18.Aug .2020 11:56

Tourism outlook down, yet other inflows and imports stronger than expected – TBC Capital

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Due to the latest developments, we have once again worsened our projections for tourism inflows, both for 2020 and 2021. Nevertheless, we maintain our view that once the virus is contained tourism inflows in Georgia will quickly recover, - says TBC Capital.

"In the baseline scenario, we expect tourism inflows to drop by 83% YoY in 2020 (-86% YoY in 2020 would equal to -100% YoY drop in tourism in Apr-Dec 2020). 2021 should be a year of recovery, however the inflows still being down by around 30% compared with the 2019 level. The projections are broadly in-line with the expectations internationally. For example, according to the International Air Transport Association’s (IATA) recently updated projections, 4 airplane passenger numbers are expected to recover to 70% of the 2019 levels in 2021.

Corporate travel is expected to take longer to recover, as companies are reducing their travel budgets and regular video conferencing has created a substitute for in-person meetings. On the other hand, although consumer confidence remains weak in light of higher job insecurity, pent-up demand still exists for leisure, as well as visiting friends and relatives, and this segment should rebound relatively quickly once the physical barriers are removed. Equally, short-haul travel should resume earlier than long-distance travel. The countries to have reopened borders for incoming tourists this summer have shown some promising trends. Following an almost 100% drop in visitors to Croatia, tourism returned to 50% of the 2019 levels in July and August, after the country opened its borders for the season.

Turkey, another notable tourist destination in the region, also saw a sharp rise in visitors following the reopening of its borders. However, the risk of virus spread remains high once the borders are reopened. As the region’s economies account for approximately half of the inbound tourism inflows to Georgia, and repeated visits also comprise a relatively high share while corporate and long distance travel is not significant, we remain bullish for the rebound prospects in 2021", - says TBC Capital August insights.