By Kate Tabatadze
USD 2 billion income from tourism in 2015, additional USD 148 million in January-April, 2016, significant share in GDP- accounting for 6.7% -all that means accommodating up to 6 million international visitors. Market players agree that 5-star segment in the country is, at a great extent, saturated and now it’s time to take a new challenge-middle class hotel business is the next best deal on the table.
“Georgia has done a good job so far of steadily growing its offer both in terms of quantity and quality. The country has a much differentiated offer today than it had ten years ago. As the country progresses and the industry across all sectors develops, there will be need for more accommodation in future,” Mark Finney, Head of Hotels and Resorts Consulting at Colliers International, told Property Georgia. “There’s an opportunity for more middle-class and lower budget hotel development in Georgia. I see lots of new projects arriving in 5-star high end market, but we should not forget 3-4-star segment, for there are more who would pay $100 rather than $200 a night. The other thing, which I think the country has not capitalized on yet, is the potential for leisure tourism. You have a fantastic potential in MICE business and also for holiday tourism-related to activities like wine tours.” In his words, this needs to come with an improved air access, which means more direct flights to major population centers. “For all the problems you may have something must be right if people are coming here and this number is increasing,” added Finney.
Colliers International Georgia is a leading global real estate services company, providing a full range of services to real estate occupiers, developers and investors on a local, national and international basis. Headquartered in London, its clients benefit from the experience and expertise of 16,000 professionals operating out of 554 offices in 66 countries.
Mark Finney was one of the speakers at the MEETING ROOM event organized by PASHA Bank on May 25. The first topic of the new meeting concept launched by the bank was Hotel Development in Georgia. PASHA Bank confirmed its readiness to finance the hospitality market in the country: “We’ve decided to arrange MEETING ROOM gatherings with the representatives of concrete sectors that are interesting to us and hotel business is on of them,” declared Shahin Mammadov, CEO and Chairman of the Board of Directors at PASHA Bank. As later Goga Japaridze, CCO and Member of the Directors at Pasha Bank, said the bank has a good practice of financing Four Seasons hotel in Azerbaijan. “We’ve done that in Baku and have big hopes up in Georgia as well. Pasha Bank can offer very flexible conditions to the developers planning to open and run a hotel here.”
PASHA Bank is a Baku-based financial institution operating in Azerbaijan, Georgia and Turkey, providing a full range of corporate and investment banking services to large and medium-sized enterprises. PASHA Bank presents a regional bank, which is a part of PASHA Holding - a diversified investment group with interests in banking, insurance, property development, construction, tourism and other sectors. As of December 2015, the total assets of PASHA Holding are approximately USD 5 billion. The bank has been operating in Georgia since 2013. As of December 2015, total assets of Pasha Bank exceeded GEL 278 million.
With 3-star hotel business model on mind for future, Axis currently develops a 5-star brand project in Tbilisi. According to Goga Kapanadze, CEO of the company, it took them one year to get the contract signed with ACCOR for bringing Pullman in Georgia. The upscale international hotel brand will receive gusts at Axis Towers in 2018. “It was hard but we made it. The most important part in the relations with an international company is to choose the right brand which is going to be mutually successful and Pullman is the one,” stated Goga.
Building an exclusive architecture multifunctional complex in partnership with a renowned global hospitality company Marriott international is what Alliance Group takes credit for. As Akaki Songulia, Director General of the leading local developer, told Property Georgia, Alliance Palace in Batumi is the pioneer project by Alliance Group combining Courtyard by Marriot hotel and premium apartments: “The history of a successful company always begins with bold ideas of a creative person. This is exactly how the history of the Alliance Group started in 2005. The first project we carried out was revolutionary for Georgia at that time – we built the very first modern residential house in Batumi. Later in 2008 our team came up with a new product-apart hotel concept, which became a milestone in attracting investments in Batumi. Last but not least, last year Alliance Group took it to the next level and signed a franchise agreement with Marriott International.”
The founders of the Alliance Group, in cooperation with the Orbi Group and other companies, have built more than 20 residential complexes and aparthotels, 5000 apartments, and more than 1 200 000 m2 of construction area.
Georgian government offers a number of incentives to hotel operators, one of them being 50% franchise fee financing. However, according to Giorgi Chogovadze, Head of Georgian National Tourism Administration, this does not work for Tbilisi and Batumi.
As it looks, no brands, no matter how giant they may be, are too big for Georgia when it comes to tourism. “The reservations that are already made, especially in Adjara, shows that we are going to have a very good year,” noted Giorgi Chogovadze, Head of Georgian National Tourism Administration. As Chogovadze stated, based on January-April, 2016 data, the number of international visitors has grown by 15.4%.
