Issue 3, 2016. June-July

   

BUILDING ON SUCCESS: A GOVERNMENT PROGRAM TO BOOST HOTELS IN MOUNTAINOUS AREAS

Investor.ge's Lika Jorjoliani spoke with Deputy Economic Minister Keti Bochorishvili about the government's new initiative to help encourage developers to build hotels in mountainous areas around the country.

Lika Jorjoliani

The Georgian government is betting on a new financing system to attract more hotels and services - and more tourists - to the country's remote mountain resorts.

From Bakuriani to Bakhmaro and every potential ski resort in between, the program foresees low interest rates and other business-friendly conditions to encourage businesses to build in potential hot spots for tourists.

"One of the main targets of the government is to transform mountain skiing resorts into four-season resorts," Deputy Economy Minister Keti Bochorishvili said.

The project, which is part of the government's Produce in Georgia program, also aims to increase the number of tourists, develop infrastructure in the regions and create local jobs, she noted.

Low-Interest Ioans

Bochorishvili said that Produce in Georgia studied the tourism market and found that more support was necessary to encourage developers to build accommodations in mountainous regions.

"The demand for high-quality hotels is constantly increasing, but for the entrepreneurs the key issue is financial availability," she said.

Therefore, the Ministry decided to make access to affordable financing the heart of the initiative, betting that more investment in high-value projects will led to economic growth in remote areas of the country.

Developers who build a hotel in a mountainous region within 24 months will pay annual interests rates of between zero to three percent for two years. The project also foresees "co-participation" worth half of the loan amount, Bochorishvili said.

If a developer brings an international hotel brand to Georgia, the project will provide some co-financing for the annual interest rate as well, and as much as a 300,000 lari for annual franchising and management costs for two years.

Plans Across the Country

There are already developments planned or underway in six of Georgia's mountainous resorts, she said.

A general development plan is being created for the Bakhmaro resort in western Georgia.

There is also a new general development plan for Gudauri, a popular ski resort, which includes the construction of additional three ropeways as well as work on the water supply system. There is also interest in creating ropeways connecting Gudauri with Kazbegi.

A second ski resort, Bakuriani, is slated for toboggan runs and a new park.

Three new ropeways and accommodations for 300 beds are planned for nearby Mitarbi, a resort not far from Borjomi.

In Svaneti, four new ropeways are planned for the Tetnuldi resort and, in Adjara, a master plan has been created for the newest ski resort in the country, Goderdzi.

In addition, this year the low-cost airline Wizz Air will open a regional base at the Kutaisi Airport. There are also more flights to Israel, Iran and Russia planned, she said.

Key to Developing Tourism sector

"Large-scale projects completed in mountain resorts are key to increasing the number of tourists," Bochorishvili said.

She noted that there have already been real successes, including the artificial snow systems in Gudauri and Bakuriani (Didveli); the creation of bike boulevards and parks in Bakuriani and Gudauri, built according to European standards; the opening of the Goderdzi Resort; and the establishment of a single ticket to all ski resorts for subscribers. The ticket would allow skiers to use services at Gudauri, Bakuriani, Goderdzi, Tetnuldi, and Hatsvali resorts.

"The implementation of these projects resulted in an increasing in the number of beds; for example in Gudauri, there was an 85 percent increase compared with 2010, and a 66 percent increase in the number of visitors," she said.

"According to research conducted by EY, there is the potential for three times the number of visitors - from half a million to 1.5 million."

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