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Thursday, April 24, 2014
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Silk Road Group gaining ground with Bank of Georgia’s Assistance

Written by Nana Mghebrishvili, The FINANCIAL

13/11/2011 22:51 (892 Day 01:46 minutes ago)

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The FINANCIAL -- Silk Road Group, which manages the Radisson hotels in Tbilisi and Batumi, is going to open a new hotel in Georgia.  The building process will start in 2012 and will last for two years.

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“ This is all the information we can release at the moment,” Giorgi Marr, Director of Silk Road Group, told The FINANCIAL. “Projects besides this one are already on the table. Soonwe will be announcing the start of building the Trump Tower in Batumi. SRG has some plans in terms of the real estate sector as well.”

“Implementing such huge projects without financial partners is almost impossible. We consider Bank of Georgia   our main partner in all our plans,” he claims. “The Bank has always helped us in past projects. As soon as we plan something new, we discuss the financial details with Bank of Georgia . We are in daily contact with them.”

Silk Road Group bought several buildings, including former hotel Medea in Batumi in 2006. Construction of the Radisson Blu Batumi Hotel took off soon after, but the process was delayed due to the recession and Georgia-Russia war  of 2008.  Building process had to be put on hold right after completion of the foundation works.
“First of all we conducted market research and drew up comprehensive plans of our project,” Marr said. “We started building in 2007 but the process stopped in 2008. Almost nothing was happening in the construction sector at that time. Later we tried to continue building with our shareholders’ finances, but it was tough. In 2010 we started negotiations with Bank of Georgia . The size of the project only made it more challenging, but we managed to  complete  the negotiations successfully and therefore restarted building of the Radisson Blu Batumi Hotel.”

“The whole investment of Radisson Blu Batumi Hotel  sums up to 60 million USD. 30 million USD of the total amount is a loan from Bank of Georgia . Without the support of the Bank,  realizing the project would have been impossible during that period,” Silk Road Group claims.

“The Bank’s interest in the tourism and hotel sector was clear to us,” Marr said. “We had always had a good relationship with Bank of Georgia . We knew of their interest in our new project as well. We both, Bank of Georgia and SRG had similar vision and will in the future, that’s why the negotiations ended successfully. And therefore we ended up borrowing 30 million USD from Bank of Georgia .”

“Bank of Georgia is the biggest bank in Georgia financing such projects. It would be difficult to find another local bank for a project of such  calibre. The capacity of the Bank is essential for us as SRG is a big company as well. Another advantage of Bank of Georgia is that the Bank is as flexible as possible for clients. They operate quite quickly even during critical situations and always fulfil all set agreements and terms.”

“The working team of Bank of Georgia adequately estimates project risks and that’s why they are financing such large projects. Before dealing with them we did have some big loans but from abroad. After the world economic crisis, it became almost impossible to get such an amount of money for implementing projects in Georgia from foreign markets. So we found a very good local partner instead,” Marr said.

Radisson Blu Batumi Hotel opened in August 2011. Company representatives report the hotel has  performed quite well during its first two months of operation, but it is difficult to sum up the results and make future predictions based on such a small time-frame. Their expectations however have been fulfilled regardless.

“The hotel market in Batumi differs from the market in Tbilisi . Radisson BLU Iveria is oriented at business visitors and events, while Radisson Blu Batumi Hotel caters more to tourists. However we try to attract business clients in Batumi also, as working solely for holiday-makers is quite difficult,” he said.

Radisson Blu Iveria has been in the top five of the 300 Radisson hotels since the day it was founded. The modern decor of the hotel rooms in Tbilisi reflects a sleek, cosmopolitan edge with spectacular views of both old and new Tbilisi from the 249 spacious rooms and suites. These hotel rooms offer 62 connecting rooms and 10 rooms equipped for disabled guests.

“Since we entered the market, a new level of quality has been established,” said Giorgi Marr.

“In general the Radisson brand is very much oriented on quality. Currently many hotels in Tbilisi are trying to meet the standards of quality that we have set.. More hotels of this class mean more guests for the country, which ultimately benefits Georgia and its citizens. I hope that after the opening of all these five star hotels , some more average level ones will start operating as well.”

“The prices at our hotels are high as they correspond to the quality  we offer. I don’t think that  they will either increase or decrease in the near future. hotels have to have prices corresponding to their quality. Reduction would cause a price war, which could eventually hurt the market in general.”

“I can say that the hotel market today is somehow chaotic. I hope that there will be a more regulated market soon. The Georgian National Tourism Agency is doing much to this end, but more is needed. We are trying to develop the market as much as we can with the assistance and advice of the Bank.”

 

 

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