The FINANCIAL — The number of guests staying at mid-range hotels operating in Tbilisi has decreased by on average 15% this season in comparison with last year. High taxes and expensive utility costs are the main reasons behind Georgia’s pricey hotel rooms. The amount of Russian guests at hotels in Tbilisi has started to dominate.
“I cannot provide accurate figures but this year the number of guests at our hotel has definitely decreased. We were expecting most of our guests to be from Azerbaijan, Armenia and Russia. After the opening of Batumi airport however, Tbilisi lost the benefit of being a transit city. As a result many of our guests are now flying directly to Adjara,” Mikhael Chechelashvili, Head of the Marketing Department at hotel Muza, told The FINANCIAL.
The main segment of guests at hotel Muza is made up by those from Azerbaijan, Armenia and Russia. The average price per single room including breakfast at the hotel is USD 70; Muza has 12 rooms in total.
Meanwhile, the number of tourists that visited Georgia in the first 6 months of 2013 is 2,188,721, which is 29 percent higher than the same period of 2012, according to data provided by the Georgian National Tourism Administration (GNTA).
Another reason behind the reduced numbers of guests staying at Tbilisi’s hotels is the increasing number of private apartments available for rent in the city on a daily basis. “There are many apartments renting out rooms per the night and that is really competing with hotels. They are cheaper. However, to combat the situation hotels will simply have to start offering similar prices so as not to encounter losses,” said Chechelashvili, hotel Muza.
There were 392 hotels in existence in Georgia until 2009. 224 new hotels were added to that number from 2009 to 2011. By 2011 the number reached 616. 95 hotels were opened that year in Georgia, which is 24 more than in 2010 and 37 more than in 2009.
Tbilisi has the largest number of newly opened hotels. The number was 15 in both 2009 and 2010. Batumi is the second of the country’s cities boasting the largest number of newly opened hotels. The number was just 9 in 2009 but in 2011 exceeded even Tbilisi’s figures. 23 hotels were opened in Batumi in 2011, while in Tbilisi just 22. This data was provided to The FINANCIAL by the National Statistics Office of Georgia, GeoStat.
Hotel Riverside has seen a reduction in guest numbers by 20% this season. With a total of 18 rooms, the hotel has a 60% occupancy rate. In July the figure was 75%.
“The average price for a room at our hotel is USD 125. We have not changed our prices this year. The nationalities of our guests are diverse, but this year the number of Iranians has increased,” said Eka Tabidze, Sales Manager at hotel Riverside.
Hotels Penthouse and Armazi Palace have also seen decreases in guest numbers this year, with 10% and 10-20% respectively.
The David Sultan hotel has been the rare exception as it has actually seen an increase in guest numbers this year. According to Marina Maisuradze, Director of the hotel, this can be explained by the increased popularity of their hotel which only opened last year.
“We have 14 rooms in total. 98% of rooms are full at the moment. We have had a guest increase of 12% in comparison with last year. We only opened last year, so perhaps this increase is just because naturally more people have heard about our hotel with time. There has not only been an increase in guest numbers, but also the picture has changed. Last year Iranians and Turks made up the majority of our guests. This year however, Ukrainians and Russians have largely replaced them.
The price of a room per night, including breakfast, at David Sultan varies from USD 80-100.
Georgian guests frequently complain about how high hotel prices are. Some representatives of mid-range hotels agree with them, however explain it by the high taxes and utility costs they have to face.
“As taxes and rent prices are too high in Georgia, it is impossible to reduce prices. If we were to reduce prices then we would be working without profit,” said Maisuradze, David Sultan Hotel.
“Hotel prices are high in Georgia due to their expenditures, especially utility costs. This year as the competition increased prices have been reduced at some hotels. We reduced prices by 5-10% in comparison with last year,” said Naniko Gegelashvili, Manager at hotel Penthouse.
The average price for a single room at hotel Penthouse is GEL 100-110, including breakfast. There are 30 rooms at the hotel. The hotel’s guests mostly come from Ukraine, Poland, Iran and Iraq.
Giorgi Shavishvili, representative of hotel Kalanga, agrees that hotel prices in Georgia are expensive, but he also said that it is due to the hotels’ high costs. Given the local prices for things they are actually reasonable.
The average price of a room at hotel Kalanga is USD 60, including breakfast.
Rati Ratishvili, from Vere Palace, a hotel with 42 rooms and with an average price of EUR 80 per single room, said that the reason for the high prices of hotel rooms in Tbilisi is that there is a imbalance between demand and supply. “If there were three or four additional hotels, with over 200 rooms each, that would lower existing prices by 20 to 30%,” Ratishvili told The FINANCIAL.
“Over 72% of rooms are currently booked. We have not seen a significant increase or decrease in guest numbers this year. The number of guests might actually have increased by 2-3%. Prices have not increased this year. They are the same as last year’s,” said Ratishvili.
Over 20% of Vere Palace’s guests are from Iran, 20% are from Ukraine and Russia and the rest are from European countries and America.
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