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Georgia's Tourism Sector - Tourism Market Watch | April 2019

7 May, 2019

Total international visitors (tourists and same-day combined) to Georgia were up 3.7% y/y to 0.5mn persons in April-19 after growing 4.6% y/y in previous month. This growth was driven by 4.2% y/y increase in tourist arrivals and 3.0% y/y growth in same-day arrivals Russia was the largest source of visitor growth, followed by Armenia and Kazakhstan. Visitors from the EU were up 28.7% y/y to almost 33k visitors, with Germany and Poland driving growth. From non-traditional markets visitors were pronounced from Israel.

From major source markets, visitors from Turkey continued to fall for 8th consecutive month, but with much slower reduction in last two months. Arrivals from Iran more than halved (down since Jun-18 with the exception of Nov-18), and is the major reason behind slowdown in tourist growth figures.

We expect tourist arrival growth to accelerate from 2H19, due to high season and fading effect of reduced visitors from Iran and Turkey.

Please see the full note here, which brings together tourist arrival data for reporting month, most recent statistical information available in the sector and 2019 forecast.


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Tbilisi Airbnb Market Outlook

11 Apr, 2019

Airbnb supply in Tbilisi growing at an astonishing pace. Over 2016-2018, the average monthly Airbnb rentals in Tbilisi increased 2.5x from 4,200 properties in 2016 to 10,300 in 2018, generating a market worth US$ 23mn.

Such a dramatic growth of the market raises questions: 

  • Is Airbnb profitable for hosts?
  • How Airbnb affects long-term rental rates?
  • Is Airbnb price competitive with hotel industry?
  • Will Airbnb’s market share increase?


Please see the full note here to get answers along with up-to-date Airbnb data, peer comparison, and outlook of the sector.


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Georgia's Tourism Sector - Tourism Market Watch | March 2019

8 Apr, 2019

Tourist arrivals increased 4.3% y/y in March-19, after growing 5.1% y/y in previous month. Same-day arrivals were up 5.0% y/y in March-19, after 10.7% y/y drop in previous month. As a result, total international visitors to Georgia were up 4.6% y/y to 0.5mn persons in March-19.
Russia was the largest source of visitor growth, followed by Azerbaijan and Israel in March-19. Visitors from the EU were up 25.9% y/y to almost 21k visitors, with Germany and Poland driving growth.

From major source markets, visitors from Turkey continued to fall for a 7th consecutive month, but on a much slower rate in March-19 compared to previous months. Arrivals from Iran more than halved (down since Jun-18 with the exception of Nov-18), and is the major reason behind slowdown in tourist growth figures.

We expect tourist arrival growth to accelerate from 2H19, due to high season and fading effect of reduced visitors from Iran and Turkey.

Please see the full note here, which brings together tourist arrival data for reporting month, most recent statistical information available in the sector and 2019 forecast.


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Georgia's Energy Sector - Changes Create Opportunities

6 Mar, 2019

Electricity is a capital-intensive sector with reasonable profits. Georgia’s investor-friendly regulations, upgraded transmission networks and export opportunities have attracted substantial investment in recent years. The energy sector was the second-largest FDI recipient in 2007-17. The sector’s EBITDA margin averaged 19% in 2012-17, above the business sector’s level of 13%

Electricity consumption in Georgia increased by 1.6x (4.4% CAGR) in 2008-18 and is expected to double by 2030. Electricity consumption is correlated with GDP, and in recent years growth in consumption has been driven by the non-residential sector. We project average annual growth of 5.7% in consumption in 2019-30, with the commercial sector being the key driver. As a result, by 2030, electricity consumption is expected to almost double and reach 24.5TWh.

Despite growth, generation capacity is still insufficient to satisfy demand. Since 2012, Georgia’s installed capacity has increased by 25.3%, reaching 4.2GW in 2018. However, this was not enough to satisfy the growing demand, and Georgia became a net importer of electricity after having been a net exporter in 2007-11. 

Georgia can become a net exporter of electricity again. Georgia has a solid pipeline of power plants, supported by government policy. Currently, 150 ongoing projects (installed capacity 5.4GW) are at various stages of development with identified investors. However, government policy has tightened significantly since 2016, which makes full implementation of the pipeline less likely. Nonetheless, we estimate that even partial implementation of these 150 projects will make Georgia a net exporter of electricity from 2021. Without the addition of new capacity, Georgia might need to import electricity, even in the summer months. 

A new wave of reforms will result in a competitive market model and attract new types of investor. Georgia became a member of the Energy Community of EU and its neighbours in 2017, obliging it to harmonize its legislation with EU standards in the energy sector by 2025. This will eventually lead to a new market model with more competitive and transparent rules for power trading. This new energy market is expected to attract new types of investor, and it opens up the possibility of trading via Turkey to Eastern European countries, since Turkey is connected to the EU market and has a compatible market structure.

We expect fundamental changes in the energy market. Upcoming reforms should shorten the settlement period from one month to one day/hour, introduce an imbalance settlement mechanism, diversify power trading channels via the creation of day-ahead and intraday markets, increase the number of direct consumers, enhance power trading activities, and unbundle distribution and supply. In the context of these upcoming changes, we believe that future market prices will be dictated by neighbouring market prices and decisions on the integration of electricity generated from old regulated HPPs and from HPPs with Power Purchase Agreements.

Turkey remains an attractive export market for Georgia. Despite the dramatic fall in Turkish electricity prices in 2012-18, Turkey’s geographic proximity, its compatible market structure, and the expected growth in prices will see it remain an attractive export destination, in our view. Another promising export market is Armenia, despite its small size, as the country is expected to face an electricity deficit due to the decommissioning of a nuclear plant in 2026. 
 

Report price: GEL 3,000 
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