Tourism is on the rise – The number of tourist arrivals in Georgia rose 7.9% y/y to 4.3mn in 9M25. Similar to recent years, growth was largely driven by rising interest from Asian markets. Alongside Asian countries, the number of visitors from traditional markets, particularly Russia and the EU also increased in 9M25, supported by the addition of new direct flights.
In Ajara, tourism growth was mainly driven by the positive dynamics of visitors from Russia, Central Asia and the Middle East. According to Galt & Taggart’s assessment, tourists from Russia and Central Asia primarily drive demand for apartments, while visitors from the Middle East tend to prefer hotels, mainly for gaming-related purposes. These trends have had a positive impact on both hotel and apartment occupancy and revenues in Batumi.
Ajara’s tourism sector currently faces two main challenges:
1. The legalization of gambling in the region, particularly in Azerbaijan, which intensifies competition in tourism.
2. The number of short-term rental apartments in Batumi is expected to double by 2029, which will require a rapid increase in tourist arrivals to balance supply.
Recommendations:
1. Given the rising regional competition, collaboration between the private and public sectors is essential to mitigate potential negative effects. Diversification of tourism offerings is also important to maintain the competitive advantage.
2. The rapid tourist growth in Batumi could pose an overtourism risk that the city’s existing infrastructure cannot sustain. Alternatively, it is important to promote long-term tourism by attracting digital nomads and developing medical tourism in Ajara.
