Irakli Gharibashvili:  “We earned USD 4.5 billion in tourism revenues last year and we are expecting more this year.”

Verdict:  FactCheck concludes that Irakli Gharibashvili’s statement is HALF TRUE.

Resume:  In 2022, tourism revenues amounted to USD 3.5 billion which in nominal terms is a historic high, although it is also USD 1 billion less as compared to the figure provided by the Prime Minister. In addition, the pace of the USD depreciation after the pandemic overtook the tourism revenue growth rate and the purchasing parity of USD 3.5 billion in 2022 equalled USD 3.1 billion in 2019.

The second part of the Prime Minister’s statement was about the forecast for 2023. In the first two quarters of 2022, tourism revenues reached USD 1.8 billion and exceeded the corresponding figure from the same period of the previous year by 58%. It is impossible to make a straightforward claim vis-à-vis tourism revenues in the remaining two quarters, although all other things being equal Georgia will most likely earn more in tourism revenues in 2023 as compared to 2023.

Analysis:

On 4 September 2023, at the session of the Government of Georgia, the Prime Minister of Georgia, Irakli Gharibashvili, discussed the economic indicators and stated the following about the tourism industry:  “Tourism is developing robustly. Last year we earned USD 4.5 billion in revenues. This year we are expecting more.”

Tourism is one of the fastest growing industries in Georgia. Under the United National Movement’s rule when the field was still nascent, revenues in 2010-2012 increased by a factor of 2.1 from USD 660 million to USD 1.4 billion which constitutes an average 46% annual growth rate.

Under the Georgian Dream’s rule, the annual growth rate decreased to 13% before the pandemic. In 2019, tourism revenues amounted to USD 3.3 billion. On top of the fact that the 46% growth rate could not have been kept forever, two other factors also precipitated the drop in the growth rate: the temporarily tightening of the visa regime in 2014 and banning direct Russia-Georgia flights in July 2019.

For 2020, the Government of Georgia estimated that tourism revenues would have been USD 3.5 billion. There have been all of the required preconditions to achieve this goal as well. There was an 18% growth rate in January but the pandemic changed everything. There were visible signs of recovery in 2021 whilst tourism revenues exceeded USD 3.5 billion in 2022.

Although USD 3.5 billion is an historic high, its purchasing power is now equal to USD 3.1 billion of the year 2019 given the depreciation of USD.

If we take a look at tourism in terms of the number of visitors, there would be a 72% recovery in 2022 (a 61% recovery in visitors and 58% in international travellers).

The fact that a fewer number of visitors spent more time in Georgia is largely attributable to two reasons:  time spent in Georgia – in 2019 one visitor was spending an average of 4.1 nights in Georgia whilst it was 6.2 nights in 2022 and inflation – consumer prices rose by 29% in 2022 as compared to 2019.

In the first half of 2023, the number of tourists that visited Georgia increased by 60% as compared to the same period of the previous year and exceeded 1.9 million, although there is still 9% less as compared to January-June 2019.

The situation is different vis-à-vis tourism revenues. In the first six months of 2023, Georgia earned USD 1.8 billion in the first six months which is 58% as compared to the same period of the previous year and 24% as compared to the first half of 2019.

Graph 1:  Tourism Revenues (USD Million)

Source: National Bank of Georgia

It is impossible to state precise tourism revenues for the remaining two quarters, although it is possible to make certain assumptions based on previous experience. In 2011-2018, tourism revenues in the second half of the year were 34%-56% more as compared to the respective first half. When direct flights from Russia were banned in July 2019, Georgia earned 24% more tourism revenues in the last six months as compared to January-June.

Even if the growth rate drops to zero in the second half of 2023, tourism revenues will still grow to USD 4.2 billion. Theoretically, in order for the annual tourism revenues to be less than last year's figure, it should decrease by 28% in the remaining time period.

From other economic parameters, we can highlight the additional value created by the tourism industry and the amount of money paid by foreign cards.

In 2022, the amount paid by foreign cards in Georgia reached GEL 3.6 billion and exceeded the figure of 2019 by 35%, although the volume of payments decreased by 8% from GEL 1.4 billion to GEL 1.3 billion in January-May 2023 as compared to the same period of 2022.

Graph 2:  Payments Made by Foreign Cards (GEL Million)

Source:  National Bank of Georgia

In 2022, the tourism industry created GEL 4.4 billion added value in Georgia which is 22.5% more as compared to 2019. In the first quarter of 2023, the amount of added value was GEL 906 million – 12.7% more as compared to the same period of 2022.

Graph 3:  Add Value Created by Tourism (GEL Million)

Source:  National Bank of Georgia

Within the context of the development of tourism, the Prime Minister spoke about the increase in passenger traffic at Kutaisi Airport which is also true. According to the data of the Civil Aviation Agency, Kutaisi Airport served a total of 667,000 passengers in January-June 2023 - which is 1,013% higher as compared to the same period of 2022 and 83% higher as compared to the same period of 2019.

The Prime Minister was right when he was speaking about the growth of tourism revenues as they reached a nominal maximum figure in 2022. However, they are still not equal to the tourism revenues earned in 2019 if inflation is taken into account. The growth continued in the first half of 2023; however, the figure of USD 4.5 billion named by the head of the government is not true. In 2022, Georgia received not USD 4.5 billion but USD 3.5 billion in tourism revenues. Despite the growth dynamic and given the factual inaccuracy vis-à-vis revenues and ignoring the factor of inflation, FactCheck concludes that Irakli Gharibashvili’s statement is HALF TRUE.