2010-11Sep-Mar Hotel Market ENG

Nikoloz Kevkhishvili- Real estate research manager a 24 Kazbegi Avenue, Tbilisi 0177, Gerogia e mail@gremic.ge; nikoloz.kevkhishvili@gremic.ge i www.gremic.
ge t [995 32] 207337 f [995 32] 207447 m [995 77] 303326
SEPTEMMBER-APRIL 2010-11
HOTEL MARKET RESEARCH
Tbilisi, Black Sea Resorts, Bakuriani, Gudauri
APRIL-SEPTEMBER 2010/11
CONTENT
01. 02. 03. 04. 05. Conclusion ................................................................................................................................................................. 4 supply ........................................................................................................................................................................ 5 Hotel classification .................................................................................................................................................... 7 Demand ..................................................................................................................................................................... 9 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. 09. Benchmarking ......................................................................................................................................................... 27 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.
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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 countrys 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 2011 it actually fell, because snow visitors arrived in Georgia, which has come only in February. As a is 41% more than the same figure result, in 2011 the most occupied in 2009. month was February in Gudauri Most hotels in Georgia are and Bakuriani. Monthly occupancy occupied seasonally. The highest rate in this month was 71% in occupancy rate is in Tbilisi (Annual Bakuriani and 77% - in Gudauri. occupancy rate 46%), which is caused by high activity of business In 2011 the highest average room rate Georgian winter resorts was sector. Batumi has higher in Gudauri (160-230 GEL). occupancy (Annual 42%) than Mentioned figure was about 1.6 other Black sea resorts. Several and 2.4 times higher than the entertainment and business same figures in Bakuriani and activities explain this fact. Mestia. It should be mentioned During last 6 months in Tbilisi and that average room rate in black sea resorts average room Georgian winter resorts in 2011 rate decreased by 11%. Average was 20-30% less than in previous room rate in Tbilisi ranges from year. 220 GEL to 330 GEL. Black sea resorts room rates range from 70 Hotel rooms per 1000 residents are unequally distributed in some GEL to 1770 GEL. tourism regions of Georgia. The room rate reduction was Despite the fact that number of accompanied by shortening of rooms in Tbilisi increased from occupancy rate, thats why 1.95 to 2.06 during last 6 months revenue per available room capital of Georgia is still behind decreased significantly. than European cities, where this The biggest share of Georgian figure is about 14-18. winter resorts comes to Bakuriani (73%). Its followed by Gudauri Construction work in progress with slow rates as it was (22%) and Mestia (5%). scheduled in free tourism zones, As usual, January is the most but completing of these projects occupied month (90%-95% will increase countries tourism monthly occupancy rate) in potential significantly. Georgian winter resorts, but in
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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, thats why revenue per available room decreased significantly .
CHART 1 HOTEL ROOM DISTRIBUTION 2010

26% 29% 5% 15% 8% 3%
10% 1% 3%
Tbilisi Kobuleti Gudauri Batumi Ureki Mestia
Gonio/Kvariati/Sarfi Bakuriani Other
CHART 2 OCCUPANCY RATE (YEARLY) 2010

60% 50% 40% 30% 20% 10% 0% 19% 25% 16% 17% 15% 46% 42%
CHART 3 ROOM RATE AND REVENUE PER AVAILABLE ROOM (REVPAR) GEL 2010/11
400 300 200 100 0 290 133 150 63 130 21 150 23
100 19
85 14
100 25
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
AVERAGE YEARLY ROOM RATE
REVPAR
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HOTEL MARKET RESEARCH 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. .
CHART 4 NUMBER OF ROOMS/PER 1000 RESIDENTS 2010

35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 2.06 10.92 3.40 8.23 6.48 29.50
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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. Criterias 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 3. different Service Cleaning rooms/linen change beverages Breakfast Feed Reception Laundry and cleaning services Payment Different Rest Internal equipment and services Spa/Cosmetics Different Create high-quality offering Complaints Management System Customer survey Mystery client Quality management system Different Conference facilities Conference Rooms Telecommunications/Media Equipment/Technologies
4.
5.
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
6.
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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HOTEL MARKET RESEARCH 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 Stars 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 Batumi Other Black Sea resorts Bakuriani Gudauri Other Total 0 0 1 0 0 0 1 1 2 2 1 0 0 6 2 4 1 4 0 0 11 0 4 0 6 0 1 11 0 0 0 0 0 0 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 GeorgianRussian 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. CHART 5 NON-RESIDENT VISITORS IN GEORGIA 2000-2010
2,500,000
2,032,586
2,000,000 1,500,000 1,000,000 500,000 387,258 302,215 298,469 313,442 368,312 560,021 1,500,049 1,290,107 983,1141,051,769
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
CHART 6 DISTRIBUTION OF NON RESIDENT ARRIVALS BY CITIZENSHIP 2010 1% 1%

2%
33% 63%
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 Russia171,124.
CIS
EUROPE WITHOUT CIS
SOUTHERN ASIA
AMERICAS
OTHER
CHART 7 PURPOSE OF VISIT IN GEORGIA OF NON RESIDENT PERSONS 2010

healthcare piligrim other working in local company transit education shopping visiting friends and relatives proffesional recreation
Most non-resident visitors come in Georgia for recreation purposes 32%, 28% comes to Business purposes. (Chart 7)
1% 1% 2% 2% 3% 3% 4% 24% 28% 32%
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HOTEL MARKET RESEARCH 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.
CHART 8 ACCOMODATION OF NON-RESIDENT VISITORS IN GEORGIA 2010

3% 3% 1% 4% 46% 34% 9%
Main part of international tourists during 2010 spent 5 days in Georgia. Much less percentage comes to greater duration visits. (Chart 9)
hotel, Sanatorium Train or Bass other
Guest-house, Famili-house Parking, Camping
Relatives or friends Hostel/Self service
CHART 9 NON-RESIDENT VISITORS' VISIT DURATION 2010 Below is more detailed description of major hotel markets in Georgia.
>30 26-30 21-25 16-20 11-15. 6-10. <5 0% 10% 20% 30% 40% 50% 1% 2% 7% 20% 59% 60% 70% 4% 7%
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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 min International Brands Business Class Middle Class Economy Class Sun/Average 760 833 398 386 2377 480 170 120 70 230 max 750 330 200 100 390 Room rate Oct-Mar 2010/11 GEL/Person/Night min 430 160 120 60 220 max 600 270 180 110 330 -16% -14% -6% 0% -9% 41% 60% 49% 50% 51% 35% 51% 37% 37% 41% 38% 56% 43% 44% 46% Room rate change Occupancy rate Apr-Sep 2010 Occupancy rate Oct-Mar 2010-11 Annual Occupancy
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 OctoberMarch statistics occupancy rate in Tbilisi hotels decreased average by 5% in comparison to the same index
CHART 10 HOTEL ROOM DISTRIBUTION BY CLASSES 2011

Econom Class 16% Middle Class 17%
International Brands 32%
Business Class 35%
CHART 11 OCCUPANCY RATE 2010/11

100% 80% 60% 40% 20% 0%
International Brands Apr-Sep 2010 Business Class Middle Class Econom Class Annual
60% 41% 35%38%
56% 51%
49%
43% 37%
50% 37%
44%
Oct-Mar 2010/11
of 2010 April-September and equaled 46%. From the hotels located In Tbilisi business hotels are mainly
occupied, their occupancy rate equals 56%.
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HOTEL MARKET RESEARCH 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 AprilSeptember 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. (Caf bar, spa, fitness centers, restaurants and etc.) This kind of incomes usually takes 40% of the whole revenue.
CHART 12 ROOM RATE (GEL/PERSON/NIGHT) 2010/11
700 600 500 400 300 200 100 0 85 85 160 150 250
615 515
215
Econom Class
Middle Class Apr-Sep 2010
Business Class Oct-Mar 2010/11
International Brands
CHART 13 REVPAR (GEL) 2010/11

350 300 250 200 150 100 50 0 35 30
Middle Class Apr-Sep 2010 Business Class Oct-Mar 2010/11 International Brands
308
191 96 123 77 79
Econom Class
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HOTEL MARKET RESEARCH INTERNATIONAL BRANDS
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HOTEL MARKET RESEARCH 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. MIDDLE CLASS HOTELS Middle class hotels are scheduled for business segment, but they dont 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 Due to the fact, that local business who are going to stay in Tbilisi 1-3 class hotels have low international days and then to go to different awareness, low prices and high tourism destinations in Georgia. quality of service are their Conference halls, restaurants and competitive advantage. Global star Bars are less available in economy works hard in this hotel segment, class hotels. They follow The Bad which assigns stars according above and Breakfast principle and the mentioned criteria. highest occupancy have in summer Majority of business class hotels are time. located in central districts of Tbilisi During last few years popularity of and in historical parts of the city. Guest houses rose significantly Beautiful views appear from hotel because they offer to their Guests fill rooms and guests can use several themselves in family atmosphere, other facilities of the hotels such as: relax and share Georgian traditions. restaurant, bar, swimming pool, conference hall and etc.
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06. BLACK SEA RESORTS HOTEL MARKET

Black sea resorts hotel market Number of rooms OctMar 2010-11 1349 750 320 505 2924 Apr-Sep 2010 room rate GEL/Person/Night min 110 70 90 50 90 max 220 150 170 120 180 Oct-Mar 2010/11 room rate GEL/Person/Night * min 80 90
3
max 180 210 90 110 170

3
Room rate change -21% 36% -46% -6% -11%
Occupancy rate (season 2010) 78% 69% 75% 68% 73%
Occupancy rate (nonseason 2010/11) * 32% 4% 9% 8% 18%
Annual occupancy rate
Batumi Kobuleti Gonio/Kvariati/Sarpi Ureki Sum/Average
42% 16% 19% 17% 30%
50 50 70
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)
CHART 14 SUPPLY IN ADJARIAN REGION 2000-2010

300 250 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 number of accomodation objects number of beds (thousands)
50 8 51 8 54 8 56 8.2 58 10.2 58 11 66 27.3 69 27.2 28.8 34 117 55.5 229 246
CHART 15 HOTEL ROOM DISTRIBUTION IN ADJARIAN REGION 2010

18% 11% 46%
25%
Batumi
kobuleti
Gonio/Kvariati/Sarfi
Ureki
* This figure includes average prices only those * This figure is calculated by dividing of occupied
hotels, which were operating during October-March rooms in specific period to total rooms available in 2010/11 this region during the same time.
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HOTEL MARKET RESEARCH 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.
CHART 18 OCCUPANCY RATE 2010/11
100% 80% 60% 40% 20% 0% 32% 78% 42% 4% 16%
CHART 16 NUMBER OF VISITORS (THOUSANDS) 2000-2010

1,200 1,000 800 600 400 200 4 14 4 14 4 12 4 71 8 75 27 120 67 183 112 240 76 209 162 662 392 312
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 resident non-resident
CHART 17 DISTRIBUTION OF VISITORS BY ADJARIAN VISITORS 2010

1% 13% 29%
57%
Batumi
Kobuleti
Khelvachauri
Khulo
69%
75%
68%
9%
19%
8%
17%
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
non-seasone
seasone
annual
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HOTEL MARKET RESEARCH BATUMI
Batumi
Number of rooms OctMar 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 (nonseason 2010/11) *
Annual occupancy rate
min Business class Middle class Economy class Sum/Average 781 280 288 1349 140 80 60 110
max 290 150 100 220
min 100 60 40 80
max 250 110 60 180 -19% -26% -38% -21% 80% 76% 72% 78% 33% 31% 29% 32% 43% 41% 39% 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 OctoberMarch 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.
CHART 19 VISITORS IN BATUMI 2006-2010

600,000 500,000 400,000 300,000 200,000 100,000 13,120 53,655 2005 32,165 102,079 2006 resident 58,637 131,059 2007 50,636 129,092 2008 80,623 181,160 2009 2010 390,306 167,333
non-resident
CHART 20 DISTRIBURION OF HOTEL ROOMS IN BATUMI 2010/11 21%
21%
58%
Business class
Middle class
Economy claaa
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HOTEL MARKET RESEARCH 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. Thats 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.
CHART 21 ROOM RATE IN BATUMI GEL/PERSON/NIGHT 2010/11

300 200 100 0 Business class Middle class Oct-Mar 2010/11 Economy claaa Apr-Sep 2010 215 175
115
85
80
50
CHART 22 OCCUPANCY RATE IN BATUMI 2010/11

100% 80% 60% 40% 20% 0% 80% 33% 43% 76% 31% 41% 72% 29% 39%
Business class seasone
Middle class non-seasone annual
Economy claaa
CHART 23 REVPAR IN BATUMIi 2010/11 200 100 173 58 87 27

saSualo klasi
57 15
ekonom klasi
biznes klasi
seasone
non-seasone
Total space Number of rooms 397 166 220 250 40 53 1126
# 1 2 3 4 5 7
Project Batumi Gate Radisson Kempisnki Hilton Boutique Hotel Batumi Plaza sum
890,555 22,792 85,253 74,000 N/A N/A 1,072,600
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HOTEL MARKET RESEARCH 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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HOTEL MARKET RESEARCH 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 OctoberMarch 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%). Its followed by Gudauri (22%) and Mestia (5%). Its 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 CHART 24 HOTEL ROOM DISTRIBUTION IN GEORGIAN WINTER RESORTS 5% 2011
22%
73%
Bakuriani
Gudauri
Mestia
CHART 25 OCCUPANCY RATE IN GEORGIAN WINTER RESORTS 2011

100% 80% 60% 40% 20% 0% January February Bakuriani Gudauri March 27% 5% 26% 71% 77% 49%
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 935 287 66
Number of beds 2565 861 139
Room rate in winter GEL/person/Night min max 150 230 120 January 27% 5% N/A
Occupancy rate February 71% 77% N/A March 26% 49% N/A
Bakuriani Gudauri Mestia
90 160 40
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HOTEL MARKET RESEARCH 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. Thats 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. Thats 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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Bakuriani hotels
Number of rooms
Number of beds
Room rate in summer GEL/person/night
Occupancy rate Room rate in winter GEL/person/night Summer min 120 70 90 max 220 100 150 July 34% 32% 33% August 62% 71% 67% January 22% 31% 27% Winter February 72% 69% 71% March 27% 25% 26%
min Big hotels Family/Guest houses Sum/Average 427 508 935 1116 1449 2565 100 40 70
max 120 50 80
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
CHART 26 OCCUPANCY RATE IN BAKURIANI 2010/11

80% 60% 40% 20% 0% July August big hotels January Fevruary March guest houses 34%32% 71% 62% 72%69%
31% 22%
27%25%
CHART 27 ROOM RATE GEL/PERSON/NIGHT 2011

200 150 110 100 50 0 45 85 170
summer big hotels guest houses
winter
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 70120 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
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HOTEL MARKET RESEARCH 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
APRIL-SEPTEMBER 2010/11 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. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
New House Almarini Villa Fagusi Nini Edelvais Hotel X Meridiani Vilavita villa Amiranis Parki Vila Parki Marinino Tinatini Villa Bakuriani Aisberg
15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.
Anga Tbilisi Tamar Mefe Villa Gio Etalasi Apoloni Iki Ski San Maria Melisi Edemi White House Villa Georgia Prima 2010 Eurika
29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42.
Viqtoria Dad Elene Kedari Trialeti palase Pol sporti Cristal Villa Palase Gigo Sandro Papa Tetri Gedi Saba Smart Hausi My house
43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56.
Red House Our School Premier Palase Lamani Mgzavrebi Sofross Alpina Vere Palase Besti Ckhratskaro Viqtoria Leonidi Tega Tovlis Babua
57. 58. 1. 2. 3. 4. 5. 6. 7.
Olimpo Varskvlavi Olimpic Stari K2 Group Bakurianis Ndzvebi Hause Art Mgzavrebi Villa Mtashii Sakhli near Didveli Existing Hotels Future Projects
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HOTEL MARKET RESEARCH 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 thats 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
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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
City Moscow Paris Zurich Rome Amsterdam Istanbul Athens London Brussels Vienna Tbilisi Madrid Kiev Berliner Prague Bucharest Lisbon Belgrade Warsaw Budapest Riga Tallinn Average
Room Rate (GBP)
Occupancy rate 63.3% 70.0% 58.3% 53.0% 60.0% 70.0% 52.5% 73.5% 64.0% 73.0% 47.2% 69.7% 55.0% 63.0% 55.0% 57.5% 67.5% 55.0% 63.0% 53.0% 65.0% 60.0%
REVPAR
259 201 199 171 170 163 162 157 148 140 140 128 125 119 119 117 115 112 109 105 103 101 144
164 141 116 91 102 114 85 115 95 102 66 89 69 75 65 67 78 62 69 56 67 61 89
61%
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
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09. APPENDIX
Tbilisi
Mentioned figures in above in this research are based on survey of the following hotels:
Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
"Radisson Blue Iveria" "Sheraton Metekhi Palace" "Tbilisi Marriott" "Courtyard Marriott" "holliday Inn" "Bazaleti Palace" "Kopala" "Betsi" "Tiflis Palace" "Varazi" "Vere Palace" "Ambasadori" "Tori" "Kolkhi" "Cruise" "GTM Kapan" "Primavera" "Old Tbilisi" "Grand" "D Plaza" "Bomondi" "KMM" "Koka" "Tbil hotel" "City" "Old Metekhi" "ZP" "Villa Rustaveli" "Riversaide" "British house" "Vake" "Demi" "Butik Hotel" "Irmeni" "Prestige" "Bomond Garden" " Sympathy "
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HOTEL MARKET RESEARCH 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80

"Iliani" "Batesta" "Vip Victoria" "Vedzisi" "Istanbul" "Dzveli Ubani" "Shardeni" "Penthause" "David" "Muza" "Villa Mtiebi" "Armazi Palace" "Georgia" "Diplomat" "Edemi" "Vip" "Sanapiro" "Ponto" "Ponto Tbilisi" "David L" "Lia" "Panorama" "Exclusive" "Vip Club" "Oda" "Firosmani" "Lagunasport Hotel" "Tsitsinatela" "Piza" "Guta" "Meridiani" "Villa Dilara" "ImereTi" "Morkinali" "Kartli" "Georgian House" "Skip Hotel" "Agro Palace" "House charm" "Kolkhi" "Medea" "My House" "Night House"
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HOTEL MARKET RESEARCH 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98

"Roial" "Clasici" "Bu" "Gutsa" "Lile" "Tela" "Merilini" "Riviera" "Jekalto" "Ifari" "Elite" "Nika" "Omari" "Mkudro" "Pavo" "Welcome "Vere Inn" "Formula 1"
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Batumi Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
"Sheraton Batumi" "Intourist" "Marina" "Tanamgzavri" "Alik" "Sanapiro" "Era Palace " "Istanbul" "Achi" "Golden Star" "Light hause" "Chao" "O. Galogre" "City Star" "Premier" "Ritsa" "G Bakuri" "Batumi 2000" "Mari" "Boni" "Merkuri" "L Bakuri" "Ankara" "Marani" "Victoria" "Oskari" "Amirani" "Metropol" "Old Batumi" "Eleganti" "Mgzavrebi" "Voiage" "Irise" "Duta" "Tsereteli" "Adeli" "Beso" Lux" "Afsaross"
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HOTEL MARKET RESEARCH 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

"Astoria" "Old Ship" "Goga" "Elada" "Iliko" "Rcheuli villa" "Kazbegi" "Class" "Miriani" "Ana" "Makhinjaurii" "Lotos" "Ponto Maria" "Planeta" "Melisi" "Revazi" "Porto Sanko" "Oto" "Salome" "Rio" "Tiko" "Interncional XXI" "Rolandi"
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Gonio/Kvariati/Sarpi Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
"Magnolia" "Liza" "Meri" "Livane" "Viola" "Eva" "Kilagze" "Neptuni" "Tamazi" "Kvariati" "Neptuni 2" "Lazuri" "Kameo" "Pirveli" "Martini" "Giorgi" "Siesta" "Afsaross complex "Peisagei" "Uchamzo"
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qobuleTi sastumros dasaxeleba
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
"Georgia Palace" "Kolkheti" "Oasis" "Tetri Etli" "Kondori" "Edemi" "Green hause" "Savane" "Chveni ezo" "Sakurorto Poliklinika" "Chagara Urali" "Fantazia" " Purple Hotel" " Pinewood" "Sanapiro" "Irise" "Mango" "Black Sea" "Eldorado" "El-Kopa" "Beach Club" " Sympathy"
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Ureki Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
"Andamati" "Prime" "Elite" "Tbilisi" Sanatorium "Kolkhida" "Eleganti" "Kopala" "Albatros" "Riviera" "Evkalipt" "Tata" "Tbiliselebi" "Prestige" "Bachana" "Originali" "Old House" "Edemi" "Mirage" "Luka" "Eldorado" "White house"
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Bakuriani Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
"Tbilisi" "White House" "Prima 2010" "Victoria+" "Mgzavrebi" "Trialeti palace" "Premier palace" "New House" "Almarini" "Villa Fagusi" "Nini" "Hotel X" "Edelvais" "Meridiani" "Villa Vita" "Villa amiranis Park" "Tinatini" "Villa Bakuriani" "Mari Nino" "Aiceberg" "Anga" "Tamar Mefe" "Vila Gio" "Etalasi" "Apoloni" "Iki Ski" "San Maria" "Melisi" "Edemi" "Vila Georgia" "Dad" "Elene" "Kedari" "Pol Sport" "Gigo" "Sandro Papa" "Tetri Gedi" "Saba" "My House"
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HOTEL MARKET RESEARCH 40 41 42 43 44 45 46 47 48 49 50 51 52 53

"Our School" "Lamani" "Alpina" "tskhratskharo" "Victoria" "Leonidi" "Cristal" "RedHouse" "Sopross" "Tega" "Tovlis Babua" "Olimpo" "Varskvlavi" "Noeli"
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Gudauri Hotel Name
1 2 3 4 5 6 7 8 9 10 11 12 13
"Gudauri" "Jvari Pass" "Truso" "Hati" "syi Hause Panorama" "Gagieti" "Sunny House" "Ozoni" "7" "Shamo" "Shele" "Toni Gudauri" "Free Rider"
Mestia Hotel Name
1 2 3
"Tetnuldi" "Mestia" "Svaneti"
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2010-11Sep-Mar Hotel Market ENG

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Nikoloz Kevkhishvili- Real estate research manager a 24 Kazbegi Avenue, Tbilisi 0177, Gerogia e mail@gremic.ge; nikoloz.kevkhishvili@gremic.ge i www.gremic.

ge t [995 32] 207337 f [995 32] 207447 m [995 77] 303326

HOTEL MARKET RESEARCH

Tbilisi, Black Sea Resorts, Bakuriani, Gudauri

HOTEL MARKET RESEARCH

HOTEL MARKET RESEARCH

HOTEL MARKET RESEARCH

HOTEL MARKET RESEARCH

CHART 1 HOTEL ROOM DISTRIBUTION 2010

Gonio/Kvariati/Sarfi Bakuriani Other

CHART 2 OCCUPANCY RATE (YEARLY) 2010

AVERAGE YEARLY ROOM RATE

CHART 4 NUMBER OF ROOMS/PER 1000 RESIDENTS 2010

HOTEL MARKET RESEARCH

03. HOTEL CLASSIFICATION

HOTEL MARKET RESEARCH

CHART 6 DISTRIBUTION OF NON RESIDENT ARRIVALS BY CITIZENSHIP 2010 1% 1%

EUROPE WITHOUT CIS

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

1% 1% 2% 2% 3% 3% 4% 24% 28% 32%

CHART 8 ACCOMODATION OF NON-RESIDENT VISITORS IN GEORGIA 2010

hotel, Sanatorium Train or Bass other

Guest-house, Famili-house Parking, Camping

Relatives or friends Hostel/Self service

HOTEL MARKET RESEARCH

05. TBILISI HOTEL MARKET

CHART 10 HOTEL ROOM DISTRIBUTION BY CLASSES 2011

International Brands 32%

Business Class 35%

CHART 11 OCCUPANCY RATE 2010/11

60% 41% 35%38%

occupied, their occupancy rate equals 56%.

Middle Class Apr-Sep 2010

Business Class Oct-Mar 2010/11

CHART 13 REVPAR (GEL) 2010/11

HOTEL MARKET RESEARCH INTERNATIONAL BRANDS

HOTEL MARKET RESEARCH

06. BLACK SEA RESORTS HOTEL MARKET

max 180 210 90 110 170

Room rate change -21% 36% -46% -6% -11%

Occupancy rate (season 2010) 78% 69% 75% 68% 73%

Occupancy rate (nonseason 2010/11) * 32% 4% 9% 8% 18%

Annual occupancy rate

Batumi Kobuleti Gonio/Kvariati/Sarpi Ureki Sum/Average

42% 16% 19% 17% 30%

CHART 14 SUPPLY IN ADJARIAN REGION 2000-2010

CHART 15 HOTEL ROOM DISTRIBUTION IN ADJARIAN REGION 2010

CHART 16 NUMBER OF VISITORS (THOUSANDS) 2000-2010

CHART 17 DISTRIBUTION OF VISITORS BY ADJARIAN VISITORS 2010

HOTEL MARKET RESEARCH BATUMI

Number of rooms OctMar 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 (nonseason 2010/11) *

Annual occupancy rate

max 290 150 100 220

CHART 19 VISITORS IN BATUMI 2006-2010

CHART 20 DISTRIBURION OF HOTEL ROOMS IN BATUMI 2010/11 21%

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

CHART 22 OCCUPANCY RATE IN BATUMI 2010/11

Business class seasone

Middle class non-seasone annual