Issue 5, 2019. October-November



The Russian flight ban has hurt the Georgian economy to an extent, but the data show the damage has been limited, and that the push of recent years to diversify the tourism market in Georgia away from Russia and towards upper-income countries has partially made up for this year's set back.

Ernie Piper IV

Russian President Vladimir Putin's flight ban on all direct flights to and from Georgia sent the Georgian economy into a panic back in July. However, looking back at the figures from this summer, the losses have been considerably less than anticipated, and the ban's bark has been worse than its bite.

Understanding the ban

The ban prevented direct flights between Georgian and Russian airports. Russian tour companies also received a directive prohibiting them from selling package tours to Georgia.

However, the ban did not prohibit travel in general - the land border was not closed between the two nations and Russians can still fly to Georgia via a third country.

What do the numbers show?

Data from TBC Research shows that the ban's worst moments were brief: arrivals were down 21% in week 2 of July, but pressure let up by week 4, when arrivals were down just 6.8%.

Overall, the total picture in July was nowhere near the predicted catastrophe: the total number of Russian citizens entering Georgia in July decreased just 11.5% (25,238 visitors), coming out to 196,159 visitors in July 2019.

Not only that: the total number of tourists coming into Georgia in the month of July 2019 actually increased 1%, to 570,482 in July 2019.

In August, the news was even better: TBC Research data shows a continuing upward trend in recovery, with international arrivals up 7.4% between August 5 - September 1.

Moreover, TBC Bank predictions are optimistic: the tourism sector is set to grow over the next 12 months by 5%

Mitigating factors

One of the major factors not considered in the initial frenzy concerning the ban is the fact that the majority of Russian travellers to Georgia do not enter the country by plane in the first place.

According to data published by the Georgian National Tourism Administration, almost 65% of Russian travellers crossed the Georgian border by land in the third quarter of 2018, accounting for 640,900 visits.

Though the number of Russian citizens arriving in Georgia by air has shot up in recent years, bounding from 91,118 in the third quarter of 2016 to 135,416 arrivals in the same period in 2017, that figure still lagged significantly behind land arrivals in Q3 2018, coming in at 237,895.

This remained true in the early summer of 2019 as well, before the ban came into effect: of the 50,030 that came into Georgia in the first week of July, just 12,245 came in by plane.

Another mitigating circumstance was that the use of land routes by Russian passport holders from Russia and Armenia into Georgia also soared.

Interestingly, in the first few weeks of July, crossings at Russian-Georgian land borders took a hit. However by the end of July arrivals bounded up 15.3%..

Russian arrivals via the Armenian land border were up a steady 20% throughout the month.

As for the factual increase in inbound tourism, this can in part be explained by the influx of tourists from other markets - the number of travellers from the EU increased by on average 25% in the month of August, hitting a high of a 31% increase in the last week of the month.

Responses to the flight ban

Perhaps some of the anticipated damage was mitigated by the swift and impressive reactions of both the public, the private sector and the government.

Data supplied by GNTA

For its part, the American Chamber of Commerce in Georgia reacted even before the ban came into effect. AmCham was intensively involved in discussions with its members and the government about strategies to combat the challenges the ban would create.

As AmCham Executive Director George Welton said, "We involved ourselves in the response to the flight ban in a few ways.

"At the suggestion of members, we produced a letter that was distributed to the members, embassies and ministries and that was shared on social media, explaining that Georgia remains a safe destination. Then we collected information about member deals and promoted them, using both local and international AmCham networks. Finally, we worked with GNTA to identify sources of finance for short-term support regarding market-diversification. Since then AmCham has continued to work with the GNTA and the Ministry of Economy on tourism, most recently, supporting efforts to attract a direct flight to Georgia from the United States."

Data supplied by TBC Research

Meanwhile, the Georgian government allocated 600,000 euros ($664,000) in subsidies to Russian travelers flying to the airports of Tbilisi and Batumi from Russia via Yerevan, reducing fares and giving incentment to travelers of up to 90 euros off flights. In tandem, the Armenian government offered Yerevan as a transfer point, through which one Georgian and three Armenian airlines began scheduling Georgia-Russia connections.

The success of this gesture can be seen in the data: Yerevan's Zvartnots International had seen consistent growth in total passenger traffic of 11% YoY until July when the flight ban took effect: growth jumped to 18% YoY. In July 2018, the airport had 300,674 passengers, while this July it had 356,934.

The Georgia National Tourism Administration launched a media campaign to promote Georgia, and organized 50 press and info tours, hosting around 320 media representatives and tour operators.

Economy Minister Natia Turnava at the time said the aim was "to prepare articles about the country, its tourism potential and promote Georgia as a unique and safe destination in the world."

The GNTA also partnered with larger media companies like CNN to advertise the country's potential, which launched a tourism portal on its website with information about Georgia's culture, history and travel destinations.

Then-Prime Minister Bakhtadze announced two programmes on August 16.

"We understand that the tourism industry needs the most support right now... we have created two programmes to support small and medium enterprises operating in the field of tourism. One programme concerns supporting the construction of hotels... the second programme will supply co-financing for loans," he said.

However, perhaps the most inspiring response has come from the public. Despite having no experience in the tourism industry, five young women created the Facebook group (and corresponding Instagram hashtag) Spend Your Summer in Georgia, which managed to attract more than 200,000 members in a matter of weeks. The group gives tour companies and travelers the chance to connect, ask questions and share travel stories and photos.

"We expected some response but not such an impact. It was really awesome to see that lots of people were added to the group in a short time," said Nino Noghashvili, the creator of the group.

Noghashvili says the five group admins all have full-time jobs and manage the group in their spare time, promoting tourism through direct and indirect strategies. "We cooperate with different companies, which offer various exclusive services and discounts for the group,'' she said.

The effect on domestic tourism has been positive as well, Noghashvili noted. "I've heard a number of stories of Georgians deciding to travel in Georgia this summer, instead of going abroad. I even heard one Georgian couple canceled their honeymoon in Greece, and had it in Georgia."

Noghashvili plans to continue the initiative year-round, and in September changed the group's name to Spend 4 Seasons in Georgia.

Though it remains uncertain how long the flight ban will be in place - though Russian FM Sergey Lavrov said on September 26 that he is in favor of removing the flight ban - it is clear Georgia remains a favorite destination for Russian holidaymakers, and will continue to attract them into the future.

And the long-term outlook is promising: international visitors from just seven years ago rose from 4,428,211 in 2012 to 8,326,252 in 2018.

One would be hard-pressed to find another country that that attracted so many guests in such a short period of time.