyle ski and 288
snowboarding is set to be held in Bakuriani. 241
Three new ski lifts are to be built for the event.
202
Wine tourism, adventure tourism and spa and
wellness tourism are under development. In
2019, wine tourism grew further with 46 newly
built cellars and small enterprises. In Kakheti,
near the village of Kisiskhevi, a wine village was
built by Schuchmann Wines Georgia, consisting 2015 2016 2017 2018 2019
of 10 cottages with 15 more to be built in 2020.
Georgia hosted the 18th World Federation of Source: Geostat, Colliers International
Tourist Guide Associations (WFTGA)
international convention in Tbilisi from January
17 to January 25, 2019. The convention brought
together 300 tourist guides and representatives Hotel industry revenues are growing
from around 70 countries and contributed to in line with the tourism trend in
raising awareness about tourism in Georgia and
will further contribute to the development of Georgia.
the tourism industry in the future.
Colliers International Georgia 18Benchmarking
In 2019, tourist arrivals in Georgia has increased by INTERNATIONAL TOURIST ARRIVALS (24+ HOURS)
6.3%. Among benchmark countries Bulgaria and Y-O-Y GROWTH RATE (%) BY BENCHMARK
Estonia experienced the highest annual growth rate COUNTRIES, 2019/2018
in 2019 amounted to 4.5% and 3.2%, respectively.
Israel and Turkey had the negative growth rate in
6.3%
2019 amounted to 1.2% and 2.4%, respectively.
Among benchmark destinations, international
tourist receipts were the highest in Turkey (USD 4.5%
36.5 billion), followed by Israel and Bulgaria with
USD 8.16 billion and 5.07 billion, respectively. 3.2%
1.4%
Georgia has the fastest growth in
arrivals, and the revenue per tourist Georgia Bulgaria Estonia Romania Israel Turkey
visit is on par with the benchmark -1.2%
countries, except for Israel. -2.4%
Source: Worldbank, Geostat, Colliers International
INTERNATIONAL TOURISM RECEIPTS (BLN) AND EXPENDITURE PER TOURIST TRIPS (USD)
BY BENCHAMRK COUNTRIES, 2019
2,005
818
698
641
545
274
2.33
36.5 8.16 5.07 3.27 3.26
Turkey Israel Bulgaria Georgia Romania Estonia
International tourism reciepts(USD/billion) 2018 Expenditure per tourist
Source: Worldbank, GNTA, Colliers International
Colliers International Georgia 19Travel Purposes
The number of guests in hotels has had a positive PURPOSE OF TOURIST VISITS IN GEORGIA,
trend over the past four years. Out of 2.8 mln hotel 2019
guests in 2018, 1.9 mln were international travellers. 1% 2%
74% of these were leisure travellers, 13% visited
Georgia for business purposes and only 1% for health 4%
tourism. 12%
5.1
Out of 5.1 million tourist trips, 56% were made for
leisure-recreation and shopping purposes, 25% for
visiting families and relatives, and about 12% for
business purposes. Its notable that business visits
have increasing trend, the figure grows with an 56%
average of 9% annually. On average, the typical
tourist spent 6.2 nights in Georgia.
25%
MLN
AVERAGE LENGTH OF STAY IN GEORGIA (NIGHTS)
6.6 Leisure & Shopping Transit
6.3 6.3 Visiting Friends/family
6.2 Health & Medical Care
Business Other
Source: Geostat, Colliers International
During last five years, the number of
business trips is growing on average
2016 2017 2018 2019
by 9% annually.
Source: Geostat, Colliers International
Colliers International Georgia 20Domestic Tourism
In 2019, Georgian residents took a total of 14.3 PURPOSE OF VISITS IN GEORGIA 2019
mln domestic trips. 44.7% of those visits included
at least one overnight stay, with an average trip 4%
length of 1.97 nights. 5%
Visiting Friends
9% & Family
The majority of domestic trips made by Georgian
14.3
residents were made with the intention of visiting Leisure & Shopping
friends and relatives (51%). The second and third 9% Visiting second
most frequent purposes were leisure & shopping 51% home
and visiting a second home, respectively. Adjara Health & Medical
was the third most visited region in 2019: since it
is located next to the Black Sea, it was the most
MLN Care
Business
popular holiday, leisure, and recreation 22% Other
destination.
Domestic tourism is a significant part of Georgia’s
economic activity. In 2018, domestic travel Source: Geostat, Colliers International
spending accounted for 71.2% of direct Travel &
Tourism GDP. Total expenditure by domestic SHARE OF TOTAL EXPENDITURE (USD), 2018
visitors amounted to c. USD 792 million (over 2
bln GEL). The majority, more than 852 mln GEL, 1.5%
was spent on shopping, followed by food and 5%
drinks (400 million GEL) and transportation (305
mln GEL). Since 87.1% of domestic visitors
preferred to stay at a friend’s, relative’s, or their 19.4% 33.5%
792
Shopping
own homes, spending on accommodation Food & Beverage
accounted for only 5% of the total expenditure Transportation
(over 86 mln GEL). Other
775,838 local travellers stayed in hotels in 2018,
58% of them for leisure and 28% for business
MLN Accommodation
Cultural & Entertainment
service
17.6%
purposes. Hotels in Tbilisi received 255,354 local
guests, while hotels in Batumi and Kutaisi hosted 23%
222,556 and 53,935 Georgian guests, respectively.
Source: Geostat, Colliers International
Colliers International Georgia 21Visa Liberalisation Georgia, especially those who are looking for a low
budget trip. This also increases demand on local
The government continues to make European and hotels and other hospitality facilities and incentivises
Euro-Atlantic integration a primary strategic native businesses to develop to meet the
objective. Since March 2017, the EU-Georgia visa expectations and requirements of European
liberalisation agreement has allowed Georgians to customers.
access visa-free travel to the Schengen zone. This
has led to the increased inflow as well as outflow of The visa free regime with Europe will potentially
visitors from Georgia. contribute to the development of the tourism
industry in Georgia in the future. However, as this
First of all, less bureaucracy, simplified travelling industry has suffered in all countries due to the
procedures and decreased costs have made it much current COVID-19 crisis, the future remains uncertain
easier for natives to visit Europe more frequently for and it is hard to foresee the prospects of this sector.
different purposes like travelling, education,
business, healthcare, etc. The free movement of
people, along with free trade with the EU, brings
Host in Georgia
significant economic benefits. Georgian SME owners, In 2016, the Government of Georgia launched the
who before needed to go through long and ‘Host in Georgia’ program to develop the hospitality
complicated procedures to obtain a visa, are now industry in the country. The program encourages
able to travel to European countries to explore new entrepreneurs to build hotels in all regions of
markets, attend international exhibitions, find Georgia, except Tbilisi and Batumi, by providing
partners, and gain experience. This leads to new them with financial and technical support. Under the
jobs, more developed business processes, improved Host in Georgia program, the government subsidizes
quality of production and a better environment for a 10% interest rate for loans in GEL and 8% for loans
attracting investors into the country. in USD/EUR for the first two years. In addition, the
collateral guarantee for 50% of the total loan
Increased demand on travelling has spurred the
amount is provided in the first four years. The
number of passengers at Georgian airports, which
maximum loan amount can be GEL 5 million in case
has attracted different airlines to open flights in new
of an International Franchise/Management Contract,
directions. In 2019, Ryanair, a relatively low budget
and GEL 2 million otherwise. In case of international
Irish airline company, entered the Georgian market.
brand hotels, the government also co-finances
The increased flow of passengers from neighboring
franchising and management agreement fees of up
countries has also created an opportunity especially
to GEL 0.3 million annually for the first two years.
for Kutaisi airport to become an air hub. The entry of
new airlines creates new jobs and contributes to the The Host in Georgia program has been very
performance of travel agencies and other local successful in developing the hotel industry in
hospitality businesses. Georgia, and the Georgian government has already
supported the development of 80 new hotels under
As the new destinations abroad become easily
the program, with a total investment volume of GEL
accessible for the Georgians due to the visa
225 mln. As a result, more than 2,200 rooms will be
liberalisation, this raises the competitiveness and
added to the Georgian hotel market. The new hotels
encourages local providers to improve the quality of
are being built in various towns, including Bakuriani,
their hospitality services. Moreover, better
Gudauri, Kazbegi, Gonio, Shekvetili, and Tskaltubo.
relationships with Europe as a result of the visa
liberalisation reform has improved the image of the
country and attracted more international tourists to
Colliers International Georgia 22Air Travel
Airlines carried 1.97 million international travellers NUMBER OF INTERNATIONAL TRAVELLERS
in 2019, up by 1.3% from 2018. Tbilisi International RECEIVED IN AIRPORTS, 2018-2019 (THOUSAND)
Airport once again received the largest number of 3%
travellers – 1.5 mln depicting a 3% decrease YoY.
Decline of travellers in Tbilisi airport was caused 2018 2019
by flight bans from Russia as the number of 1,551
1,498
international travelers received in airports from
this country decreased by 24% YoY. The number
of travellers in Kutaisi Airport increased
significantly by 43%. The main contributors were
Ukraine and Poland. 55% of the travellers were
43% 7%
received from these countries. Batumi Airport was
also up from 262 K to 279 K international
travellers, which represents a 7 % increase. 197
138
261 279
In 2019, there were 50 international and two
domestic airlines operating on the Georgian Tbilisi Kutaisi Batumi
market. Wizz Air Hungary is the largest company
Source: GNTA, Colliers International
operating on the Georgian market. It offers flights
to up to 39 destinations. In 2019, it provided NUMBER OF INTERNATIONAL TRAVELLERS
service for 825,290 passengers (16% of the total RECEIVED IN AIRPORTS FROM RUSSIA , 2018-2019
trips). The second largest company is Turkish (THOUSAND)
Airlines, with 572,181 passengers and 11.1% of the
market share. This is followed by Georgian
Airways, Ural Airlines, Fly Dubai, and Ukraine
24%
International Airlines. In 2018, one Georgian, My
Way Airlines, and nine international companies 530 404
appeared on the market. Additionally, in 2019,
Ryanair, one of the Europe’s low-cost and most
popular airlines, also entered Georgia, offering 2018 2019
two routes from Tbilisi and two from Kutaisi. Source: Geostat, Colliers International
Colliers International Georgia 23Map Of Direct Flights From
Georgia
MAIN FLIGHT ROUTES
Duration Duration Duration
Origin Destination Origin Destination Origin Destination
(hours) (hours) (hours)
Tbilisi Baku 1.0 Tbilisi Riga 3.1 Tbilisi Kuwait 2.1
Tbilisi Tehran 1.7 Tbilisi St. Petersburg 3.1 Tbilisi Bahrain 2.5
Tbilisi Istanbul 2.0 Tbilisi Vienna 3.2 Tbilisi Astana 3.1
Tbilisi Tel Aviv 2.1 Kutaisi Berlin 3.3 Tbilisi Aktau 1.2
Tbilisi Kiev 2.2 Tbilisi Prague 3.4 Tbilisi Doha 2.7
Tbilisi Moscow 2.4 Tbilisi Almaty 3.5 Tbilisi Bucharest 2.2
Tbilisi Athens 2.6 Tbilisi Munich 3.6 Tbilisi Barcelona 4.6
Tbilisi Minsk 2.6 Kutaisi Milan 3.8 Tbilisi Tashkent 2.8
Kutaisi Vilnius 2.8 Tbilisi Amsterdam 4.2 Tbilisi Ankara 1.6
Kutaisi Budapest 2.9 Tbilisi Urumqi 4.5 Kutaisi Paris 4.2
Tbilisi Dubai 2.9 Tbilisi London 4.6 Kutaisi Prague 3.2
Tbilisi Warsaw 3.0 Batumi Istanbul 1.7 Kutaisi Rome 3.3
Tbilisi Yerevan 0.39 Batumi Kiev 2.0 Kutaisi Riga 3.0
Tbilisi Brussels 4.2 Tbilisi Paris 4.4 Kutaisi Thessaloniki 2.4
Tbilisi Beijing 7.4 Tbilisi Bologna 3.6 Batumi Minsk 2.5
Tbilisi Sharm el sheikh 2.5 Tbilisi Milan 3.8 Batumi Moscow 2.3
Source: www.flighttime-calculator.com
Colliers International Georgia 24The Reliance of The Georgian
Economy on Tourism
The reliance of the Georgian economy on tourism same category, and the recovery period will be
has increased significantly in the last couple of years. extensive.
In 2019, tourism made up 8.1% of the Gross
Georgia mainly receives tourists from its neighboring
Domestic Product of Georgia.
countries. Leading countries by the number of
Domestic tourism has a small role in the sector tourists in Georgia are Russia, Turkey, Armenia,
overall and takes up a mere 27% (percent of local Azerbaijan, Ukraine, and the EU countries
tourists in the total number of tourists staying at collectively. In order to make an accurate estimate of
hotel-type accommodations). With these numbers, future visitors to Georgia, the spread of the virus in
Georgia appears in the lower right corner of the said countries must be taken into consideration, as
graph (close to Greece). It is expected that the crisis when these countries will be able to stop the spread
will have a significant effect on the hotel industry of the virus.
and the economy in general for countries in the
DOMESTIC TOURISM RELATIVE TO TOURISM AS A PERCENTAGE OF THE ECONOMY, 2019
Significant impact on the hotel industry Significant impact on the hotel industry
and economy, prolonged recovery and economy, gradual recovery
Significant impact on the hotel industry Significant impact on the hotel industry but
but less on the economy, slow recovery less on the economy, faster recovery
Source: Colliers International
Colliers International Georgia 25Tbilisi Hotel
Market Overview
Photo: Panorama Freedom SquareSupply
Tbilisi’s hotel market provides the largest share of EXISTING HOTEL ROOM SUPPLY BY YEARS
hotel rooms in Georgia. In 2019, the existing supply
consisted of 541 hotels, with a total of 12,430 rooms.
The largest share, 41% of rooms, are categorized as
economy/budget, while 38% fall in to the local 5,119
upscale and middle segment, 13% into the 3,888
international midscale segment, with only 8% of the
4,744
total room supply categorized as international 5,222
upscale. 4,046
4,728
The total supply of rooms increased by 22% in 2019 4,251
when compared to 2018. However, the tourism sector 2,820
2,335 2,348
suffered due to the ban on flights to Georgia from 1,573
972 1,091 1,423
Russia in July 2019. Until 2017, there were only three 972
632 1,010
376 590 590
international upscale hotels in Tbilisi: the Radisson Blu
Iveria, Tbilisi Marriott and the Biltmore hotel. In 2018, 2015 2016 2017 2018 2019
the Sheraton Grand Tbilisi Metekhi Palace, Wyndham Local Economy/Budget Class Local Upscale and Middle Class
International Midscale Class International Upscale Class
Grand Tbilisi, and Stamba Hotel entered the market.
Together, these hotels provide 5% of the city’s total Source: Colliers International
room supply. Nine more international upscale brands,
EXISTING SUPPLY BY YEARS
among them Hilton, Marriot Autograph Collection,
Radisson Red, and Tbilisi Hyatt, are expected to open 27,165
during the next few years, adding 706 hotel rooms to
22,661
the capital’s stock. 21,319
18,329
International midscale hotels provide 13% of the 14,692
city’s hotel room supply. Eight hotels are categorized 12,430
9,466 10,107
in this segment, consisting of Courtyard Tbilisi, 8,360
6,656
Rooms Hotel Tbilisi, Holiday Inn Tbilisi, and Mercure
Tbilisi Old Town. Five hotels are expected to open in 287 352 379 426 541
this segment over the next three years, including Park
2015 2016 2017 2018 2019
Inn by Radisson, Swissotel, Hilton Garden Inn,
Number of Hotels Number of rooms Number of beds
Wyndham Garden and Ramada Tbilisi (Melikishvili).
Together, they will add 655 rooms to the supply. Source: Colliers International
Looking ahead, 18 international hotels are scheduled
to open during the next three years, which will result The stock of international hotel
in around 3,296 new rooms joining Tbilisi’s stock. rooms is expected to double by 2023.
EXISTING AND FUTURE SUPPLY OF INTERNATIONALLY-BRANDED HOTELS
38
36
31 12,165
11,535
10,231
20
18
15 6,256 5,879
5,266 5,539
10 11 4,602
9 4,256
3,190 3,451
2,760 2,979
2,583
1,681 2,055
1,348 1,562
2015 2016 2017 2018 2019 2020 2021 2022 2023
Number of Hotels Number of rooms Number of beds
Source: Colliers International
Colliers International Georgia 27MAP OF EXISTING AND UPCOMING
INTERNATIONAL HOTELS
Majority of upcoming announced hotels are situated out
of central hotel cluster. In particular, Vake district features
three major hotel developments.
EXISTING INTERNATIONAL HOTELS
Capacity of
# of
# Operator Location Owner Conference Class
Rooms
Rooms
1 Radisson Blu Iveria 1 Rose Revolution Square JSC New Hotel 249 645 Upscale
Sheraton Grand Tbilisi Metechi Ras Al Khaima Investments
2 Palace
16 Telavi Street
Authority Georgia
220 2,472 Upscale
3 Wyndham Grand Tbilisi 3 Gudiashvili Street City M 158 350 Upscale
4 Tbilisi Marriott 13 Shota Rustaveli Avenue GMT Hotels 127 427 Upscale
5 The Biltmore Hotel 29 Shota Rustaveli Avenue Dabi Group Georgia 214 1,104 Upscale
6 Stamba Hotel 14 Merab Kostava Street City Loft 42 230 Upscale
7 Holiday Inn Tbilisi 1 26 May Square Adjara+ 270 712 Midscale
Hotels & Preferences Hualing Joseph Pilsudski Avenue, Tbilisi
8 Tbilisi Sea
Hualing Group 246 1,410 Midscale
9 Ibis Tbilisi Stadium 178 Aghmashenebeli Avenue Stadium Hotel 150 - Midscale
10 Moxy Tbilisi by Marriott Saarbrucken Square GMT Hotels 130 - Midscale
11 Ibis Styles Tbilisi Center 4 G.Tabidze Street MaQro Construction 119 - Midscale
MaQro Construction
12 Mercure Tbilisi Old Town 9 Vakhtang Gorgasali Street 108 65 Midscale
13 Courtyard Tbilisi 4 Freedom Square GMT Hotels 118 662 Midscale
14 Citadines City Centre Tbilisi 4 Freedom Square Amtel Properties Georgia 66 - Midscale
15 Rooms Hotel Tbilisi 14 Merab Kostava Street City Loft 125 818 Midscale
16 Ramada Encore 15 Kazbegi Avenue M2 152 145 Midscale
17 Best Western Tbilisi Art Hotel 11 Apakidze Street Tifli Development 45 222 Midscale
18 Best Western Tbilisi City Center 92 Vasil Barnovi Street Bani 2007 44 - Midscale
Colliers International Georgia 28PIPELINE OF INTERNATIONALLY-BRANDED HOTELS
# of Opening Construction Investment
# Developer Operator/brand Location Class
Rooms Year Type Volume
Axis/Georgian Co- AccorHotels/ Pullman 37-39 Chavchavadze
1 226 2020 Upscale Greenfield
Investment Fund Hotels & Resorts Avenue
Georgian Co- Panorama Freedom
2 Freedom Square 220 2021 Upscale Greenfield
Investment Fund Square
Paragraph Hotel
Georgian Co- & Convention
3 Sololaki Hills 208 2022 Upscale Greenfield
Investment Fund Center/ Panorama
Sololaki
4 Granat Georgia Hilton Tbilisi 41 Kostava Street 206 2021 Upscale Brownfield
Radisson Blu
5 Silk Road Group LLC 31 Rustaveli Avenue 180 2023 Upscale Brownfield
Telegraph
Georgian Co- Paragraph Golf & Spa
6 Tabori Mount 176 2022 Upscale Greenfield
Investment Fund Resort
Rustaveli Property
7 Tbilisi Hyatt 30 Rustaveli Avenue 170 2022 Upscale Greenfield
LLC
44 Agmashenebeli
8 Telegraph LLC Radisson Red 110 2021 Upscale Brownfield
Avenue
Kempinski Hotels 22 Zaal Dumbadze USD 900 mln
9 M2 Residence 99 2021 Upscale Greenfield (incl.VAT)
Tbilisi Street
10 Beta Group Ibis Budget Tbilisi 14 Uznadze Street 227 2022 Midscale Brownfield
LLC Block-
11 Park Inn by Radisson 10 Chanturia Street 200 2021 Midscale Brownfield
Investment
64 Chavchavadze
12 Redix Hilton Garden Inn 170 2020 Midscale Greenfield
Avenue
Hilton Garden Inn
13 KIT 2016 17 Ialbuzi Street 161 2021 Midscale Greenfield
Tbilisi Riverside
49G Chavchavadze
14 Alliance Group Wyndham Garden 160 2023 Midscale Greenfield
Avenue
15 Beta Group Ibis Budget Vera 22 Akhvlediani Street 158 2021 Midscale Brownfield
16 Archi Group Ibis 22 Gulua Street 156 2022 Midscale Greenfield
16 Macro Construction Swissotel 3 Virsaladze Street 145 2021 Midscale Greenfield
17 M2 Residence Ramada Tbilisi 10 Melikishvilis Street 125 2021 Midscale Greenfield
Simetria/Capitol
18 Holiday Inn Express 4 Lagodekhi Street 121 2021 Midscale Greenfield
Investment Group
LLC Block- Louvre Hotels
19 2A 300 Aragveli Street 78 2021 Midscale Greenfield
Investment Group/Golden Tulip
Colliers International Georgia 29Photo: Wyndham Grand Tbilisi
Demand
The number of tourists in Tbilisi usually follows the BREAKDOWN OF HOTEL GUESTS BY
trend of the whole Georgia. Despite the decreased PURPOSE OF VISIT, 2016-2018
number of Russian tourists due to flight bans,
there was no significant decline in the annual 11% 15%
17%
tourist inflow. Georgia managed to partially
substitute it with a significant increase in demand 22% 15%
25%
from non-neighbouring countries, as well as with
internal tourism.
Travellers from Russia, Turkey, Iran, and Azerbaijan
67% 70%
comprise the majority of Tbilisi’s hotel guest 58%
numbers. The number of guests in Tbilisi hotels
increased by 7% year-on-year (y-o-y) in 2018, with
70% of those guests visiting Tbilisi for leisure and
15% in town on business. 15% of hotel guests are 2016 2017 2018
locals and 85% international visitors. Tbilisi’s hotels Leisure & Recreation Business Other
hosted around 1,743,000 guests in 2018. Source: Geostat
Ministers of tourism from several dozens of
countries will gather in Tbilisi in September 2020 to
discuss the future prospects of the tourism
industry at a ministerial under the aegis of the
United Nations World Tourism Organisation
(UNWTO).
Colliers International Georgia 30Performance Indicators
The hotels’ market has witnessed a decreasing stability yet, also reduces the average indicators of
trend in all main performance indicators during past international upscale hotels.
few years. The main reason for this downward
The average daily rate (ADR) in Tbilisi decreased in
going trend is not only the increased supply of
2019 in all segments. As Georgian Lari critically
hotels since 2017, but the strengthening
depreciated against USD Dollar in 2019, the ADR in
competition of Airbnb as well.
USD terms significantly changed. A substantial
Occupancy rate recorded a decrease in all segments decrease (13% y-o-y) was recorded in International
in Tbilisi after 2017 due to the abovementioned Upscale class hotels.
reasons. Additional cause of the sharp decline in
the occupancy rate in 2019 could also be the flight
bans from Russia, which negatively affected tourism Among different classes, international upscale
industry. Relatively to other hotel segments, hotels suffered from the sharpest fall in
international upscale, as well as local upscale and
performance indicators in 2019, supposedly
midscale hotels experienced the higher occupancy
rate in 2019 amounting to 62% each. The fact that due to increased supply by 60%.
Sheraton Grand Metekhi Palace has not reached a
ADR (USD, excl. VAT) 2015-2019
177 175 175
2015 2016 2017 2018 2019
161
152
118
112 108 104
94
77 79
72 72
61 57
39 43 39
36
International Upscale Class International Midscale Class Local Upscale and Middle Class Local Economy/Budget Class
Source: STR Global, Colliers International
OCCUPANCY RATE (%) 2015-2019
2015 2016 2017 2018 2019
70% 69%
68% 70% 68% 69% 68%
65% 64% 64%
62% 60% 62% 64% 62%
57%
55% 54%
48%
46%
International Upscale Class International Midscale Class Local Upscale and Middle Class Local Economy/Budget Class
Source: STR Global, Colliers International
Colliers International Georgia 31Performance Indicators
Revenue per available room (RevPAR) experienced in 2019. It is followed by the local upscale class with
significant decline in 2019 in all segments of hotels, USD 38 and local budget class with USD 18, both
which is caused by the increased competition all declining by 23% and 25%, respectively.
segments, combined with the decreased inflow of
tourists due to the flight bans from Russia.
In 2019, a substantial decrease was seen in
The figure for International upscale class hotels
stands at USD 94, decreasing by significant 22%.
RevPAR across all hotel classes ranging from
International midscale class also recorded the 15% up to 25%.
decline in the REVPAR by 15%, standing at USD 57
REVPAR (USD, excl. VAT) 2015-2019
2015 2016 2017 2018 2019
121 123 120
113
94
77 74
71
67
57
53
47 46 49
38
27
22 24
19 18
International Upscale Class International Midscale Class Local Upscale and Middle Class Local Economy/Budget Class
Source: STR Global, Colliers International
Colliers International Georgia 32Photo: Airbnb Listing, Tbilisi
Airbnb Market in Tbilisi
The daily rental, home-sharing platform Airbnb, MONTHLY AVERAGE NUMBER OF ACTIVE LISTINGS
offering around 7 million listings in more than 100 K AND BOOKED PROPERTIES BY YEARS
cities, operates in 220+ countries and regions. Since
its launch in early 2008, the website has grown 6,658
rapidly in popularity among tourists and domestic
travelers all around the world. As of 2019, the
platform has more than 750 million guest arrivals.
3,732
In Georgia, the rental platform was launched in early
2017. Even though it was a novelty for locals, by the 2,020
end of the year, the platform had around 6,319
active listings. The figure impressively grew in 2018, 6,319 10,248 14,418
with 62% more listings, amounting to a 10 K monthly
average. 2017 2018 2019
Relatively to 2018, in 2019 the number of properties Active listings Booked Properties
listed on Airbnb also saw a substantial growth by Source: AirDna
41% from 10,248 to 14,418 average monthly listings.
However, this is 2.2x higher than the average number
of booked properties (that is 6,658 in 2019). MARKET REVENUE BY YEARS (USD)
The median ADR of entire homes in Tbilisi has seen a
slight decline during past 3 years, standing at USD 33
in 2019. The market revenue of Airbnb has been 35,174,352
55%
characterised by a steadily increasing trend over the
past few years, having grown by 55% from 2018 to
81% 22,747,078
2019. This trend reveals the fact that Airbnb is
successfully competing with local budget hotels and
gradually taking up a larger portion of their 12,548,464
consumers.
The Airbnb market is impressively competing 2017 2018 2019
with hotels, almost tripling its total market 2017 2018 2019
revenue since 2017. Source: AirDna
Colliers International Georgia 33You can also read
