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BUSINESS
GEORGIA TODAY
JANUARY 23 - 25, 2018
The Galt & Taggart Research team comprises Georgian and Azerbaijani finance and economic experts who have broad experience of covering the macro and corporate sectors of the two countries. Our current product offering includes Georgian and Azerbaijan macroeconomic research, Georgian sector research, and fixed income corporate research. For free access to Galt & Taggart Research, please visit gtresearch.ge or contact us at gt@gt.ge.
Tourism Market Watch FOR GEORGIA TODAY BY KAKHABER SAMKURASHVILI
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ector research is one of the key directions of Galt & Taggart Research. We currently provide coverage of Energy, Healthcare, Tourism, Agriculture, Wine, and Real Estate sectors in Georgia. As part of our tourism sector coverage, we produce a monthly Tourism Market Watch, adapted here for Georgia Today’s readers. Previous reports on the sector can be found on Galt & Taggart’s website - gtresearch.ge.
INTERNATIONAL BRANDED HOTEL PROJECTS IN GEORGIA BEHIND SCHEDULE Of the 27 international branded hotels in our 2016-2018 pipeline (see our June 2016 tourism report, Shifting into High Gear), only four have been completed, while three projects have been cancelled. Of the remaining 20 projects, only four are expected to be finished on time. Delays are geographically distributed as follows – 10 of 13 hotels in Tbilisi, three of four in Batumi, and all three in other
regions. The delays can be largely attributed to regional turbulence, coupled with currency fluctuation, in recent years. Nonetheless, international branded hotel stock is expected to increase by 1,371 rooms (+79.7%) in Tbilisi, 440 rooms (+44.9%) in Batumi, and 706 rooms (+142.3%) in other regions by end-2018. The updated 2018-2020 pipeline now includes 19 projects in Tbilisi, seven in Batumi, and 10 in other regions.
5 INTERNATIONAL MIDSCALE BRANDED HOTELS ADDED TO GEORGIAN MARKET IN 2017 Last year saw five new branded hotels added to the Georgian market. Notably, only one of them, the 3-star Ibis Styles, was opened in Tbilisi. The 5-star Wyndham Hotel and 4-star Best Western Plus opened in Batumi, while the 4-star Golden Tulip was added to the international hotel stock in Borjomi. The first international branded hotels were opened in Kutaisi and Bakuriani in 2017 – the 3-star Best Western in Kutaisi, with 45 rooms, and the 4-star Best Western Plus in Bakuriani, with 70 rooms. These six hotels added 447 rooms to Georgia’s international branded hotel stock, bringing the total to 25 properties with 3,346 rooms.
INTERNATIONAL TRAVEL INFLOWS TO GEORGIA INCREASE 27.0% Y/Y TO US$ 2.75BN IN 2017, ACCORDING TO NBG’S PRELIMINARY ESTIMATES Foreign card operations in Georgia were up 30.3% y/y to GEL 1.9bn in the first 11 months of 2017. Tourism value added was up 11.5% y/y to GEL 1.5bn in the first nine months and accounted for 7.0% of GDP. Accommodation units subsector was the main driver, with 32.6% y/y growth. Travel companies, which account for 31.9% of tourism value added, posted modest 1.1% y/y growth.
NUMBER OF INT’L ARRIVALS UP 23.3% Y/Y TO 0.6MN IN DECEMBER 2017 Of the top four source markets, Russia was the top performer (+45.4% y/y), while Armenia (+13.7% y/y) and Azerbaijan (+15.7% y/y) also posted double-digit growth rates. The number of visitors from Turkey has been on the rise for six consecutive months, with growth in December coming in at 33.4% y/y. Arrivals from the EU were up 9.6% y/y to nearly 15,000 visitors.
to the overall growth of 18.8% y/y. The number of Israeli visitors increased 35.9% y/y to over 125,000 visitors, while the number of visitors from Saudi Arabia was up 164.6% y/y to over 56,000. Arrivals from the EU were up 21.9% y/y to over 322,000 visitors in 2017, with Germany, Poland, and UK accounting for a third of the growth.
TOURIST CATEGORY CONTINUES
TO DRIVE ARRIVAL GROWTH IN DECEMBER 2017 The number of overnight visitors (‘tourist’ category) was up 31.7% y/y and accounted for 39.2% of international arrivals. The transit category was also a major contributor (+54.9% y/y), while the number of same-day arrivals was up 6.7% y/y. The number of tourist arrivals in 2017 is up 27.9% y/y to 3.5mn, surpassing the annual figure for 2016 by 0.8mn tourists.
NUMBER OF INT’L ARRIVALS UP 18.8% Y/Y TO 7.6MN VISITORS IN 2017 The number of visitors increased from all major source countries, except Turkey (-0.8% y/y). The largest individual contributor to overall growth was Russia (+34.1% y/y), while Armenia and Azerbaijan also posted double-digit increases. The number of Iranian visitors was up 2.2x to nearly 323,000 visitors and surpassed the number of Ukrainian visitors (193,002) in 2017.
SECONDARY SOURCE MARKETS POSTED ROBUST PERFORMANCES IN 2017 Arrival growth from secondary (nonEU) source markets contributed 3.5ppts
Georgian Trade Union: 41 Dead, 63 Injured in Workplaces in 2017 BY THEA MORRISON
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he Georgian Trade Union has spoken out about the “alarming” statistics of accidents that occurred in workplaces last year, claiming 41 people died and 63 people received serious injuries due to the absence of proper safety norms. The information was released by the Head of the Labor Technical Inspection of Trade Union, Nika Kakashvili, who said the majority of accidents happened at construction sites because the companies are not observing safety norms. Kakashvili is calling on the government to regulate the field and to ensure safe working conditions at construction sites and other workplaces. “The statistics provided by us are not full and we call on the Interior Ministry to release the full statistics, as the real picture is very alarming,” he said, add-
Photo source: Netgazeti
ing that after the construction sector, the majority of incidents occurred in the mining field, followed by electricity and other sectors. “The most incidents happen in Tbilisi as there are so many ongoing construc-
tions there; however, the reason is not the quantity of constructions but the non-observance of safety norms,” he said. Kakashvili did note that there are highstandard construction companies who
do ensure the safety of their workers, “but the majority of companies operating in Georgia opt to save money by avoiding the safety norms.” The absence of safety norms in Georgian workplaces was also mentioned among the key findings of 2017 in the recent report of Human Rights Watch (HRW), an American-founded international NGO that conducts research and advocacy on human rights. The HRW stressed that every year in Georgia dozens of workers die and hundreds suffer injuries as a result of occupational accidents, adding that the country is failing to introduce effective health and safety measures in the workplace. “According to the Ombudsman, 270 people died in the past five years due to unsafe working conditions, 18 of them in the first half of 2017. The Ombudsman and NGOs criticized the Labor Inspection Department under the Ministry of Labor, Health, and Social Affairs, for having no executive authority to enforce standards, thus failing to introduce effec-
tive health and safety measures in the workplace. Investigations into workplace incidents rarely lead to accountability,” - the report reads. The most recent incident happened on January 18 this year when a worker fell off a construction site in Temka, GldaniNadzaladevi district, and died in a hospital soon after. The worker, 27, was working in a high spot without a helmet or harness. As reported by media, the site also lacked a safety net around the building. The Ministry of Internal Affairs subsequently launched an investigation into the case under Article 240 which envisages a breach of safety norms. Akaki Zoidze, Chair of Parliament’s Healthcare Committee, believes Georgia should share the European experience regarding labor rights in order to avoid frequent incidents in the workplace. “We should adopt the highest standards of labor rights…But it should be done gradually and in parallel with proper supervision,” Zoidze added.