Issue 3, 2018. June-July

   

SWOT: GEORGIA'S TOURISM AND HOSPITALITY SECTOR

Investor.ge is introducing a new platform for members to learn more about each other. It is dedicated to showcasing our members' opinions and concerns about the issues that are important for them. The second feature in this series is the tourism and hospitality sector and we asked AmCham companies involved in the field about growth, challenges and prospects for the sector.


A May study by Galt&Taggart found that tourism is "the most flourishing part of the Georgian economy."

Not only have tourism numbers been increasing significantly over the past several years, but the sector was unaffected by regional economic turmoil in 2015-2016.

In fact, the $2.8bn earned by the tourism sector in 2017 helped Georgia to "significantly reduce the country's current account deficit," the report said, noting that it fell to single digits (8.7 percent of GDP) that year.

"Importantly, Georgia has never seen a decline in its tourism revenues-not even in 2009 and 2015, beating peers which experienced reduced tourism revenues in those years," the report said.

In addition, the report found that tourism numbers should double over the next five years. That does not mean, however, that increased revenue will automatically follow, warned Galt&Taggart Economist Eva Bochorishvili.

"Given the ongoing trend in arrivals as well as examples of other comparative countries, we think that doubling of tourist number in the next five years is quite realizable. However, more tourist arrivals do not mean that revenues in the sector will increase by the same rate if the services Georgia offers to tourists will not be further diversified," she told Investor.ge.


"So the emphasis should be on diversification of tourist services and quality of service in order to generate more revenues in the tourism sector," Bochorishvili added.

Tourism and hospitality professionals agree. In a survey of AmCham members involved in the tourism industry, many pointed out the need to do more to continue developing and growing the sector. They also underscored the many strengths and opportunities in the sector.

Georgia's strengths

From culture to climate, safety to accessibility, professionals in the tourism industry in Georgia say the country has an incredible number of strengths to build on.

Georgia's biggest strength is the "heartfelt experience" it offers tourists, noted Hilton Batumi's Torsten Weller.

"From my professional point of view the strengths are definitely the culture, it is the heartfelt hospitality, the feeling you get from the people who live in Georgia, from the Georgians, who are really welcoming and hospitable," he said.

"It is the culture, the culinary, it is the wine, the landscape, the people themselves...everyone who experiences this is bragging about it. That is why we [tourists] want to come back," Weller said.

Riverside Hotel's Dito Shvelidze agreed that Georgia's legendary hospitality plays an important role. "People here are very hospitable and go the extra mile to make guests' stay unforgettable," he said.

The country's ancient culture heritage is an important draw for tourists, noted Alliance Group Founder Akaki Songulia.


He added that Georgia's liberal visa policy and public safety also add to its ability to attract tourists.

Others underscored the sheer variety Georgia offers tourists, in terms of where to go and what to do-as well as in terms of budget.

"Georgia is a wonderful, adventurous, and curious place to visit. Not only for those who come to see the nature but also if you just walk around the capital. Online services and maps are fairly easy to use and the multiple taxi services are also helpful. There are lots of choices for accommodation which enables tourists to visit on almost any budget," Betsy's Hotel owner, Steve Johnson, said.

"For a small country, it's capacity to offer vastly different experience options is truly astounding-one can relax at a high-end hotel in the city center and head toward the wilderness of mountainous villages within a blink of an eye. Exciting destinations coupled with the easy immigration laws, investment friendly climate and political stability contribute to the recent growth spurt of Georgian tourism sector," Radission Blu Iveria Hotel Tbilisi's Avtandil Tsurtsumia said.

Challenges to overcome

Overwhelmingly, tourism professionals told Investor.ge that infrastructure remains a real challenge for the industry.

"The country's biggest challenge is to develop infrastructure not only in major cities but in regions and villages as well. It is also important to raise the tourism education, especially in rural areas, to directly involve local communities in the management of regions tourism and to make it more effective," Vinotel's Benedikt Kashakashvili said.

Batumi Hilton's Torsten Weller also noted the need to provide people with better infrastructure to move around the country. He said the work on the new roads connecting Batumi and Kutaisi as well as between Batumi and the capital are a "very great start" but more work is needed.

In addition, Weller pointed out to the high cost of flying into Batumi.

Others echoed his concerns about the flights into the country-a situation that is improving, but still requires work.

"It has been, and continues to be a challenge for the airlines arriving and departing in the middle of the night into and out of the capital. Kutaisi's airport is a good option for less expensive flights and better arrivals and departures but, not for the main tourist trade since it is located 3-4 hours drive from Tbilisi," noted Johnson.

He added that finding quality studies on how much tourists are spending-and on what-is still difficult. Johnson underscored that this is "important information" and the data that is available also seems to be "over reported and inaccurate."

Songulia said more hotels are needed, especially mid-class hotels in the regions outside of the capital. But he stressed that a qualified workforce is also necessary to fill the demand.

"Service quality and qualified management is what Georgia's hospitality sector needs to strongly focused on," he said.

Others echoed his concerns.

"Human capital remains a serious challenge within the hospitality sector. Whilst there are educational institutes that provide training in this field, and develop local talent, as the hospitality sector grows, further specific training is required to enhance and develop service delivery and educate on current trends in order to be competitive to other destinations and to meet and exceed customers growing expectations," noted Cameron McNeillie, Multi-property General Manager, Marriott Hotel, Courtyard by Marriott, and Moxy Hotel.

"The increased tourism figures are creating further jobs opportunities within this sector, however the lack of educational institutes are apparent and certainly need to be a future consideration," he said.

Opportunities for Georgia's tourism sector

Providing affordable education is actually "the biggest opportunity in this sector," McNeille noted.

He added that Georgia also needs a proper convention center, which "if in place, could attract large international business in order for Georgia to compete within the international arena."

Valeri Chekheria, the director general of Adjara Group Hospitality, noted the potential of agro-tourism as well as wellnesss tourism.

Tsurtsumia also pointed out to the opportunities to expand "existing popular locations" and explore lesser known, but equally interesting parts of the country, including Racha, Imereti and other regions.

Vinotel's Kashakashvili agreed.

"One of the important directions of hospitality and tourism development in Georgia is to increase adventure tourism and to move toward sustainable tourism development in mountain regions, to place mountains and alpine areas in a dominant position, as mountain tourism represents an important segment of the global tourism industry today," he said.

Vakhtang Chipashvili, the general manager of Best Western Tbilisi Art Hotel, noted that the tourism sector has the "opportunity and huge potential to increase of economic contribution, social, cultural and humanity heritage values."

"To capture the country's full potential, we have to explore new opportunities. Aparthotels are becoming popular accommodation, both in sea and ski resorts and this could be a good solution for tourism development in different parts of Georgia," noted Songulia.

Batumi Hilton's Weller noted that Georgia has a great opportunity to continue to grow as a tourism destination, especially if the country is able to create and promote a united "story" about Georgia as a destination.

"What do people like? They like to listen to a story," he said, noting that a good narrative about a place-like Italy and France have accomplished-attracts people and makes them want to learn more. "I think a story would be a great opportunity, it would be more effective to the outside world [to package] all those heartfelt experiences."

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