Investment Opportunities: Why to Invest in Georgia's Hospitality Sector?

Investment Opportunities: Why to Invest in Georgia's Hospitality Sector?

Investment Opportunities: Why to Invest in Georgia's Hospitality Sector?

The FINANCIAL -- Georgia has predominantly proved to be a highly desirable location for the hospitality and real estate sector. In the early 2000s international companies, enticed by Georgia’s pro-business environment, began to base their activities here.

Currently, hospitality and real estate sectors are one of the main drivers of Georgia’s economy. Over the recent years Georgia has seen a dynamic growth of international visitors (In 2014 the number of international travelers stood at 5,493,492 while the population of Georgia is 4.5 mln people) and 6% of Georgia’s GDP was generated by the hospitality sector. Number of international tourists’ arrivals is expected to grow by 8-10% during the next five years (Colliers International Hospitality Sector research 2015).

Real Estate is one of the main FDI drivers (87 mln USD in 2014, Total  1,271 mln USD). Real Estate growth rate was 40% in 2014 compared to 2013.

Already-operational international hotel chains include Sheraton, Radisson, Marriot, Rixos, Holiday Inn and Best Western. A number of other brand-hotels such as Hilton, Hyatt, Intercontinental and Kempinski are under construction. Given the large share of hospitality business in Georgia all international hotel chains are positioned in the higher segment.

Why invest in hospitality and real Estate?

•    Continuous Increase of International Visitors

The average annual number of international visitors from 2007 increase by 23%. Number of visitors from the European countries is increasing rapidly. Four the most active countries are Lithuania, Poland, Latvia and UK (93%, 25%, 25% and 11%). According to UNWTO (World Tourism Organization), Georgia has one of the highest growth rates of international tourist arrivals during last three years among European countries.

•    Rich natural and cultural resources

Distinctive among the world’s nations in its biodiversity, Georgia boasts rich natural and cultural resources and is home to more than 12,000 historical and cultural monuments, four of which are included in the list of UNESCO World Heritage Sites.

•    Regional Center

Georgia is a regional center located on the shortest route between Europe and Asia and enables mass of visitors to enjoy by easy access and visa liberalization with more than 150 countries. Georgia is a country full of modern facilities, equipped by three International and one domestic airports (Tbilisi, Batumi, Kutaisi and Mestia), elongside Georgian Railway System connects the country to the other neighboring states.

•    Various type of Resorts

Ajara Region is famous for its black sea coasts, winter resorts offer to holidaymakers an extraordinary experience. And with Tskaltubo medical and wellness resort Georgia is a unique balneal therapy and spa destination in the Region. For those who enjoy gaming, Georgia can provide a high quality gaming experience equal to world class gambling destinations without the restrictive legislation.

•    Considerable potential to develop Real Estate

There are no Real Estate Ownership Restrictions. Taking into account growth in demand Georgia offers considerable potential to develop Hotel & Leisure, residential, retail and office premises including beach resorts, medical and wellness destinations, winter-ski resorts, four season resorts, gaming facilities, cultural attractions and much more.

•    Batumi, Ajara - Summer Tourist Center of Georgia

Batumi is a seaside city on the south-eastern coast of the Black Sea, with a population up to 200,000.  Batumi serves as an important tourist and commercial center. The city is famous with its merged historical and modern architecture, high-rise landmark buildings, sandy and stony beaches and admirable landscapes. Several new hotels appeared in Batumi after 2009, a number of brand-hotels such as Crown Plaza, Kempinski and Hilton are under construction. Batumi has a distinctive niche by its Easy Access and Modern Infrastructure. Batumi international Airport (currently serves 9 direct destinations through 5 different airlines. The air traffic occurs mainly in the summer season). Batumi Railway is connecting most cities of Georgia and Batumi City Port serves as a Eurasian transportation corridor and major transportation object of Georgia’s international importance.

•    Gonio, Ajara - Unique potential to develop area side touristic destination into a world class resort

The land plot (315 ha) is located at the Black Sea coast in Southwest Georgia, between Batumi and Turkey border;

Good opportunity to develop a mixed resort, based on best use of existing land plot, with hotel, leisure, residential conventional areas, etc.

Gudauri

Gudauri is No.1 Ski destination in region and established brand name in winter tourism in CEE Countries. The resort is located on the southern slopes of the Caucasus Mountain Range at an elevation of 2,196 meters above sea level. Gudauri offers high-quality skiing opportunities (5 months of permanent finest high-altitude powder snow), including free ride and heli-skiing. The total length of ski lifts in Gudauri amounts to around 10 km. The beginning of an active development of the resort dates back to the 1970s-1980s, signified by a partnership between USSR and Austria.Nowadays, the ultimate vision of the government is the establishment of Gudauri-Kobi-Kazbegi as a world class mountain destination, with a world-class leisure and recreation experience.

Real estate development

More than 50 hectares land development for hotel, food and entertainment facilities. (hotels/aparthotels/guesthouses; Café/restaurants; Ski school).

Ski lift construction

Gudauri terrain has potential of the additional 80 km ski lifts expansion (21 additional ski lifts). (Ski facilities in place: ski cable way of 20+ km; ski trails, ice rink, bike - route).Master plan prepared by Ecosign – Mountains Resort Planners

Goderdzi

Goderdzi Pass, located two hours drive from the popular seaside resort town of Batumi. Goderdzi resort is ideally situated for the creation of a winter season mountain resort. At an elevation of 1,700-2,400m, the mountains are snow-covered from November to April, offering an attractive and welcoming character throughout the seasons. The wilderness setting of Goderdzi resort offers the visitor unique experiences, fresh-air and world-class scenery.

Investment opportunities: Real estate development

The Goderdzi real estate investment opportunities identifies mass of distinct zones, each offering a different character and function. The Goderdzi village center is supposed to be developed as a heart of the destination, secured by the several hotels, while passive accommodation zones and private real-estate development opportunities (hotel, food and entertainment facilities) will be established at the perimeter (within walking distance to the center).

Ski lift construction

Goderdzi terrain has potential of the additional 35 km ski lifts expansion (8 additional ski lifts) increasing ski lifts capacity by 7,500+ skiers per day.

(Master plan prepared by the HOK Planning Group)

Svaneti

Svaneti (administrative center Mestia) has a great potential to become a place for year–round fun and adventure. Summer in Svaneti offers an array of stunning landscapes, lush and wild flora, rare wildlife, flowing rivers and lakes, also majestic alpine plateau landscape next to UNESCO heritage site. Svaneti is characterized by ideal natural endowment conditions (5 months of permanent snow, elevation range of 1,400 – 2,300m, 12.6 hours of average daylight hours). Svaneti ski tracks are categorized by Olympic downhill standards with 988 m vertical drop. Winter plateau Tetnuldi has become one of the main ski lovers’ direction in CIS countries.

Svaneti has already established infrastructure and easy access (Mestia domestic airport).

Investment Opportunities: Real estate development

Land development for hotel, food and entertainment facilities for four season resort preposition (hotels/aparthotels/guesthouses; café/restaurants; snow park area and ski trail; area for ski movie; ice rink; bike-route; ski school).

Ski lift construction

Mestia terrain has potential of the construction of additional ski lifts. (Ski facilities in place: ski cable way of 1,400m length with capacity of 1,000 passengers per hour, 6 ski lifts in the pipeline).

(Master plan prepared by Ecosign –Mountains Resort Planners)

Tskaltubo

Tskaltubo is a Famous medical and wellness resort in west Georgia, with historical background in Central and Eastern European countries. The city previously served market of 300 mln people. The historical documentations and the potential for story telling about famous people are enormous in Tskaltubo (Even Joseph Stalin used to have a “Dacha” in Tskaltubo). With the historical attractions nearby (restored by the World Bank and MDF-Municipal Development Fund of Georgia) the destination can offer a wide range of cultural tourism.

In terms of the offered products and services, Tskaltubo has the opportunity to develop in all fields and to become the leading Medical and Wellness destination in Europe!

Unique Water

Tskaltubo water do not have analogies in Europe or Asia. Unique Tskaltubo water quality and chemical composition is very rare and complex, it does not change seasonally (No dependence on the amount of sediment) and do not include any strong toxic substances. Tskaltubo water is a perfect solution for Anti Age & Beauty & Weight loss Treatment, thus it’s the sole exception not causing redness of the skin after Spa procedures.

Rich Nature

Subtropical climate, Rich Nature (More than 150 type of trees; 3 Recreational zones). Average annual temperature of +14.6 C, with average low of +5.3 C and average high of +25 C (2,000 hours of sunshine annually).

Easy Access

Tskaltubo resort has easy access to all Georgian cities and worldwide (20 minutes from Kutaisi International Airport (2nd Largest Airport of Georgia); Additionally, Tskaltubo Railway is connecting most cities of Georgia.

Investment opportunities

Renovation of 16 existing state owned sanatoriums into luxury hotels, medical and wellness spots. Most of the sanatoriums are historical buildings with exclusive architecture. Alongside with the Medical & Wellness destination Tskaltubo has potential to encourage MICE and sport tourism centers, amusement parks, gambling facilities, and off course shopping and retails!

Gabmbling

Surrounded by countries where gambling is completely or partially prohibited or severely restricted, Georgia has a regional competitive advantage in the gaming business. Georgia offers high quality gambling experience similar to world class gambling destinations. The government of Georgian is actively supporting the development of the gaming industry and encourage certain incentives in distinct locations, even though numerous sites already enjoy diverse tax exemption.

Beside casinos, slot clubs and bookmakers are popular gambling facilities all around the country. Overall, gambling industry accounts for about 70% of the entertainment industry’s total turnover (equaled GEL 1.2 bln in 2013).

Tbilisi

Tbilisi is the capital and the largest city of Georgia with 1.7 mln inhabitants. Located on the south eastern edge of Europe, Tbilisi's proximity to east-west trade routs (The Great Silk Road) ensures its position as an important transit direction for global real estate, energy and trade projects.

Tbilisi has important landmarks and sightseeing locations. It benefits from growing international, regional and local tourism in Georgia. Also, Tbilisi is a business center of Georgia. Tbilisi hospitality and real estate sector offers several investment opportunities, such as Residential, Hotel & Leisure, Commercial and Retail. Potentially interested developers in hospitality sector could be mid-class brands of leading international hotel groups or boutique type hotels, MICE and Conventional Center developers.

The number of multinational companies operating CIS regional centers in Tbilisi is increasing steadily. Development of A class European standard office buildings is one of the investment opportunities in Tbilisi (Numerous State owned city center locations are available for sale).

Tbilisi has Easy Access and Modern Infrastructure - In 2013, 1.44 mln passengers flew in and out of Tbilisi to and from a wide variety of destinations. The Tbilisi Metro serves the city with rapid transit subway services (It has 22 stations and 186 metro cars).

Tbilisi Railway – is an important part of the Euro-Asian Transportation Corridor that links Europe with Central Asia

Free Tourism Zones

Georgia has two unique Free Tourism Zones Anaklia and Kobuleti that offer prepackaged hotel projects, free casino license for hotel capacity over 80 rooms, free land and certain tax exemption. The Government of Georgia offers to interested investors unprecedented terms for the construction of hotels along the seaside that has the best climate conditions. Government of Georgia will provide engineering and infrastructural networks to the territories and exempt investor from profit and property taxes for 15 years.

Kobuleti FTZ

Kobuleti is a seaside resort on Black Sea, with modern infrastructure and easy access. Kobuleti Free Tourism Zone includes development area of 12 ha for around 30 hotels (140 meters from the sea).
 
Anaklia FTZ

Anaklia is a seaside resort, located in the Samegrelo-Zemo Svaneti region (Western Georgia), at the place where the Inguri River flows into the Black Sea. The city Zugdidi is the capital of the region. The lands that will be handed over to investors are located alongside the boulevard which was designed by Spanish architect Alberto Domingo Cabo.