The FINANCIAL — “Adjara Group, owner company of Holiday Inn in the Georgian capital Tbilisi is founding the Georgian Hotel brand which, on initial stage, will include two hotels in the famous mountainous resorts of Kazbegi and Borjomi. Two new hotels under Adjara Group’s control will fully meet international standards and quality expectations of international and local visitors,” Iva Davataia, CEO of Adjara Group, told The FINANCIAL exclusively.
“When we talk about the Georgian hotel brand, we do not only mean the name, it is the whole range of standards that will apply to the hotels in terms of service quality, security, fire and life safety, food safety and many other critical points that put any hotel on the map for international visitors,” Davitaia said. “This project entails foundation of a hotel management company that will undertake management of other qualifying hotels as well, whereby we’ll improve their quality standards, so that they too fully meet international standards. In this way the hotels will be unified under the new brand, which will combine to make a large network of Georgian hotels of international quality and repute.”
Adjara Group is a holding that runs several types of businesses. It was founded with Georgian investments and is managed by Georgians as well. The Group owns Holiday Inn in Tbilisi, the building of publishing house Samshoblo where the Group is going to open internationally branded hotels as well. They are building a Holiday Inn in Batumi (180 rooms) which is to open in 2013 and hotels in Kazbegi (150 rooms) and Borjomi (100 rooms) to open in summer of 2012. The holding is also managing the Sports Palace through long-term leasing and, in addition, runs gambling and wood processing businesses as well.
“Our company was founded more than 10 years ago. It later formed as a holding. It was about 3 years ago that we became especially active on the market,” Davitaia said. “At that particular time we needed financial assistance and Bank of Georgia became our long-term partner. We are one of the biggest borrowers of the Bank as we have loan facility worth several tens of millions of USD. We are cooperating with Bank of Georgia in all of our business lines.”
The whole investment of Holiday Inn totals to circa 30 million USD. 11 million was the capital of Adjara Group. The holding got its loan of 19 million USD from Bank of Georgia just after the financial crisis and Russia-Georgia conflict.
“We had intensive negotiations with other local and international banks at that time as well,” the CEO said. “However only Bank of Georgia was brave enough to issue the loan of this scale in a period when the access to financing , especially of real estate sector, was practically ceased. Holiday Inn was our first co-project, but later the Bank assisted us in other businesses and in total they have loaned us with several tens of millions.”
“Bank of Georgia possesses prudence to envisage what will happen on the market and estimate the potential risks related to the implementation of concrete projects. We spent one year trying to find the funds but all in vain. Only Bank of Georgia could approve the loan in a short period of time,” he added.
“Fast approval of the loan helped our business to flourish, as businessmen don’t have time to wait around. Certainly, because of the loan amount the procedures of Bank of Georgia weren’t simple, but they were organized and correspond to high client satisfaction, which results in the quick approvals of loans,” Davitaia said.
Iva Davitaia thinks that cooperation with Bank of Georgia, which helped the business of Adjara Group to be so successful, was down to the shared vision of these two companies. Both of them tend to implement projects which are interesting, profitable, innovative and successful.
“The main character of Adjara Group is that we are running a Georgian business. We use as much Georgian resources as possible in everything, would that be products of Georgian origin or human capital. Bank of Georgia supported us in this respect as they have the same vision,” Davitaia remarked.
“A lot of people were sceptical that we could build such a high quality hotel in 8 months within budget of 30 million USD, counting almost entirely on Georgian resources, including materials and human resources. Only Bank of Georgia believed in this idea and they’ve made a right choice. Soon we, with the assistance of the Bank, showed everyone that here in Georgia, our people can build the hotels of international standards, we can open and successfully operate them with Georgian human capital and this have become a very good example of a truly successful Georgian business.
“I would like to underline that we involve as many Georgian resources in our business as possible because we want the money we spend to remain in the economy of Georgia. At the beginning we hired 3 foreign individuals to managing positions. However currently everyone working for our hotel is Georgian and we are proud of that fact. We have proved that Georgians can build and manage 4 and 5 star hotels by themselves.” Holiday Inn Tbilisi built and run by Georgians is named as one of the top best-designed Holiday Inns in the world.”
Currently Adjara Group is building another Holiday Inn Hotel in Batumi and negotiations about the loan with Bank of Georgia are nearly completed. Whereas the holding had to hire some foreign specialists for building the hotel in Tbilisi, now only Georgians are building the hotel in Batumi as they are already trained in the hotel’s building requirements.
Holiday Inn is operating very successfully. For most of the summer the hotel’s 180 rooms were fully booked. Currently 93 percent of the hotel’s capacity is occupied. The average price of a room is 110 USD, while at the moment the highest price for the most expensive room is 180 USD.
After successful implementation of the Holiday Inn project Adjara Group is founding a hotel management company in order to share their experience with other hotels and multiply the accumulated knowledge of hotel development and operations.
“Later on those hotels can take the name of the Georgian Hotel brand, which automatically means that we would transform them to hotels of international standards,” he noted.
“Nowadays the main problem with the hotel industry in Georgia is a lack of international standard hotels and staff who can offer a high level of services. These challenges have to be addressed as they impede further development of tourism in Georgia. Lack of rooms results in an increase in existing rooms prices. For example in Budapest or in Prague the average price of a room for 3-4 stars hotel is 80-90 EUR, while in Tbilisi it is 130-150 EUR per room and above,” Davitaia told The FINANCIAL.
“Our strategy is to capitalize on expansion of the tourism market through high quality offerings at affordable price. We prefer to have tens of thousands of guests at affordable price rather than hundreds for overpriced rates. We believe that only this strategy may provide sustainable ground for further growth of our business and at the same time will stimulate healthy competition in the environment where we operate. With our new projects we are trying to solve these problems. There are lots of tourists who are willing to spend money here. We just have to give them this possibility. By founding Georgian hotel brand and hotel management company, we can ensure that professionals are managing and serving at the hotels. On the other hand by building lots of hotels of international standards we can create the capacity to accept more and more of tourists who are curious to see Georgia or those who just love it.”
Davitaia believes that the new hotels in Kazbegi and Borjomi will greatly support development of the regions. These are tourist destinations which have many visitors but too few hotels. Therefore by adding two new hotels to the areas we will be boosting visitor numbers.
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