Georgia’s tourism sector has demonstrated significant growth posting an impressive 22% CAGR in international arrivals over 2000-2012. In 2012, Georgia registered 4.4mn arrivals, or 0.9x its current population. As of 1Q13, the number of arrivals reached 0.93mn, up 37% y/y. In April alone, the number was up 20% y/y, with 4M13 figure already at 1.3mn.
The tourist peak season lies ahead. Generally, Georgia attracts approximately 35% of international arrivals from total annual arrival inflow in the third quarter of the year. The arrivals are mostly drawn to seaside and mountain destinations, as well as to the capital – Tbilisi. Neighboring countries account for most of Georgia’s international tourism. In 1Q13, most of the arrivals came from Turkey (40%), followed by Azerbaijan (22%), Armenia (18%) and Russia (10%), together making up 90% of international arrivals.
Number of arrivals to outpace our estimates
Beating our estimates, the 4M13 figure has already reached 1.3mn arrivals, translating into weighted annualized 5.4mn international arrivals in 2013. We have revised our international arrivals forecast upward to a conservative 5.2mn, thus exceeding our previous estimates of 4.8mn arrivals.
Travel inflow and NBG reserve accumulation
The National Bank of Georgia continues to accumulate gross international reserves to US$ 2.97bn in 4M13, from US$ 2.87bn as of YE12, partly as a result of increasing tourism receipts, in our view. The net buying of FX by NBG was around US$ 195mn as of 4M13. Around US$ 84.8mn has been used for repayment of foreign liabilities. In total, NBG international reserves increased by US$ 94.7mn in 4M13 YTD vs. US$ 54.7mn increase in 2012
