Issue 2, 2012. April-May

   

HOTELS: OPTIMISM GROWS IN 2012

A recent report by KPMG indicates that occupancy rates, and confidence, in the Tbilisi hotel sector grew in 2011 and are expected to continue to grow in 2012.

Longer Season, Higher Occupancy

The increase in visitors, i.e. business travelers and tourists, coming to Tbilisi has pushed up occupancy rates and extended the hotel sector's ‘peak' season, according to data compiled by KPMG for a hotel overview published in February.

While business travelers are the main stay for Tbilisi hotels, making up 67 percent of all guests in 2010, the latest statistics available, show that 12 percent of the guests were "leisure travelers" and 21 percent were visiting for "other purposes."

The volume of guests has shifted the hotels' peak and "shoulder" periods, noted Andrew Coxshall, KPMG's managing partner in the Southern Caucasus.



The "shoulder" period refers to the months between high and low occupancy seasons.

"Obviously if you looking at London or Paris there would be less of a peak season, shoulder season [but] for this type of destination, that seemed completely inline with what we expect," he said.

"The season does appear to be getting longer. I think you probably saw that last year when you see tourists in March and April and still here in October. The peak is sort of coming down a little bit."

Currently high season is from April to June and from September to November, with July and August considered "shoulder" months. Occupancy rates were 79 percent during the peak of the season, and down to 51 percent in the low period. Shoulder months saw an occupancy level of 65 percent.

Room rates, however, did not "show significant variation" depending on the season: international chains charge between $119 for a standard single to $710 for an executive suite. While chains are more popular, according to the survey, local hotels charge less: a standard single starts from just $70.

High hotel costs have been an issue in the past, but Coxshall noted that Tbilisi room rates are comparable with neighboring Azerbaijan.

The report noted that the average traveler to Tbilisi spent $151 per day on lodging, food, and beverages in 2010, higher than the $103 per day average for the CIS but lower the European average, $202.

High Occupancy, Higher Demand?

But is the increase in occupancy enough to satisfy the hotel projects planned for the city? Currently there are six international hotels already operating in Tbilisi, and a Hilton, Rixos, and others either under construction or in the planning stages.

The report notes that business travelers prefer to stay in chain hotels over local establishments, a tendency that is understandable, noted Coxshall, adding that a lot comes down to "brand recognition."

"Business travelers are generally going to want to go to somewhere they know," he said.

"They know the Radisson, they know the Marriott."

The report noted that the number of rooms in Tbilisi is projected to increase from 3,323 in 2010 to an approximate 3,812-4,438 in 2016.