International travel numbers decreased for the first time in decades. According to the statistics of the Georgian National Tourism Administration, visits of international passengers in 2020 dropped by 81.3% as compared to 2019 which in absolute figures is a fall from 9.35 million travellers to 1.75 million. Of note is that a tourist visit envisions at least a 24-hour stop in a country which is obviously important since tourist visits require expenses on food, accommodation, leisure, etc., and spending, therefore, is greater.
It is important to consider the tourism industry’s development trend, particularly in the last decade.
Graph 1: Statistics of International Visitors and Travelers, Million Persons
Source: Georgian National Tourism Administration
Naturally, tourism revenues also increase with the growth of the tourism industry. A record high tourism revenues of USD 3.26 billion was registered in 2019. However, the tourism industry sharply declined in 2020 as did its revenues, amounting to only USD 0.54 billion.
Graph 2: Tourism Revenues in 2013-2020
Source: Ministry of Economy and Sustainable Development of Georgia
Tourism revenues dropped sharply as a result of the restrictions imposed amid the COVID-19 pandemic. Tourism revenues were USD 160.5 million in February 2020 and shrank to USD 8.5 million in April 2020.
Graph 3: Tourism Revenues in 2020
The outbreak of the COVID-19 pandemic and the imposition of restrictions led to a sharp contraction of the tourism industry. The Government of Georgia’s policy to use domestic tourism and lift some restrictions in the summer in order to offset losses did not bring results. Moreover, the 1.39 million visits of domestic tourists in the third quarter of 2019 decreased by 5.5% in the third quarter of 2020 and amounted to 1.31 million visits. Therefore, all of these measures failed to put 2020’s domestic tourism figures on par with 2019’s numbers, let alone offsetting the losses from international tourism.
Graph 4: Number of Domestic Tourists, Million Persons
Source: National Statistics Office of Georgia
It is also interesting that the authorities established COVID-19 quarantine spaces as a means of helping hotels as one of the integral parts of the tourism industry and allocated GEL 32.5 million from the budget (as of September 2020 data) for this purpose. At the same time, the authorities postponed income and property taxes for the tourism industry and later wrote them off. However, this is a small amount of money as compared to the losses inflicted to the sector.
Adjacent industries, such as restaurant business and airlines, were also hit hard with some of them going bankrupt. In response, the government subsidised loan interests and flight tickets as well as postponed the payment of property and income taxes for these industries. However, similar to hotels, this aid was very little for the restaurant industry and airlines as compared to enormous losses they suffered.
To summarise, 2020 was the hardest year for the Georgian tourism industry given the COVID-19 pandemic and the restrictions imposed by the government. Tens of thousands of jobs were lost and the industry in general was inflicted the heaviest financial losses.