Lending to Georgia’s hotel and tourism sector is slowing, while overdue loans are rising. Hotel Federation founder Shalva Alaverdashvili says banks made the right decision to reduce lending, arguing that the hotel market is saturated and no longer as attractive to investors as it once was.
According to the National Bank of Georgia, the sector’s loan portfolio stood at GEL 2.78 billion in July 2026, down by 15% year-on-year, or GEL 494 million. Of this amount, GEL 130 million was more than 91 days overdue, representing 4.7% of the total portfolio.
Alaverdashvili, who currently manages nine hotels, said Tbilisi has more hotel rooms than the market needs. He noted that while hotel investments could previously be recovered in seven to eight years, the payback period has now extended to as much as 25 years. He added that some investors use income from other businesses, including real estate development, to cover hotel-related debts.
He also stressed that tourism is particularly vulnerable to geopolitical and political instability. Wars in Ukraine and the Middle East, regional conflicts and domestic political tensions can quickly reduce demand, making hotels a higher-risk investment. According to Alaverdashvili, banks have recognized these risks and are responding by reassessing their exposure to the sector.
