According to the Georgian National Tourism Administration, in 2021, some positive recovery trends were shown both in terms of revenue from international travel and in the number of international visitors. In particular, the revenue from international travel reached 38% of the pre-pandemic (2019) level, while the number of international visitors amounted to 20% of the pre-pandemic level and recorded a 7.7% year-on-year (YoY) increase. Against this background, it is worth evaluating the dynamics and recovery trends of hotel prices in Georgia throughout 2021.
Over the course of 2021, the prices of hotels and restaurants increased significantly. The monthly dynamics of the YoY price increase fluctuated between 2% and 15%, with an average monthly price increase of 10%. Such trends are observable from a sample of Georgian hotels’ average monthly prices in 2021. Across the 2019-2021 period, the prices were lowest in 2020 due to the outbreak of the Covid-19 pandemic, however, since the beginning of 2021, prices have increased significantly.
In 2021, the average monthly price of hotels exceeded both the pre-pandemic (2019) level (129 GEL) and the 2020 level (115 GEL), to reach 159 GEL. Prices increased for all categories of hotels, with the price increase being highest in the most volatile category, namely 5-star hotels, for which the average monthly price peaked in June 2021 (500 GEL). 4-star hotel prices showed similar fluctuations, while 3-star hotels and guesthouse prices increased relatively steadily.
To further evaluate the monthly hotel price dynamics, the YoY HPI index should also be analyzed. At the beginning of 2021, the hotel price index for Georgian hotels calculated in GEL was negative until June of 2021, meaning that prices were lower compared to the corresponding month of 2020. Since then, the prices have been increasing each month. The magnitude of the YoY price increase was the highest in July 2021 (27% increase) followed by November 2021 (24%).
However, when compared to pre-pandemic values, even though the HPI was positive throughout June-October 2021, in this period the magnitude of the month-on-month price increase was low at an average of 3%. It must also be noted that in the last two months of 2021, the HPI compared to 2019 again returned to negative values. Looking at the categories, in 2021 compared to 2020, the month-on-month price increase was higher in the case of 3, 4, 5-star hotels (with an average monthly HPI of 28%) than guesthouses (7%). Meanwhile, compared to 2019, the average monthly HPI for 3, 4, 5-star hotels was -3%, while the average monthly HPI for guesthouses was -1%. Moreover, the magnitude of price fluctuations was greater in the case of 3, 4, 5-star hotels compared to guesthouses. However, it must also be noted that the high inflation rate and depreciation of the GEL’s exchange rate against the USD could realistically render the HPI compared to 2019 close to zero, thus making real decrease of prices higher than reported.
Hotel Price Index
In December 2021, in Georgia the hotel price index increased by 2.5% compared to November 2021. The 3-star, 4-star and 5-star hotel price index increased by 4.4%, while for guesthouses, the price index increased by 3.1%.
In December 2021, compared to December 2019, hotel prices in Georgia decreased by 2.2%. The prices of 3*, 4*, 5* hotels decreased by 3.7% and the prices of guesthouses decreased by 5.5%.
Average Hotel Prices
In Georgia, the average cost of a room in a 3-star hotel was 135 GEL per night in December 2021, while the average cost of a room in a 4-star hotel in Georgia was 246 GEL per night, and the average cost of a room in a guesthouse was 106 GEL per night.
The average cost of a room in a 5-star hotel in Georgia in December 2021 was 423 GEL per night. In Kakheti, the average price was 548 GEL, followed by Tbilisi – 524 GEL, Guria – 398 GEL and Adjara – 391 GEL.