The number of international arrivals to Georgia grew 2.1% y/y in 9M14 to 4.2mn. On a full-year basis this translates into 5.6mn for 2014 (vs 5.4mn in 2013), which would be short of our expectations. A lower number of arrivals from Turkey (26.5% of all arrivals and the largest contributor) was the principal reason for the slowdown, mainly due to the economic situation in that country. Arrivals excluding Turkey increased 8.0% y/y in 9M14, including from Russia (+7.1% y/y), Poland (+36.1% y/y), Belarus (+48.8% y/y) and Ukraine (+21.1% y/y). We expect other countries to continue growing robustly, creating opportunities for hotel developments. The hotel pipeline remains strong with more than 10 upscale and midscale international brand hotels set to open by 2016; however we still think that demand is likely to outpace supply. Georgia’s National Tourism Administration continues to pursue active promotional campaigns and Georgia expects to host several important events in 2015 including the EBRD’s annual shareholder meeting, the European Youth Olympic Festival and the UEFA football Super Cup.
Visitors from other countries
The number of international arrivals to Georgia grew by just 2.1% y/y in 9M14 to 4.2mn, which translates into an annual 5.6mn for 2014 vs 5.4mn in 2013. Visitor numbers were flat in August and down by 1.0% y/y in September. Fewer arrivals from Turkey were the main reason for the slowdown partly due to the weak Turkish lira and the elections there. Typically the largest contributor of visitors, with 29.7% in 2013, Turkey’s contribution fell to 26.5% in 9M14 (number of arrivals -11.2% y/y in 9M14). Armenia was the second largest contributor in 2013, remaining flat this year (22.4%) and being outpaced by Azerbaijan with a 23.3% share. On a positive note, total visitors (excluding Turkey), grew by 8.0% in 9M14.
Growth to be 5-6% p.a. till 2019
We have revised our forecast and expect 5.6mn visitors this year vs. our previous forecast of 6.1mn (the downward revision was mainly due to an unexpected slowdown in Turkish visitors). We now envisage an overall growth rate of 5-6% per annum until 2019 and annual visitor growth of 8-9% ex-Turkey. We forecast around 7.4mn international visitors in 2019 or 1.7x of the current population.
Visitor spending is stable
In terms of tourism receipts, visitor spending per capita was US$ 332 in 1H14 vs US$ 333 in 1H13. In FY14, we expect around 4.9% y/y growth in tourism receipts and estimate that spending per visitor will grow 2.1% y/y to US$ 327 from US$ 321 in FY13.
Important tourist events lined up for 2015
Georgia’s National Tourism Administration is continuing its active promotional campaign in Western and Eastern Europe, in the CIS and other countries. In addition, there are major events lined up for 2015 which we estimate will bring in additional 40-50,000 visitors. The events are important for the country’s image, in our view. Tbilisi, in particular, will host a number of events.
