Issue 5, 2013. October-November

   

URBAN RENEWAL PROGRAM OFFERS NEW LIFE FOR VILLAGES, SOVIET-ERA RESORTS

The World Bank's Regional Development Program, together with local governments and the Ministry of Infrastructure and Regional Development, has already brought an estimated $17 million of direct and indirect private investment to Kakheti. Now, they hope to duplicate their success with the western Georgian region of Imereti.

Molly Corso

A multimillion dollar World Bank (WB) program is betting better roads, modern sewage systems, and updated infrastructure can convince Georgian and foreign businesses to invest in the once-famous village resorts that dot the Georgian countryside.

From the mud baths and wine vineyards of Kakheti, to the thermal water springs of Imereti, Georgia was once synonymous with Soviet holidaymaking and curative water treatments.

Years of neglect, however, turned once prosperous villages into poverty- stricken rural communities that lacked the resources to attract tourists or modernize their fading resorts.

Today, however, the Georgian government, together with WB and private investors, are eyeing the aging sanatoriums for a possible foothold in the $2 trillion global spa and wellness market.

Sanatoriums in Tskaltubo are predominately state owned. Some, however, have been purchased by private investors.


Ahmed Eiweida, the sustainable development sector leader for South Caucasus at the WB, said the program is focused on using the regions' strengths - like their spa legacy - to help attract investment.

"We have a regional development program for Georgia and we are using the regional development approach ... to generate employment in the private sector ... by making the regions attractive to private sector to invest [in] and thus create investment, invest jobs," he said.

"While doing that we are improving the living conditions of people, we are improving connectivity, and we are improving the situation and targeted intervention in each region based on its competitive advantages."

The WB has already had some success: after investing in Kakheti's tourism infrastructure, roads, water systems, and modernizing the region's approach to marketing, the regional development project helped bring $17 million of direct and indirect private investment, including the country's first wine spa, Kvareli Eden Spa.

The resort opened in March, and now, according to director Khatia Benidze, is working on attracting tourists and educating people about its unique spa facilities.

"The potential of Georgia to become a spa destination is pretty strong, considering that this will be a new destination. We will have to educate even better the population, organize more activities and promotions," she said.

"Our target market is [the] population of Georgia with medium and high income, wine lovers and experts, who appreciate the wine-making tradition of Georgia and are open to live a different experience using wine not only via drinking, but also in [a] therapeutic way."

Other resort areas are also hoping to tap into Georgia's potential as a spa destination.

Mariam Surmava, the administrative manager at Sairme Hotels and Resorts, agrees Georgia has the potential to attract guests for spa and wellness treatments.Sairme is already attracting guests from around the world: this year, most of the main hotel's 5,000 visitors came from post-Soviet countries like Kazakhstan and Azerbaijan.

Tskaltubo, a well-known sanatorium center during the Soviet Union, is also a potential favorite for spa tourism. Together with the government, the WB is investing $37.5 million in upgrading the region's infrastructure; 75 percent of the funds have been earmarked for Tskaltubo.

Plans for the aging resort include an overhaul of its water and sanitation systems, as well as the resort's 80-hectare city parks and train station.

Revitalizationis a key part of the World Bank's strategy for aiding economic development in the region, Eiweida stressed.

GNIA is in the process of creating a strategy for developing the sanatoriums in Tskaltubo


"[T]he vision for our investments in Tskhaltubo is for Tskhaltubo to regain its glory. You know in the Soviet time, it was the spa and wellness and sanatorium destination for the entire Soviet Union," he said.

A resort of sanatoriums, Tskaltubo was a playground for the Soviet elite and a place of rest and healing for the USSR's sick for generations. Thermal water and mineral springs provided curative treatments for everything from skin diseases to infertility.
The Georgian government is also interested in developing Tskaltubo: the question of investing in the resort was raised during the official launch of Prime Minister Bidzina Ivanishvili's initiative - the Georgian Co-Investment Fund - on September 30.

Giorgi Pertaia, the head of the Georgian National Investment Agency, told Investor.ge that the agency is planning to commission an international study to explore the best development options for the resort.

"Tskaltubo has a huge potential, because of the water first of all ... because of the nature and because of the buildings that we have right now," he said.

"One of the important things, on top of everything else we have, is that Tskaltubo is already a brand. In Georgia people don't know so much about Tskaltubo as in Moscow and in Kazakhstan."

Eiweida noted that a revival is already underway in the resort: one sanatorium, the Tskaltubo Spa Resort, opened in 2011.

He said Tskaltubo also has the potential to tap into the global trend for spa and wellness tourism.

"It is a specialized kind of tourism....Tskaltubo targets a special niche of tourists who look for spa and wellness," he said.