2010-11Sep-Mar Hotel Market ENG

Nikoloz Kevkhishvili- Real estate research manager a 24 Kazbegi Avenue, Tbilisi 0177, Gerogia e [email protected]; [email protected] i www.gremic.ge t [995 32] 207337 f [995 32] 207447 m [995 77] 303326

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mailto:[email protected]

mailto:[email protected]

HOTEL MARKET RESEARCH APRIL-SEPTEMBER 2010/11

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CONTENT

01. Conclusion ................................................................................................................................................................. 4

02. supply ........................................................................................................................................................................ 5

03. Hotel classification .................................................................................................................................................... 7

04. Demand ..................................................................................................................................................................... 9

05. Tbilisi hotel market ................................................................................................................................................. 11

International Brands ....................................................................................................................................................... 13

Business class hotels ....................................................................................................................................................... 14

middle class hotels .......................................................................................................................................................... 14

economy class hotels ...................................................................................................................................................... 14

06. Black sea resorts’ hotel market ............................................................................................................................... 15

Batumi ............................................................................................................................................................................. 17

Gonio/Kvariati/Sarpi ....................................................................................................................................................... 19

Kobuleti ........................................................................................................................................................................... 19

Ureki ................................................................................................................................................................................ 20

07. Georgian winter resorts .......................................................................................................................................... 21

Bakuriani ......................................................................................................................................................................... 22

Gudauri ........................................................................................................................................................................... 26

Mestia ............................................................................................................................................................................. 26

08. Benchmarking ......................................................................................................................................................... 27

09. Appendix ................................................................................................................................................................. 28


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Following research is done by “Georgian Real Estate and Investments Management Company”. During

preparing research we used information provided by developers, brokers, some governmental organizations

(National Agency of Public registry, National Statistics Office of Georgia, National Bank of Georgia, Ministry of

Economy and Sustainable Development of Georgia, Tbilisi City hall). Also information from famous

Georgian/International publications is included in this research. (www.cbre.com, www.colliers.com,

www.armstat.am, www.azstat.org, www.worldbank.org, www.imf.org www.makler.ge,

www.sapovnela.ge, , www.eqo.ge, www.mymakler.ge, www.saqme.ge catalog “Sitkva da Sakme”)

Besides this, our research is based on the local market knowledge and past experience.

Information, used in the research, is objective and we believe that it represents the real situation on the

Georgian Hotel market in 2010/11. Despite this fact we are not responsible for the correctness of this

information.

“Georgian Real Estate and Investments Management Company” is not responsible for the possible results of

activities made by customers/readers of the following research.

http://www.cbre.com/

http://www.colliers.com/

http://www.armstat.am/

http://www.azstat.org/

http://www.worldbank.org/

http://www.imf.org/

http://www.makler.ge/

http://www.sapovnela.ge/

http://www.eqo.ge/

http://www.mymakler.ge/

http://www.saqme.ge/


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01. CONCLUSION

During analyzing Georgian hotel market in 2010/11 the following trends were revealed:

⇒ Total supply of hotel rooms in Georgia increased by 1.5% during last 6 months. At this moment it consists of 9,300 hotel rooms, where about 21,000 guests can be placed. It should be noted, that country’s tourism potential is much more, which is determined by multitude of accommodation places in resort areas.

⇒ By the date of March 2011 four international Brands are represented in Georgia. And their share is about 10% of total supply (‘Sheraton’, ‘Marriott’ ‘Radisson’ ‘Holiday Inn’). During next 2-3 years ‘Kempisnki’, ‘Intercontinental’ and ‘Hilton’ are going to open their Hotels.

⇒ About 26% of total supply comes to Tbilisi hotels. 1/3 comes to Black sea hotels and 14% - to Georgian winter resorts.

⇒ Arrivals of non-resident visitors at national borders of Georgia were increasing gradually from 2003 and this growth has not stopped during Georgian-Russian war and global economic crisis in 2008-09. In 2010 2.032 million non-resident

visitors arrived in Georgia, which is 41% more than the same figure in 2009.

⇒ Most hotels in Georgia are occupied seasonally. The highest occupancy rate is in Tbilisi (Annual occupancy rate 46%), which is caused by high activity of business sector. Batumi has higher occupancy (Annual 42%) than other Black sea resorts. Several entertainment and business activities explain this fact.

⇒ During last 6 months in Tbilisi and black sea resorts average room rate decreased by 11%. Average room rate in Tbilisi ranges from 220 GEL to 330 GEL. Black sea resorts’ room rates range from 70 GEL to 1770 GEL.

⇒ The room rate reduction was accompanied by shortening of occupancy rate, that’s why revenue per available room decreased significantly.

⇒ The biggest share of Georgian winter resorts comes to Bakuriani (73%). It’s followed by Gudauri (22%) and Mestia (5%).

⇒ As usual, January is the most occupied month (90%-95% monthly occupancy rate) in Georgian winter resorts, but in

2011 it actually fell, because snow has come only in February. As a result, in 2011 the most occupied month was February in Gudauri and Bakuriani. Monthly occupancy rate in this month was 71% in Bakuriani and 77% - in Gudauri.

⇒ In 2011 the highest average room rate Georgian winter resorts was in Gudauri (160-230 GEL). Mentioned figure was about 1.6 and 2.4 times higher than the same figures in Bakuriani and Mestia. It should be mentioned that average room rate in Georgian winter resorts in 2011 was 20-30% less than in previous year.

⇒ Hotel rooms per 1000 residents are unequally distributed in some tourism regions of Georgia. Despite the fact that number of rooms in Tbilisi increased from 1.95 to 2.06 during last 6 months capital of Georgia is still behind than European cities, where this figure is about 14-18.

⇒ Construction work in progress with slow rates as it was scheduled in free tourism zones, but completing of these projects will increase countries’ tourism potential significantly.


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02. SUPPLY Total supply of Georgian hotel market consists of 9,300 hotel rooms, where about 21,000 guests can be placed. About 26% of total hotel rooms come to Tbilisi hotel market. Also, capital of Georgia is distinguished by its service comparing to another hotel regions.

About 26% of total supply comes to Tbilisi hotels. 1/3 comes to Black sea hotels and 14% - to Georgian winter resorts. (See chart 1). Hotel room supply increased by 1.5% during last 6 months on the markets that were studied by us. Mentioned changes were caused by opening several new hotels in Tbilisi and Black sea resorts. Considering current constructions and Future projects, significant increase of hotel room supply is expected during next several years.

Most hotels in Georgia are occupied seasonally. The highest occupancy rate is in Tbilisi, which is caused by high activity of business sector. Batumi has higher occupancy than other Black sea resorts and several entertainment and business activities explain this fact. (Chart 2)

During last 6 months in Tbilisi and black sea resorts average room rate∗decreased by 11%. This reduction was accompanied by shortening of occupancy rate, that’s why revenue per available room decreased significantly∗.

∗ In the specific Geographical area average room rate is calculated by weightening of average prices in different segments of local hotels (In proportion with total number of rooms in this segment) ∗ REVPAR is calculate by multiplying room rate and occupancy rate

26%

15%

3%

8% 5% 10%

3% 1%

29%

CHART 1 HOTEL ROOM DISTRIBUTION 2010

Tbilisi Batumi Gonio/Kvariati/SarfiKobuleti Ureki BakurianiGudauri Mestia Other

46% 42%

19% 16% 17% 25%

15%

0%

10%

20%

30%

40%

50%

60%

CHART 2 OCCUPANCY RATE (YEARLY) 2010

290

150 100

130 85 100

150 133 63

19 21 14 25 23 0

100

200

300

400

CHART 3 ROOM RATE AND REVENUE PER AVAILABLE ROOM (REVPAR) GEL 2010/11

AVERAGE YEARLY ROOM RATE REVPAR


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As chart 4 shows, hotel rooms per 1000 residents are unequally distributed in some tourism regions of Georgia. The highest figure is in Bakuriani, which is caused by few residents and the fact that most residents are engaged in hotel business.

Despite the fact that number of rooms in Tbilisi increased from 1.95 to 2.06 during last 6 months capital of Georgia is still behind than European cities.

.

2.06

10.92

3.40 8.23 6.48

29.50

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

CHART 4 NUMBER OF ROOMS/PER 1000 RESIDENTS 2010


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03. HOTEL CLASSIFICATION

99% of Georgian hotels have no stars, based on international standards. ‘Global Star ‘officially assigns stars to hotels, restaurants, cafes and warehouses in Georgia. Criteria’s for estimating hotels are based

on international standards of assigning stars recognized by ‘Hotelstars’. The mission of the union is to establish common platform for hotels in Europe.

⇒ Process of assigning stars has several steps: ⇒ Announcement for the classification ⇒ Audit and estimating ⇒ preparing the valuation report ⇒ Assigning stars ⇒ Periodic audit

The company is headed by 270 criteria, which are divided into the following main parts:

1. Building/rooms clearness/Hygiene Fixed asset conditions General performance Customer registration Room Space Social space Conditions for Disabled people Parking Different

2. Furniture/Equipment Sanitary Amenities Slipping comfortably Room equipment Noise control/Air conditioning Broadcast power devices Telecommunication

different 3. Service Cleaning rooms/linen change beverages Breakfast Feed Reception Laundry and cleaning services Payment Different

4. Rest Internal equipment and services Spa/Cosmetics Different

5. Create high-quality offering Complaints Management System Customer survey Mystery client Quality management system Different

6. Conference facilities Conference Rooms Telecommunications/Media Equipment/Technologies

Criterias, mentioned above, have other sub-criterias and they are used in order to calculate scores and assign stars.

Scores are distributed in this way:

90-170 Score 170-250 Score 250-380 Score 380-570 Score

570-650 Score


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Periodic monitoring and audit is necessary in order to maintain assigned number of stars. (I st year-4 audit, II year-3 audit, III year-2 audit, IV year-1 audit)

Hotel management can gain many different benefits, collaboration with ‘Global Star’:

⇒ Corresponding European standards ⇒ Assigning recognized stars ⇒ Assigning recognized certificate ⇒ Placing in the ‘Global Star’s guide ⇒ Using Logo of ‘Global Star’ ⇒ Participating in the annual quality competition ⇒ Engagement of ‘Global Star’ in hotel PR

Campaign ⇒ Staff education and certification

⇒ Advertising campaign to local and international tourism agencies

⇒ Using recognized stars on local and international web-sites

By the date of March 2011, 20 hotels have assigned stars by ‘Global Star’. 4 of them were assigned during last 6 months.

During winter season 2010-11 company assigned stars to 9 guest-houses in Bakuriani.

International hotel brands represented in Georgia have stars which belong directly to these brands. Each hotel which is managed by these brands automatically gains stars.

Star quantity

Location

Tbilisi 0 1 2 0 0

Batumi 0 2 4 4 0

Other Black Sea resorts 1 2 1 0 0

Bakuriani 0 1 4 6 0

Gudauri 0 0 0 0 0 Other 0 0 0 1 0 Total 1 6 11 11 0


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04. DEMAND During last few years, Georgia had political development, economic growth, and international advertising campaign. Arrivals of non-resident visitors at national borders of Georgia during 2000-2010, make us sure, that interest about country as desired tourism and investment destination increased significantly. (Chart 5)

Mentioned figure was increasing gradually from 2003 and this growth has not stopped during Georgian-Russian war and global economic crisis in 2008-09.

During first 3 months in 2011 486,506 non-resident visitors arrived in Georgia, which is 41% more than the same figure in 2010.

Most of the tourists arrive from the former Soviet Union countries and from Europe (Chart 6). According countries, most of the tourists in 2010 arrived from Armenia-547,162, Azerbaijan-498,570 and Russia-171,124.

Most non-resident visitors come in Georgia for recreation purposes – 32%, 28% comes to Business purposes. (Chart 7)

63%

33%

2% 1% 1%

CHART 6 DISTRIBUTION OF NON RESIDENT ARRIVALS BY CITIZENSHIP 2010

CIS EUROPE WITHOUT CIS SOUTHERN ASIA AMERICAS OTHER

387,258 302,215 298,469 313,442 368,312 560,021

983,114 1,051,769 1,290,107

1,500,049

2,032,586

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CHART 5 NON-RESIDENT VISITORS IN GEORGIA 2000-2010

32% 28%

24% 4%

3% 3% 2% 2%

1% 1%

recreation

proffesional

visiting friends and relatives

shopping

education

transit

working in local company

other

piligrim

healthcare

CHART 7 PURPOSE OF VISIT IN GEORGIA OF NON RESIDENT PERSONS 2010


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Chart 8 shows, that more than half of non-resident visitors in Georgia choose hotels and hotel-type facilities for accommodation. 34% visit their relatives’ and friends’ houses.

Main part of international tourists during 2010 spent 5 days in Georgia. Much less percentage comes to greater duration visits. (Chart 9)

Below is more detailed description of major hotel markets in Georgia.

46%

9%

34%

3% 3% 1% 4%

CHART 8 ACCOMODATION OF NON-RESIDENT VISITORS IN GEORGIA 2010

hotel, Sanatorium Guest-house, Famili-house Relatives or friendsTrain or Bass Parking, Camping Hostel/Self serviceother

59%

20%

7%

2%

1%

4%

7%

0% 10% 20% 30% 40% 50% 60% 70%

<5

6-10.

11-15.

16-20

21-25

26-30

>30

CHART 9 NON-RESIDENT VISITORS' VISIT DURATION 2010


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05. TBILISI HOTEL MARKET

Tbilisi hotel market number of

rooms Oct-Mar 2010-11

Room rate Apr-Sep 2010 GEL/Person/Night

Room rate Oct-Mar 2010/11

GEL/Person/Night Room rate

change

Occupancy rate Apr-Sep

2010

Occupancy rate Oct-Mar

2010-11

Annual Occupancy

min max min max

International Brands

760 480 750 430 600 -16% 41% 35% 38%

Business Class 833 170 330 160 270 -14% 60% 51% 56%

Middle Class 398 120 200 120 180 -6% 49% 37% 43%

Economy Class 386 70 100 60 110 0% 50% 37% 44%

Sun/Average 2377 230 390 220 330 -9% 51% 41% 46%

Hotels in Tbilisi can be divided in 4 main segments: International Brands, Local high class hotels, middle class hotels and economy class hotels. Considering the fact that the majority of tourists have business visit in Tbilisi, hotels mainly serve business segment. Tourists, who stay in Tbilisi for recreation and relaxation represent minority, because they travel in other parts of the country and stay in Tbilisi for 1-2 days.

Hotels in Tbilisi have 2400 rooms, where fits approximately 4 600 persons. The majority of rooms come on business class hotels (35%) and international brands (32%). Middle and economy class hotel rooms represent the minority.

During next 2-3 years some international brand hotels will be added to the number of Tbilisi hotels that will increase the supply of rooms by 15-20%.

According to the 2010-2011 October-March statistics occupancy rate in Tbilisi hotels decreased average by 5% in comparison to the same index

of 2010 April-September and equaled 46%. From the hotels located In Tbilisi business hotels are mainly

occupied, their occupancy rate equals 56%.

International Brands

32%

Business Class 35%

Middle Class 17%

Econom Class 16%

CHART 10 HOTEL ROOM DISTRIBUTION BY CLASSES 2011

41%

60% 49% 50%

35%

51%

37% 37% 38%

56% 43% 44%

0%

20%

40%

60%

80%

100%

International Brands Business Class Middle Class Econom Class

CHART 11 OCCUPANCY RATE 2010/11

Apr-Sep 2010 Oct-Mar 2010/11 Annual


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During 6 months on the Tbilisi hotel market room rate decrease by 11% and now the price range is 230-385 GEL.

The prices have mainly decreased on international brand segment (-16%), which is derived from the appearance of new international brand “Holiday Inn” on Tbilisi hotel market, here room rates are 70% less than the same figure in other international Brand hotels.

By this time International brand hotels in Tbilisi have standard prices: Deluxe rooms’ price range is 430-600 GEL. High class hotels 160-270, middle class hotels 120-180 GEL and economy class hotels is 60-110 GEL.

In comparison with 2010 April-September statistics during next 6 months occupancy rate and room rate decreased in Tbilisi hotels that caused decrease in REVPAR.

Revenue per available room is the highest in International Brand hotels. This figure does not include incomes from additional hotel services. (Café bar, spa, fitness centers, restaurants and etc.) This kind of incomes usually takes 40% of the whole revenue.

85 160

250

615

85 150

215

515

0

100

200

300

400

500

600

700

Econom Class Middle Class Business Class International Brands

CHART 12 ROOM RATE (GEL/PERSON/NIGHT) 2010/11

Apr-Sep 2010 Oct-Mar 2010/11

35

96 123

308

30

77 79

191

0

50

100

150

200

250

300

350

Econom Class Middle Class Business Class International Brands

CHART 13 REVPAR (GEL) 2010/11



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INTERNATIONAL BRANDS


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BUSINESS CLASS HOTELS

35% of hotel rooms in Tbilisi come to local high class hotels. Target segment of these hotels is foreign visitors, who arrive in Georgia with business and professional purposes. Besides foreign guests, local organizations are active users of high class hotels’ conference halls. Some high class hotels in Tbilisi are: ‘ambasadori’, ‘Betsi’, ‘British house’, ‘Primavera’, ‘Victoria’, ‘Kala’, ‘Kopala’, ‘Old Metekhi’, ‘Old Tbilisi’, ‘Vere-Palace’ and act.

Due to the fact, that local business class hotels have low international awareness, low prices and high quality of service are their competitive advantage. ‘Global star’ works hard in this hotel segment, which assigns stars according above mentioned criteria.

Majority of business class hotels are located in central districts of Tbilisi and in historical parts of the city. Beautiful views appear from hotel rooms and guests can use several other facilities of the hotels such as: restaurant, bar, swimming pool, conference hall and etc.

MIDDLE CLASS HOTELS

Middle class hotels are scheduled for business segment, but they don’t have full infrastructure which is necessary for business people. About 17% of hotel rooms in Tbilisi come to middle class hotels and room rate ranges between 120-180 GEL.

ECONOM CLASS HOTELS

Besides High and middle class hotels significant share of total rooms comes to economy class hotels. These hotels mostly serve to local customers and international guests who are going to stay in Tbilisi 1-3 days and then to go to different tourism destinations in Georgia. Conference halls, restaurants and Bars are less available in economy class hotels. They follow ‘The Bad and Breakfast’ principle and the highest occupancy have in summer time.

During last few years popularity of Guest houses rose significantly because they offer to their Guests fill themselves in family atmosphere, relax and share Georgian traditions.


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06. BLACK SEA RESORTS’ HOTEL MARKET

Black sea resorts’ hotel market

Number of rooms Oct-

Mar 2010-11

Apr-Sep 2010 room rate GEL/Person/Night

Oct-Mar 2010/11 room rate GEL/Person/Night *

Room rate

change

Occupancy rate (season

2010)

Occupancy rate (non-

season 2010/11) *

Annual occupancy rate

min max min max

Batumi 1349 110 220 80 180 -21% 78% 32% 42%

Kobuleti 750 70 150 903 2103 36% 69% 4% 16%

Gonio/Kvariati/Sarpi 320 90 170 50 90 -46% 75% 9% 19%

Ureki 505 50 120 50 110 -6% 68% 8% 17%

Sum/Average 2924 90 180 70 170 -11% 73% 18% 30%

During last few years, hotel market in Georgian Black sea resorts increased significantly, this fact is confirmed by increased demand and supply in Adjara (Cart 14; 16). By the date 2010 number of accommodation objects is 5 times more than the same figure in 2000. Potential of the Adjarian region increase by 7 times during last 10 years. At the moment Adjarian region can host about 55,500 guests in 1 day, which is 39% higher than the same figure in 2009 and 48% higher than - 2008. About 80%-90% of accommodation objects come to houses and apartment buildings, but increasing number of hotels and hotel type facilities is observed during last few years. We have studied major Black sea hotel markets (Batumi, Gonio, Kvariati, Sarpi, Kobuleti and Ureki) and found that total number of hotel rooms is 2,924 and they can host 6,674 guests. The vast majority of hotel rooms (46%) in Adjarian region are concentrated in Batumi (Chart 15) * This figure includes average prices only those hotels, which were operating during October-March 2010/11

* This figure is calculated by dividing of occupied rooms in specific period to total rooms available in this region during the same time.

50 51 54 56 58 58 66 69

117

229 246

8 8 8 8.2 10.2 11 27.3 27.2 28.8 34

55.5

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CHART 14 SUPPLY IN ADJARIAN REGION 2000-2010

number of accomodation objects number of beds (thousands)

46%

25%

11%

18%

CHART 15 HOTEL ROOM DISTRIBUTION IN ADJARIAN REGION 2010

Batumi kobuleti Gonio/Kvariati/Sarfi Ureki


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Increased demand, derived from Georgian and foreign tourists, has led Adjarian hotel market supply to increase. In 2010 974,000 tourists visited Adjara, which is 76% more than the same figure in 2009 and 242% more than 2008. In 201 and 2012 about 1 and 1.5 tourists is predicted to visit Adjarian region respectively. Chart 17 shows distribution of visitors by Adjarian regions. Most share of visitors - 57% come to Batumi and the least share comes to Kholo region, but implementation of projected ski resort in Khulo will cause increased number of visitors in Adjarian highlands. As Chart 18 shows, highest occupancy rate∗, in Adjarian region is in Batumi. This is caused by developed infrastructure and correctly implemented marketing activities. Major entertainment and

corporate events around the year is held in Batumi. In winter season occupancy rate in other Black sea resorts opposite to Batumi decreases dramatically, and vast majority of hotels work seasonally.

∗ In order to calculate annual occupancy rate in Black sea resorts, length of summer season is considered as 80 days and length of the non-season period is considered as 280 days

14 14 12 71 75 120 183 240 209 392

662

4 4 4 4 8 27 67

112 76

162

312

-

200

400

600

800

1,000

1,200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

CHART 16 NUMBER OF VISITORS (THOUSANDS) 2000-2010

resident non-resident

57% 29%

13% 1%

CHART 17 DISTRIBUTION OF VISITORS BY ADJARIAN VISITORS 2010

Batumi Kobuleti Khelvachauri Khulo

32%

4% 9% 8%

78% 69% 75% 68%

42%

16% 19% 17%

0%

20%

40%

60%

80%

100%

CHART 18 OCCUPANCY RATE 2010/11

non-seasone seasone annual


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BATUMI

Batumi Number of rooms Oct-

Mar 2010-11

Apr-Sep 2010 room rate GEL/Person/Night

Oct-Mar 2010/11 room rate GEL/Person/Night * Room rate

change

Occupancy rate (season

2010)

Occupancy rate (non-

season 2010/11) *

Annual occupancy

rate

min max min max

Business class 781 140 290 100 250 -19% 80% 33% 43%

Middle class 280 80 150 60 110 -26% 76% 31% 41%

Economy class 288 60 100 40 60 -38% 72% 29% 39%

Sum/Average 1349 110 220 80 180 -21% 78% 32% 42%

Batumi has the same increasing trend in hotel market as in whole Adjarian region. Development of infrastructure and international marketing campaign of the city caused significant increase of tourists’ interests for Batumi (Chart 19). On the other hand grown demaid resulted increased supply of hotel rooms.

We studied 62 hotels in Batumi. 99% of them operates around the whole year. Total number of hotel rooms in Batumi is 1,349 and 2,767 guests can be placed there.

Hotel market in Batumi can be devided into 3 different segments. The biggest share comes to business class hotels (58%), 21%-21% comes to middle and economy class hotels. Average room rates during October-March 2010/11 is 21% lower than the same figures during April-September 2010. In the summer time average room rate in Batumi range from 80 GEL to 215 GEL, and in the other period of the year-50 GEL-17%GEL.

53,655 102,079 131,059 129,092 181,160

390,306

13,120 32,165

58,637 50,636 80,623

167,333

-

100,000

200,000

300,000

400,000

500,000

600,000

2005 2006 2007 2008 2009 2010

CHART 19 VISITORS IN BATUMI 2006-2010

resident non-resident

58% 21%

21%

CHART 20 DISTRIBURION OF HOTEL ROOMS IN BATUMI 2010/11

Business class Middle class Economy claaa


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Room rates in most hotels in batumi change seasonally in accordance with demand. We can say that there is established ‘August price’, which is 30%-40% more than average annual room rates. comparing to August prices Jule and September prices. are lower and they are followed by June and October prices. Other moths’ room rates are much lower. The highest occupancy rate in Batumi have business class hotels as during seasone as well as during non-seasone period. That’s why their share in total supply is much more than other segments’ share. The highest occupancy rate is in august, when about 95% of hotel rooms are occupied. During seasone average occupancy rate in Batumi is 78%. The same figure during other part of the year is 32%. If we consider Summer time as 80 days

(End of June, Jule, August, and initial period of September) Annual Occupancy rate in Batumi is 42%. Because of the fact that highest room and occypancy rate in Batumi is in business class hotels, revenue per available room in this segment is 2-3 times higher than the same figure in middle and economy class hotels.

From future projects new ‘Redisson’ hotel should be noted which will host first guests in summer 2011. Total space of this hotel will be 85,253 square meters and will include 220 hotel rooms.

During next 2-3 years several large progect constructions are planned. As a result, hotel room supply in Batumi will double.

# Project Total space

Number of rooms

1 Batumi Gate 890,555 397

2 Radisson 22,792 166

3 Kempisnki 85,253 220

4 Hilton 74,000 250

5 Boutique Hotel N/A 40

7 Batumi Plaza N/A 53

sum 1,072,600 1126

80% 76% 72%

33% 31% 29% 43% 41% 39%

0%20%40%60%80%

100%


CHART 22 OCCUPANCY RATE IN BATUMI 2010/11

seasone non-seasone annual

215

115 80

175

85 50

0

100

200

300


CHART 21 ROOM RATE IN BATUMI GEL/PERSON/NIGHT 2010/11


173

87 57 58

27 15 -

100

200

biznes klasi saSualo klasi ekonom klasi

CHART 23 REVPAR IN BATUMIi 2010/11

seasone non-seasone


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GONIO/KVARIATI/SARPI

The most active tourism destination from Khelva-chauri region is Go-nio/Kvariati/Sarpi segment. about 11% of Ajdarian region hotel rooms comes to this part.

⇒ By the date of march 2011 total number of hotel rooms in Gonio/Kvariati/Sarpi segment is 320 and about 800 guests can be accomodated there in 1 night.

⇒ According to hotel occupancy in this region seasonality is highly expresed unlike the hotels in Batumi.

⇒ During the Summer seasone 2010 average occupancy rete in this rehion was 75%

⇒ During October-March 2010/11 only 7 hotels were operating in this segment and average occupancy of these 7 hotels were 21%. Average occupancy of the whole region in the same pariod was inly 9%.

⇒ As a result, Annual occupancy rate of Gonio/Kvariati/Sarpi hotels is no more than 19%

⇒ At the summer time room rate is between 90-170 GEL and in the rest of the year – 50-90 GEL

KOBULETI

According to number of visitors in Adjara Kobuleti region is next to Batumi. In 2010 276,880 tourists visited Kobuleti region which is 29% of total visitors in Adjara. (Chart 17) We analyzed major hotels located in Kobuleti region and concluded main trends: ⇒ By the date of march 2011 total number of hotel rooms

in Kobuleti is 750, where about 1800 visitors can be accomodated per night

⇒ During the Summer seasone 2010 average occupancy rete in this region was 69%

⇒ Vast majority of hotels in Kobuleti operate only in Summer.

⇒ During October-March 2010/11 only 6 hotels were operating in this region and average occupancy of these 6 hotels were 8%. Average occupancy of the whole region in the same pariod was inly 4%.

⇒ As a result, Annual occupancy rate of Gonio/Kvariati/Sarpi hotels is no more than 16%

⇒ During April-September 2010 average room rate in Kobuleti was 70-150 GEL. During October-March 2010/11 several high class hotels were operating (‘Georgia Palace’, ‘oasis’’ Sanapiro’ ‘Beach club’) and average room rate of these hotels were 90-210 GEL.

⇒ Construction work in progress with slow rates as it was scheduled in Kobuleti free tourism zone, but completing of these projects will increase hotel room supply in this region approximately by 60%.

.


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UREKI

According the medical prospects of its beach, Ureki serves different visitors as other Black sea resorts. Vast majority of visitors in Ureki are Georgian families and they spend about 7-10 days in this resort. Ureki is less developed part of Black sea resorts according to infrastructure, but increasing demand and supply during last few years in this region will cause infrastructure development.

⇒ By the date of march 2011 total number of hotel rooms in Ureki is 505 and about 1333 guests can be accomodated there per night. most of the hotels are located at the beach near magnetite tertitory.

⇒ During the Summer seasone 2010 average occupancy rete in this region was 68%

⇒ Vast majority of hotels in Ureki stop opperating after Summer period

⇒ During October-March 2010/11 only 6 hotels were operating in this region and average occupancy of these 6 hotels were 19%. Average occupancy of the whole region in the same pariod was inly 8%.

⇒ As a result, Annual occupancy rate of Gonio/Kvariati/Sarfi hotels is no more than 17%

⇒ During April-September 2010 average room rate in Kobuleti was 50-120 GEL. During October-March 2010/11 several high class hotels were operating and average room rate in this period was 50-110 GEL.


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07. GEORGIAN WINTER RESORTS By the date of March 2011 total number of hotel rooms in Georgian winters resorts is 1,300 that can accommodate 3,600 visitor per night. The biggest share of hotel rooms in Georgian winter resorts comes to Bakuriani (73%). It’s followed by Gudauri (22%) and Mestia (5%). It’s planned to construct ski resort in highlands of Adjara and according this total supply of winter resorts will increase during next years.

In 2011 the most occupied month was February in Gudauri and Bakuriani. Monthly occupancy rate in this month equaled 71% in Bakuriani and 77% - in Gudauri.

As usual, January is the most occupied month (90%-95% monthly occupancy rate) in Georgian winter resorts because school holidays coincides with this period, but in 2011 it actually fell, because snow has come only in February.

In 2011 the highest average room rate Georgian winter resorts was in Gudauri (160-230 GEL). Mentioned figure was about 1.6 and 2.4 times

higher than the same figures in Bakuriani and Mestia. It should be mentioned that average room rate

in Georgian winter resorts in 2011 was 20-30% less than in previous year.

Georgian winter resorts Number of rooms

Number of beds

Room rate in winter GEL/person/Night Occupancy rate

min max January February March

Bakuriani 935 2565 90 150 27% 71% 26%

Gudauri 287 861 160 230 5% 77% 49%

Mestia 66 139 40 120 N/A N/A N/A

73%

22% 5%

CHART 24 HOTEL ROOM DISTRIBUTION IN GEORGIAN WINTER RESORTS 2011

Bakuriani Gudauri Mestia

27%

71%

26%

5%

77%

49%

0%

20%

40%

60%

80%

100%

January February March

CHART 25 OCCUPANCY RATE IN GEORGIAN WINTER RESORTS 2011

Bakuriani Gudauri


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BAKURIANI

During analyzing of Bakuriani hotel Market following trends were revealed:

As usual, ski season in Bakuriani lasts during three months –from the end of December till the end of March. The most occupied month is January because school holidays coincide with this period. Average occupancy rate in January is about 90%-100%. Number of visitors decline from February and for the end of March hotel occupancy rate equals its minimum.

Mentioned trend was violated in this year, because snow has come only in February. That’s why the most occupied month in winter 2011 was February. Occupancy rate in January was only 27%.

Summer season is shorter than winter season in Bakuriani and lasts from the mid July till the end of August. Occupancy rate in summer is less than in winter. That’s why some hotels terminate stop in summer.

Major customers in summer seasons of Bakuriani hotels are mothers with children who prefer relaxing in clean

environment. In winter several different segments visits the resort.

In spring and autumn operate only several high class hotels which switch to serve local corporate clients and foreign tourists who visit Borjomi region for camping purposes. Occupancy rate in spring and autumn is about 10%.

Vast majority of hotels change their room rates according to period. Summer season prices are 30-40% lower than winter prices, which is caused by ceased demand.

Currently several development projects are being constructed in Bakuriani. Most of them are hotel-type houses. Their prices range from $500 to $1200 per square meter.

According to the Georgian tourism department, share of foreign guests in total visitors in Bakuriani is about 9%. The same figure in 2009 was only 5%.


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Hotel market in Bakuriani can be devided into 3 different segments. BIG HOTELS In Big hotels we consider hotels, which can accommodate 60 or more guests per night. By the date of March 2011 there are 11 big hotels in Bakuriani and they can place 1,116 persons per night in 427 hotel rooms. Most of the big hotels in Bakuriani constructed for business customers as they have conference halls, wifi, restaurants, spa, fitness centers and other facilities. In winter 2011 Average room rate in big hotels varied from 120-220 GEL, which is 54% more than the same figure in summer 2010. Occupancy rate in big hotels remains more stable around the year than in middle family/Guest houses, because many corporate events are held during spring and autumn periods. He highest occupancy rate in big hotels in Bakuriani was in February (72%). The same rate in January and March was much less (22% and 27% respectively). MIDDLE GUEST HOUSES Vast majority of such hotels include about 10 hotel rooms and can accommodate approximately 30 guests. As usual, local families own

and serve these types of hotel. The largest share of total hotel room supply in Bakuriani comes to middle guest houses (508 rooms and 1,449 beds).

In winter 2011 Average room rate in middle guest houses varied from 70-120 GEL, which is twice more than the same figure in summer 2010, but is 15%-20% less than the same figure in winter 2010 this was caused by

Bakuriani hotels Number of rooms

Number of beds

Room rate in summer

GEL/person/night

Room rate in winter GEL/person/night

Occupancy rate

Summer Winter

min max min max July August January February March

Big hotels 427 1116 100 120 120 220 34% 62% 22% 72% 27%

Family/Guest houses 508 1449 40 50 70 100 32% 71% 31% 69% 25%

Sum/Average 935 2565 70 80 90 150 33% 67% 27% 71% 26%

34%

62%

22%

72%

27% 32%

71%

31%

69%

25%

0%

20%

40%

60%

80%

July August January Fevruary March

CHART 26 OCCUPANCY RATE IN BAKURIANI 2010/11

big hotels guest houses

110

170

45

85

0

50

100

150

200

summer winter

CHART 27 ROOM RATE GEL/PERSON/NIGHT 2011

big hotels guest houses


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warm weather and decreased demand. In this year highest occupancy rate in middle guest houses was in February, when this occupancy rate equaled 72%. LOCAL FAMILIES Local families occupy major part of total supply. Prices in this segment is

3 times less than in guest houses and equal 20-30 GEL during winter season and 10-15 GEL in summer season. Food is not included in these prices and also service has much low quality, but demand is still strong because of low prices. In this year the highest occupancy rate in this segment was fixed in

February, but seasonal occupancy was much less than in previous years. According to data provided in 2010 about 2,000 person lives in Bakuriani in 455 families and this region can accommodate about 5,000 guests per night.


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1. �New House� 2. “Almarini” 3. “Villa Fagusi” 4. “Nini” 5. “Edelvais” 6. “Hotel X” 7. “Meridiani” 8. “Vilavita” 9. “villa Amirani’s Parki” 10. “Vila Parki” 11. “Marinino” 12. “Tinatini” 13. “Villa Bakuriani” 14. “Aisberg”

15. “Anga” 16. “Tbilisi” 17. “Tamar Mefe” 18. “Villa Gio” 19. “Etalasi” 20. “Apoloni” 21. “Iki Ski” 22. “San Maria” 23. “Melisi” 24. “Edemi” 25. “White House” 26. “Villa Georgia” 27. “Prima 2010” 28. “Eurika”

29. “Viqtoria” 30. “Dad” 31. “Elene” 32. “Kedari” 33. “Trialeti palase” 34. “Pol sporti” 35. “Cristal” 36. “Villa Palase” 37. “Gigo” 38. “Sandro Papa” 39. “Tetri Gedi” 40. “Saba” 41. “Smart Hausi” 42. “My house”

43. “Red House” 44. “Our School” 45. “Premier Palase” 46. “Lamani” 47. “Mgzavrebi” 48. “Sofross” 49. “Alpina” 50. “Vere Palase” 51. “Besti” 52. “Ckhratskaro” 53. “Viqtoria” 54. “Leonidi” 55. “Tega” 56. “Tovlis Babua”

57. “Olimpo” 58. “Varskvlavi” 1. “Olimpic Stari” 2. “K2 Group” 3. ”Bakurianis Ndzvebi” 4. “Hause Art” 5. “Mgzavrebi” 6. “Villa Mtashii” 7. “Sakhli near Didveli”

Existing Hotels Future Projects


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GUDAURI

⇒ Unlike Bakuriani, majority of hotels in Gudauri operate only in winter. In summer season small number of hotels function and they are mainly oriented on short-term travel tour services.

⇒ Ski tracks in Gudauri are more complicated and difficult than in Bakuriani that’s why Gudauri is more popular for international tourists.

⇒ According to Tourism Department in 2010 16% of Gudauri tourists represent international tourists. This index was 12% in 2009.

⇒ According to the statistics of 2011 in Gudauri hotels have up to 300 rooms that can accommodate 860 tourists.

⇒ In winter of the current year the average room rate in Gudauri hotels was 160-230 GEL, that was 60% high than prices in Bakuriani.

⇒ February was the most occupied month in 2011, when hotel occupancy rate equaled 70%

MESTIA

⇒ In 2011 ski resort has been opened in Mestia that influenced hotel market and increased supply by 5%.

⇒ Nowadays Mestia has 3 hotels (Tetnuldi; Mestia; Svaneti) containing 66 rooms that equals 140 customers.

⇒ In addition to these hotels, recently some guest houses have been added to the number of Mestia hotels and the number of available beds increased to 420∗.

⇒ It is worth mentioning that some new hotel construction is planned in Mestia, this fact will cause the resort share in whole supply to increase.

⇒ According to 2011 statistics the price range in Mestia hotels was 40-120 GEL.

∗ source: http://www.skigeorgia.ge/travel/AccommodationMestia.pdf

http://www.skigeorgia.ge/travel/AccommodationMestia.pdf


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08. BENCHMARKING During analysis of European hotel market it became clear that hotel average price in 2011 increased by 5-7∗ % in comparison of last year. Nowadays the average price in European hotels is 144 GBP per room∗. Prices in Tbilisi hotels (International hotels and high class hotels) are close to European prices and equal 140 GBP, but occupancy rate in Tbilisi is the lowest.

It is worth mentioning the Tbilisi is significantly behind west European hotels by the number of rooms per 1000 residents. In the cities of west Europe this index is 16, in Tbilisi there is only 2 rooms per 1000 residents. Taking into consideration future projects and plans above mentioned index will significantly increase. Appendix

∗source:http://www.hotelnewsnow.com/media/File/PDFs/monthly_charts/GlobalHotelReview_Media_February_2011.pdf

∗source:http://www.hrgworldwide.com/Portals/40/Documents/MediaCentre/HRG_press_releases/2011/HRG_2010_Hotel_Survey_150211.pdf

City Room Rate (GBP) Occupancy rate REVPAR £

Moscow 259 63.3% 164 Paris 201 70.0% 141 Zurich 199 58.3% 116 Rome 171 53.0% 91 Amsterdam 170 60.0% 102 Istanbul 163 70.0% 114 Athens 162 52.5% 85 London 157 73.5% 115 Brussels 148 64.0% 95 Vienna 140 73.0% 102 Tbilisi 140 47.2% 66

Madrid 128 69.7% 89 Kiev 125 55.0% 69 Berliner 119 63.0% 75

Prague 119 55.0% 65 Bucharest 117 57.5% 67 Lisbon 115 67.5% 78 Belgrade 112 55.0% 62 Warsaw 109 63.0% 69 Budapest 105 53.0% 56 Riga 103 65.0% 67 Tallinn 101 60.0% 61 Average 144 61% 89

http://www.hotelnewsnow.com/media/File/PDFs/monthly_charts/GlobalHotelReview_Media_February_2011.pdf

http://www.hrgworldwide.com/Portals/40/Documents/MediaCentre/HRG_press_releases/2011/HRG_2010_Hotel_Survey_150211.pdf


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09. APPENDIX Mentioned figures in above in this research are based on survey of the following hotels:

Tbilisi

Hotel Name

1 "Radisson Blue Iveria" 2 "Sheraton Metekhi Palace" 3 "Tbilisi Marriott" 4 "Courtyard Marriott"

5 "holliday Inn" 6 "Bazaleti Palace" 7 "Kopala" 8 "Betsi" 9 "Tiflis Palace" 10 "Varazi"

11 "Vere Palace" 12 "Ambasadori" 13 "Tori" 14 "Kolkhi" 15 "Cruise" 16 "GTM Kapan"

17 "Primavera" 18 "Old Tbilisi" 19 "Grand" 20 "D Plaza" 21 "Bomondi" 22 "KMM"

23 "Koka" 24 "Tbil hotel" 25 "City" 26 "Old Metekhi" 27 "ZP" 28 "Villa Rustaveli"

29 "Riversaide" 30 "British house" 31 "Vake" 32 "Demi" 33 "Butik Hotel" 34 "Irmeni"

35 "Prestige" 36 "Bomond Garden" 37 " Sympathy "


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38 "Iliani" 39 "Batesta" 40 "Vip Victoria"

41 "Vedzisi" 42 "Istanbul" 43 "Dzveli Ubani" 44 "Shardeni" 45 "Penthause" 46 "David"

47 "Muza" 48 "Villa Mtiebi" 49 "Armazi Palace" 50 "Georgia" 51 "Diplomat" 52 "Edemi"

53 "Vip" 54 "Sanapiro" 55 "Ponto" 56 "Ponto Tbilisi" 57 "David L" 58 "Lia"

59 "Panorama" 60 "Exclusive" 61 "Vip Club" 62 "Oda" 63 "Firosmani" 64 "Lagunasport Hotel"

65 "Tsitsinatela" 66 "Piza" 67 "Guta" 68 "Meridiani" 69 "Villa Dilara" 70 "ImereTi"

71 "Morkinali" 72 "Kartli" 73 "Georgian House" 74 "Skip Hotel" 75 "Agro Palace" 76 "House charm"

77 "Kolkhi" 78 "Medea" 79 "My House" 80 "Night House"


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81 "Roial" 82 "Clasici" 83 "Bu"

84 "Gutsa" 85 "Lile" 86 "Tela" 87 "Merilini" 88 "Riviera" 89 "Jekalto"

90 "Ifari" 91 "Elite" 92 "Nika" 93 "Omari" 94 "Mkudro" 95 "Pavo"

96 "Welcome” 97 "Vere Inn" 98 "Formula 1"


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Batumi

Hotel Name

1 "Sheraton Batumi" 2 "Intourist" 3 "Marina" 4 "Tanamgzavri" 5 "Alik"

6 "Sanapiro" 7 "Era Palace " 8 "Istanbul" 9 "Achi" 10 "Golden Star" 11 "Light hause"

12 "Chao" 13 "O. Galogre" 14 "City Star" 15 "Premier" 16 "Ritsa" 17 "G Bakuri"

18 "Batumi 2000" 19 "Mari" 20 "Boni" 21 "Merkuri" 22 "L Bakuri" 23 "Ankara"

24 "Marani" 25 "Victoria" 26 "Oskari" 27 "Amirani" 28 "Metropol" 29 "Old Batumi"

30 "Eleganti" 31 "Mgzavrebi" 32 "Voiage" 33 "Irise" 34 "Duta" 35 "Tsereteli"

36 "Adeli" 37 "Beso" 38 “Lux" 39 "Afsaross"


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40 "Astoria" 41 "Old Ship" 42 "Goga"

43 "Elada" 44 "Iliko" 45 "Rcheuli villa" 46 "Kazbegi" 47 "Class" 48 "Miriani"

49 "Ana" 50 "Makhinjaurii" 51 "Lotos" 52 "Ponto Maria" 53 "Planeta" 54 "Melisi"

55 "Revazi" 56 "Porto Sanko" 57 "Oto" 58 "Salome" 59 "Rio" 60 "Tiko"

61 "Interncional XXI" 62 "Rolandi"


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Gonio/Kvariati/Sarpi

Hotel Name

1 "Magnolia" 2 "Liza" 3 "Meri" 4 "Livane" 5 "Viola"

6 "Eva" 7 "Kilagze" 8 "Neptuni" 9 "Tamazi" 10 "Kvariati" 11 "Neptuni 2"

12 "Lazuri" 13 "Kameo" 14 "Pirveli" 15 "Martini" 16 "Giorgi" 17 "Siesta"

18 "Afsaross” 19 complex "Peisagei" 20 "Uchamzo"


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qobuleTi

sastumros dasaxeleba

1 "Georgia Palace" 2 "Kolkheti" 3 "Oasis" 4 "Tetri Etli" 5 "Kondori"

6 "Edemi" 7 "Green hause" 8 "Savane" 9 "Chveni ezo" 10 "Sakurorto Poliklinika" 11 "Chagara Urali"

12 "Fantazia" 13 " Purple Hotel" 14 " Pinewood" 15 "Sanapiro" 16 "Irise" 17 "Mango"

18 "Black Sea" 19 "Eldorado" 20 "El-Kopa" 21 "Beach Club" 22 " Sympathy"


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Ureki

Hotel Name

1 "Andamati" 2 "Prime" 3 "Elite" 4 "Tbilisi" 5 Sanatorium "Kolkhida"

6 "Eleganti" 7 "Kopala" 8 "Albatros" 9 "Riviera" 10 "Evkalipt" 11 "Tata"

12 "Tbiliselebi" 13 "Prestige" 14 "Bachana" 15 "Originali" 16 "Old House" 17 "Edemi"

18 "Mirage" 19 "Luka" 20 "Eldorado" 21 "White house"


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Bakuriani

Hotel Name

1 "Tbilisi" 2 "White House" 3 "Prima 2010" 4 "Victoria+" 5 "Mgzavrebi"

6 "Trialeti palace" 7 "Premier palace" 8 "New House" 9 "Almarini" 10 "Villa Fagusi" 11 "Nini"

12 "Hotel X" 13 "Edelvais" 14 "Meridiani" 15 "Villa Vita" 16 "Villa amirani’s Park" 17 "Tinatini"

18 "Villa Bakuriani" 19 "Mari Nino" 20 "Aiceberg" 21 "Anga" 22 "Tamar Mefe" 23 "Vila Gio"

24 "Etalasi" 25 "Apoloni" 26 "Iki Ski" 27 "San Maria" 28 "Melisi" 29 "Edemi"

30 "Vila Georgia" 31 "Dad" 32 "Elene" 33 "Kedari" 34 "Pol Sport" 35 "Gigo"

36 "Sandro Papa" 37 "Tetri Gedi" 38 "Saba" 39 "My House"


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40 "Our School" 41 "Lamani" 42 "Alpina"

43 "tskhratskharo" 44 "Victoria" 45 "Leonidi" 46 "Cristal" 47 "RedHouse" 48 "Sopross"

49 "Tega" 50 "Tovlis Babua" 51 "Olimpo" 52 "Varskvlavi" 53 "Noeli"


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Gudauri

Hotel Name

1 "Gudauri"

2 "Jvari Pass"

3 "Truso"

4 "Hati"

5 "syi Hause Panorama"

6 "Gagieti"

7 "Sunny House"

8 "Ozoni"

9 "7"

10 "Shamo"

11 "Shele"

12 "Toni Gudauri"

13 "Free Rider"

Mestia

Hotel Name

1 "Tetnuldi" 2 "Mestia" 3 "Svaneti"

2010-11Sep-Mar Hotel Market ENG

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