Georgian Economy Minister:
“Georgia is a safe country for everyone, including Russian tourists”

Economy Minister promised that the government will do its best to support small entrepreneurs who are negatively affected by “this specific crisis”. Photo: Economy Minister., 25 Jun 2019 - 19:19, Tbilisi,Georgia

“Georgia is one of the safest countries for tourism and for travellers from any country, including Russian tourists”, says the Economy Minister of Georgia Natia Turnava.

I will use all platforms to say that Georgia remains one of the most hospitable, open and safe countries in the world, welcoming with equal pleasure European, Korean, Ukrainian or Russian tourists”, said Turnava today while meeting with representatives from the hospitality sector of the Adjara region of Georgia.

Hospitality sector representatives asked Turnava to speak about the challenges they will face this summer after Russian President Vladimir Putin’s banned flights to Georgia

They claimed that most of the hostels in Kobuleti as well as in the entire region of Adjara used to serve tourists coming from Russia and the travel embargo would “significantly reduce” their income.

Natia Turnava meeting hospitality sector representatives in Kobuleti. Photo: Ministry of Economy.

Owners of hotels and guest homes in Kobuleti asked Turnava and the government to find alternative ways for Russian tourists willing to visit Georgia and for the hospitality sector of Adjara region to conquer alternative tourism markets.

Turnava promised that the government will do its best to support small entrepreneurs who are negatively affected by “this specific crisis”.  

Today I am in Adjara as the season has already started here and you need the support mostly. However there are challenges in Kakheti, Svaneti regions as well and I will continue meetings to learn the specific problems and we will work to create an effective plan”, Turnava said.

Will the ban on flights affect the Georgian economy?

How will Putin’s ban on flights to Georgia and restrictions on the import of Georgian beverages into the Russian Federation affect the economy? 

The International School of Economics (ISET) posted an infographic on its Facebook page, which shows that the share of tourism in the Georgian economy is 7.6 per cent, and in which the share of Russian tourists in the economy is 1.8 per cent while the share of Russian tourists entering Georgia by plane is just 0.5 per cent.

Infographic by ISET.

TBC Bank published a study ‘Russian Sanctions: Manageable Impact on the Growth and Still Betting on the GEL’, which says that last year the share of Russia in total inflows (exports of goods, tourism, remittances, and FDIs) stood at 16 per cent with a tourism share of 19 per cent and a significant contribution to growth.

The estimated drop of tourism inflows from Russia may be as high as 50 per cent. Even in this case, we believe the impact on growth is manageable and we are betting on the GEL”, read the report.

Share in exports, tourism , remittance and FDI inflows in 2018 (%). Image: TBC.

The study says that despite a possible sharp drop from Russia, total tourism inflow growth is expected to remain in a positive direction up to five per cent, mainly due to a solid increase from other sources, such as the EU with around a 10 per cent share and the growth rate of 33.6 per cent year-on-year over the last twelve months, Israel (4.5% share and 36% growth), as well as other countries.

The negative impact can be balanced by a more supportive fiscal stance as well as relaxed retail credit regulations. Those measures are likely to soften the impact to one per cent of GDP. 2019 growth rate is estimated to equal four per cent instead of around five per cent expected previously”, read the report.

The research says that a 50 per cent drop can be a conservative assumption as market players have already started to actively seek indirect routes; also, as only one third of Russian tourists arrive by plane, the rest of the tourists are expected to be much less impacted, as well as Georgian nationals with Russian passports arriving by different means of transportation. In addition, the interest of Russian tourists still remains high as there are no safety issues and atmosphere remains welcoming.

The Russian Association of Tour Operators says that there are currently between 5,000-7,000 Russian tourists in Georgia on organised tours.

Russian news agency TASS says that the flight bans will result in another 150,000 Russians having to cancel their planned trips to Georgia.