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Tbilisi and Batumi are main suppliers of hotel rooms. In 2019, the total number of hotel rooms in Tbilisi increased by 23%, amounting to 12,430 units. Batumi’s supply rose to 6,341 rooms, reflecting a 13% increase. Taking the pipeline into consideration, these two cities will remain Georgia’s top suppliers over the next five years.

Number of hotels
Number of rooms
Number of bads
Source: Colliers

Number of hotels
Number of rooms
Number of bads
Source: Colliers

The Airbnb market is impressively competing with hotels, almost tripling its total market revenue since 2017.

AIRBNB market revenue by years (USD)
Source: AirDna

The international upscale hotel supply has significantly increased in Tbilisi during the past couple of years, driving the performance indicators downwards. Overall, the market size experienced an insignificant decline, compensated by the substantial increase of the Airbnb market that accumulated USD 35 million in 2019. Therefore, the overall accommodation market recorded a modest 2% growth.

Hotel Market Performance of Tbilisi
Source: AirDna, Colliers Georgia
Hotel Market Performance of Batumi
Source: AirDna, Colliers
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In 2019, the global hotel industry saw $550 billion in rooms revenues, which was a record and up 2.5% on the prior year. European hospitality market experienced a turning point in 2019, as supply growth increased across numerous markets. However, demand growth (1.8%) continued to outpace supply growth (1.4%). As a result, occupancy rose marginally by 0.4%, ADR increased more notably by 1.8%, and RevPAR increased by 2.2%. Despite risks from Brexit and the increase of alternative accommodation, Europe remained resistant and recorded 72.2% occupancy in 2019. Looking forward, supply growth is set to continue. However, due to challenges posed by Covid-19 slightly slower growth is expected.
The international hotel supply has not changed during the last three years in Batumi. This could be the reason for maintaining the stability of performance indicators regardless of economic and political factors in 2019.
In line with Tbilisi and Batumi, the Airbnb market is peaking up in ski resorts as well. The increased popularity of aparthotels in Gudauri and Bakuriani has been a driving factor for significant growth of competition and improved performance of Airbnb.
Spa and destination resorts’ hotel market is quite attractive with its high-performance indicators. It is important to note that the fascinating potential growth of Abastumani is expected in the next few years. This resort is rebranded and redeveloped at the highest standard with 1,000+ hotel rooms in the current pipeline.
International hotels will be in the highest demand because of the customers’ trust in the brand. Among them, chain-branded midscale hotels will be the quickest to recover as they are preferred by people who need to travel. As for the international upscale and luxury hotels, they may face a slower recovery trend. Specifically, luxury will be the last to recover. It is noteworthy that smaller hotels reach break-even point more quickly but benefit less because of the increased expenditures to meet the new regulations, while the larger hotels will benefit more after reaching this point.