According to the Georgian National Tourism Administration, there has been a positive recovery in the tourism industry in 2021. The revenue from international travel has reached 38% of the pre-pandemic level, and there has been a 7.7% increase in the number of international visitors. As a result, the hotel prices in Georgia have also shown an upward trend throughout the year.
In 2021, there has been a significant increase in the prices of hotels and restaurants. The monthly price increase has ranged from 2% to 15%, with an average of 10%. This can be seen from the average monthly prices of Georgian hotels in 2021. Compared to the previous years, the prices were lowest in 2020 due to the pandemic, but they have been steadily increasing since the beginning of 2021.
The average monthly price of hotels in 2021 has exceeded both the pre-pandemic level and the 2020 level, reaching 159 GEL. Prices have increased for all categories of hotels, with the highest increase seen in 5-star hotels, where the average monthly price peaked at 500 GEL in June 2021. 4-star hotels also showed similar fluctuations, while 3-star hotels and guesthouses had a relatively steady increase in prices.
To further analyze the monthly hotel price dynamics, the year-on-year Hotel Price Index (HPI) should also be considered. At the beginning of 2021, the HPI for Georgian hotels in GEL was negative until June, indicating that prices were lower compared to the same month in 2020. However, since then, prices have been increasing every month. The highest increase was seen in July 2021 (27%), followed by November 2021 (24%).
But when compared to the pre-pandemic values, the HPI was positive only from June to October 2021, with an average monthly increase of 3%. In the last two months of 2021, the HPI compared to 2019 returned to negative values. Looking at the different categories, the month-on-month price increase in 2021 compared to 2020 was higher for 3, 4, and 5-star hotels (with an average HPI of 28%) than for guesthouses (7%). However, when compared to 2019, the average monthly HPI for 3, 4, and 5-star hotels was -3%, while for guesthouses it was -1%. It is also important to note that the price fluctuations were greater for 3, 4, and 5-star hotels compared to guesthouses.
However, it should be noted that the high inflation rate and the depreciation of the Georgian Lari against the US Dollar could potentially make the HPI compared to 2019 close to zero, resulting in a higher real decrease in prices.
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