Hotel business in Georgia is no longer profitable and its investment attractiveness has significantly declined, according to Paata Kokaia, founder of Inn Group. He says returns in the sector have dropped sharply in recent years due to an oversupply of hotel rooms in the market.
Speaking on “Business Course,” Kokaia noted that although tourist arrivals continue to grow, supply has expanded even faster, creating an imbalance where demand is no longer keeping up. He added that under current conditions, hotel companies often rely on income from other businesses to service bank loans in the sector.
Kokaia said his company has still invested in refurbishment projects, including renovating an entire building in Gudauri and replacing furniture, but has no plans to build new hotels. He explained that construction costs are high while returns remain low, making new investment unattractive.
He also pointed to weak credit absorption capacity in the sector, saying hotels can only sustain limited debt levels and often require external funding sources to cover obligations. In his view, many existing hotels are now being sold below replacement cost, reinforcing his conclusion that the sector has become increasingly unviable for new investment.
