Georgia’s hotel industry is facing a slowdown despite growing tourist numbers, according to business advisor Mikheil Gaprindashvili. He says the biggest pressure comes from the rapid expansion of non-hotel accommodations, such as short-term rental apartments, which are taking a large share of tourism revenue. By 2028, their number is expected to almost double, directly affecting hotel occupancy and income.
Gaprindashvili notes that the planned opening of new hotels has also slowed significantly. Although 22 international and 290 local hotels were scheduled for 2024–2026, many projects are now delayed due to market oversupply. At the same time, average room rates have dropped from $99 in 2019 to $93 today, while operating costs have risen, making profitability even more difficult.
He adds that smaller hotels have struggled the most, with some converting into offices or bank branches. Because of reduced income, many hotels can no longer make capital investments in equipment or renovations, contributing to what he calls a “period of stagnation.”
To overcome challenges, Gaprindashvili recommends stronger customer segmentation and added value. High-spending tourist groups, such as Jewish visitors, should be prioritized, while less profitable segments may require a new strategy. He says hotels must offer more than accommodation — such as food, entertainment, and excursions — to remain competitive in the changing market.
