Hotel owners and management companies say Georgia’s hotel sector has become less attractive for investors, mainly because the payback period for hotel projects has significantly increased. Although tourism revenues are at record highs, the number of hotel rooms has expanded faster than the growth of international visitors, reducing profitability.
According to Irakli Chighladze, founder of KA Group, the sector is no longer appealing as a new investment. Before the pandemic, hotel investments typically paid back within 7–8 years, but now the period has stretched to 15–20 years. He says he currently recommends new hotel investments only in Kutaisi, which still suffers from room shortages during peak seasons.
Paata Kokaia, founder of Inn Group, also confirms the shift. He notes that from 2015 to 2017 investors could recover their money in six years, but the number of beds in the country has since increased by about 50%, creating strong competition. Although tourism income is increasing, visitor growth of 5–7% per year is no longer enough to balance the oversupply of rooms.
According to Galt & Taggart, the number of branded hotel rooms in Tbilisi has grown 1.8 times since 2019. As a result, many hotels are struggling with profitability, and in many cases, real-estate development revenues are still being used to repay hotel loans.
