GEORGIA: TOURISM TRENDS ANALYSIS & RECOMMENDATIONS May, 2024 Georgia: Tourism Trends Analysis and Recommendations © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This work is a product of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Georgia Tourism Trends Analysis and Recommendations. © World Bank.” Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover photo: Authors. Further permission required for reuse. 2 Georgia: Tourism Trends Analysis and Recommendations Table of Contents 1. EXECUTIVE SUMMARY ...................................................................................................................................................... 6 2. INTRODUCTION ................................................................................................................................................................ 7 3. OVERVIEW OF GEORGIA'S TOURISM INDUSTRY ............................................................................................................... 9 3.1 Arrivals: Volume and Evolution ................................................................................................. 9 3.2 Tourism Contribution to Georgia's Economy ............................................................................ 9 4. TOURISM TRENDS AND DEVELOPMENTS ....................................................................................................................... 12 4.1 Recent Trends in Visitor Arrivals ............................................................................................. 12 4.2 Emerging Tourism Source Markets ......................................................................................... 14 4.3 Analysis of the main segments/regions: Culture, Nature, MICE, Gastronomic ...................... 15 4.4 Tourism supply assessment .................................................................................................... 25 4.5 Connectivity ............................................................................................................................ 29 4.6 Level of Achievement of the Tourism Strategy 2015-2025 ..................................................... 31 5. PATTERNS OF TRAVEL AND VISITOR FLOWS ................................................................................................................... 33 5.1 Analysis of International Tourism ........................................................................................... 33 5.2 Analysis of Domestic Tourism ................................................................................................. 38 6. BENCHMARKING WITH COMPETITOR DESTINATIONS ................................................................................................... 39 7. MAIN SHORTCOMINGS & RECOMMENDATIONS FOR IMPROVEMENT .......................................................................... 45 ANNEX 1. WORLD BANK REGIONAL DEVELOPMENT SUPPORT................................................................................................ 51 ANNEX 2. CONSULTATIONS WITH KEY STAKEHOLDERS ........................................................................................................... 53 ANNEX 3. LIST OF PARTICIPANTS OF FGDS AND INTERVIEWED STAKEHOLDERS ..................................................................... 55 ANNEX 4. A FEW BEST PRACTICES OF GEORGIA'S TOURISM SECTOR ...................................................................................... 56 3 Georgia: Tourism Trends Analysis and Recommendations List of Figures Figure 1: International and Local Tourist Flows in Georgia, thousand, 2015-2023 Source: GEOSTAT....................................... 9 Figure 2 International travel receipts. Source: BoG 2023 ........................................................................................................ 10 Figure 3: Average expenditure per visit. Source: GEOSTAT 2023 ............................................................................................ 10 Figure 4: Evolution of the share of tourism in GDP (2015-2023). Source: GEOSTAT ............................................................... 11 Figure 5: Value added on tourism industries. Source: GNTA 2024 .......................................................................................... 11 Figure 6: Employed persons in hotels. Source: GEOSTAT ........................................................................................................ 12 Figure 7 International Visit Trip by Countries in 2019-2023. Source: GEOSTAT 2023 ............................................................. 13 Figure 8 Top 15 countries by international visitor trips. Source: Ministry of Internal Affairs of Georgia ................................ 13 Figure 9: Number of visitors to Protected Areas. Source: WWW.APA.GOV.GE ....................................................................... 14 Figure 10: Dynamics of the tourist flow from the Middle East countries to Georgia. Source: GNTA ...................................... 15 Figure 11: Mestia. Credit GNTA ................................................................................................................................................ 20 Figure 12: Stepantsminda. Credit: GNTA ................................................................................................................................. 21 Figure 13: Mtirala National Park. Credit: GNTA ....................................................................................................................... 21 Figure 14: Prometheus Cave. Credit: GNTA ............................................................................................................................. 22 Figure 15: Telavi. Credit: GNTA ................................................................................................................................................ 22 Figure 16 Visited regions by international visitors. Source: geostat ........................................................................................ 23 Figure 17 Visited regions by local visitors. Source: geostat ..................................................................................................... 23 Figure 18 International visitors' distribution by the regions. Source: GEOSTAT ...................................................................... 23 Figure 19. Tourism value chain in Georgia. Source. Own preparation. .................................................................................... 25 Figure 20: Hotels and other types of accommodation. Source: geostat .................................................................................. 26 Figure 21 Number of hotels and hotel-beds by the regions. Geostat, 2024 ............................................................................ 27 Figure 22. Accommodation unites by type and regions. Source: GEOSTAT, 2024 ................................................................... 27 Figure 23 The countries of origin of hotel guests. Source: GEOSTAT ....................................................................................... 28 Figure 24: Package tours by international Tour operators. Source: GNTA, 2022 .................................................................... 28 Figure 25: Georgia Transport & Pipeline Network. Source; Caspian policy center .................................................................. 29 Figure 26: International visitor trips by border, 2023. Source: Ministry of Internal Affairs of Georgia ................................... 31 Figure 27. Baseline and target indicators. Source: www.gnta.ge ............................................................................................ 32 Figure 28. Distribution of international travelers by age group. Source: GEOSTAT ................................................................. 33 Figure 29: Purpose of international visits to Georgia. Source: GEOSTAT 2023 ........................................................................ 34 Figure 30: Motivation of visitors to the PAs. Source: APA ....................................................................................................... 34 Figure 31. International Visitor Trips by Visiting Practice and Average Satisfaction. Source: TBC Capital. ............................. 35 Figure 32. Average number of international visits. Source: GEOSTAT ..................................................................................... 35 Figure 33: Monthly average number of international visitors. Source: GEOSTAT, 2023 ......................................................... 36 Figure 34: Average length of stay for international and domestic visitors to Georgia between 2015 and 2023. Source: GEOSTAT .................................................................................................................................................................................. 37 Figure 35. Monthly average expenditures of inbound visitors by inbound visitors. GEOSTAT ................................................ 37 Figure 36. The main purpose of domestic travelers. Source: GEOSTAT 2023 .......................................................................... 38 Figure 37. Most visited regions by domestic travelers. Source: GEOSTAT............................................................................... 38 Figure 38. Domestic visitors’ expenditure per visit. Source: GEOSTAT 2023 ........................................................................... 39 Figure 39. Recommended lines of action ................................................................................................................................. 45 Figure 40. Tourism management model in Georgia. Source: Ecotourism market analysis (GIZ, 2020) ................................... 57 List of Tables Table 1: Georgia positioning and strategic pillars .....................................................................................................................15 Table 2. Georgia´s unique destination product and experience themes ..................................................................................16 Table 3. Georgia´s main tourism value chains ..........................................................................................................................17 4 Georgia: Tourism Trends Analysis and Recommendations Abbreviations APA – Agency of Protected Areas of Georgia BoG – Bank of Georgia CAGR – Compound Annual Growth Rate DMO – Destination Management Organization EG – Enterprise Georgia FDI – Foreign Direct Investment GDP – Gross Domestic Product GEOSTAT – National Statistics Office of Georgia GITA – Georgia’s Innovation and Technology Agency GIZ – Deutsche Gesellschaft für Internationale Zusammenarbeit GNTA – Georgian National Tourism Administration GoG – Government of Georgia MEDT – Ministry of Economic Development and Technology MICE – Meetings, Incentives, Congress, and Events MTA – Mountains Trails Agency NACH – Georgian National Agency for Cultural Heritage Preservation NFA – National Forestry Agency NGO – Nongovernmental Organizations OECD – Organization for Economic Co-operation and Development PAs – Protected Areas PPPs – Public-Private Partnerships RDA – Resorts Development Agency SFM – Sustainable Forest Management SMEs – Small, Medium Enterprises Slovenia for the Promotion of Entrepreneurship, Innovation, Technological SPIRIT – Development, Investment, and Tourism SPOT – Slovenia Business Point TTDI – Travel and Tourism Development Index UNWTO – United Nations World Tourism Organization USAID – United States Agency for International Development VRFs – Visiting Friends or Relatives WB – World Bank WEF – World Economic Forum WTTC – World Travel and Tourism Council WWF – World Wildlife Fund 5 Georgia: Tourism Trends Analysis and Recommendations 1. EXECUTIVE SUMMARY The objective of this report is to identify key bottlenecks and challenges still affecting tourism sector development in Georgia and provide recommendations to enhance future economic development through sustainable, inclusive, and resilient tourism approaches. Tourism is a major driver of Georgia's economic growth and diversification, revenue generated by international visitors amounted to 4,1 billion USD in 2023, making tourism one of the leading industries. However, the sector is far from reaching its full potential. Despite the impressive growth in arrivals experienced since 2009, Georgia relies heavily on visitors from neighboring countries. In 2023, the combined share of Russia, Turkiye, Armenia, and Azerbaijan accounted for 61% of the total international visitors’ trips, while emerging markets with higher expenditure levels still represent a small percentage of international tourism visitors. Georgia offers natural diversity, from green valleys and seaside to deserts and high mountains of the Greater and Lesser Caucasus, a variety of religious and historical attractions and a rich gastronomy, but only few regions concentrate a higher percentage of visitors (especially international) Tbilisi, Adjara and Mtskheta-Mtianeti. Limited connectivity (road access) and other relevant infrastructure and the availability of high-quality experiences and services is hindering the development of other destinations. Although Georgia has been making relevant improvements in terms of destination management and governance through the creation of the DMOs, there is still room for further improvement, especially in terms of actively integrating the private sector, and providing regional and local administrations with the necessary tools for the adequate management of the destination (capacity building, funding, investments, etc.), developing adequate planning tools, etc. Based on the gaps identified, four lines of recommendations have been proposed increase to tourism revenues and attract higher spending markets: Develop tourism-related infrastructure as the foundation for tourism development and accessibility, ensure that basic facilities and services are operational and available, improve connectivity between destinations, and facilitate that tourism-related infrastructure is in place to enjoy the existing attractions and proper preservation. Improve the cooperation and management mechanisms among stakeholders , with the objective of clear cooperation mechanism among relevant state agencies, development partners, local communities, and existing and potential private sector and the adoption of a participatory planning and management approach for a more effective and sustainable destination management. Enhance the quality and diversity of tourism products while making them more sustainable and competitive. Adopt clear marketing and promotion strategies for the priority segments while improving the online presence. Create economic opportunities for the local communities by supporting locals' access to finance & markets, creating linkages along the supply chain, and supporting the creation of new and authentic tourism businesses owned by locals. 6 Georgia: Tourism Trends Analysis and Recommendations 2. INTRODUCTION Tourism is an important economic sector in Georgia, contributing 7.2% to the country´s gross domestic product (GDP) in 2022 and on average the direct and indirect contribution to the total economy is more than 25%. The Georgian tourism sector experienced significant growth between 2015 and 2023, but it is far from reaching its full potential. While several large infrastructure projects have been implemented in past years, the Government acknowledges through its “Vision 2030: Development Strategy of Georgia” the many gaps and major investments and efforts r equired to put Georgia into a leading position within the competitive market of tourism. Georgia’s tourism sector relies heavily on visitors from neighboring countries. In 2023, the combined share of Russia, Turkiye, Armenia, and Azerbaijan accounted for 61% of the total international visitors’ trips. It is important to note that these countries had relatively low levels of expenditure per visit. The share of visitors from EU countries remained unchanged. New air routes have also contributed to an increase in the number of visitors from the Middle and Far East (Saudi Arabia, UAE, etc.). In contrast, the share of visits from other countries increased by 10%, and emerging markets with higher expenditure capacity (UAE, Kuwait, etc.), still represent a small percentage of international tourism visitors. Although the arrivals from these countries are still low, they have an important economic impact as their level of expenditure is higher and their stays are longer1. Adapting the tourism offering to cater to this market's needs could support increasing the arrivals. Since 2002, the government has prioritized critical strategic objectives, focusing on the recovery of the country's economy, particularly within the tourism industry, and infrastructure revitalization. The strategic approach adopted by the Government of Georgia early on was grounded in the principles of a free and competitive market economy. In 2003-2004, the first tourism development strategy was formulated with the assistance of EU/PHARE, aiming to position Georgia within the international travel market as a destination "awaiting discovery." The initial target was to attract 500,000 international visitors within five years. Through adept institutional reforms, an open border policy, and strong political impetus, this goal was swiftly achieved. Remarkably, by 2006, the number of international visitors had surged to 1 million. In 2006-2007, the country was positioned as a new discovery destination, a "European gateway to Asia." Democratic reforms, visa liberalization, the implementation of an "open sky policy" to facilitate the expansion of international flights, and the opening of land borders to neighboring countries' citizens led to the realization of the tourism strategy objective. After the implementation of incentive programs, such as “Invest in Georgia” (in 2005-2006), the Free Trade (Tourism) Zone on the Black Seacoast along with visa liberalization policies,2 most of the abandoned Soviet hotels had been integrated into international brands by foreign investors 3. This process is still ongoing, particularly regarding ski resorts 4. All these efforts were followed by fast tourism development in several forms (rural tourism, agritourism, adventure tourism). Commencing in 2009, the Government of Georgia recognized that relying exclusively on major cities like Tbilisi, Kutaisi, and Batumi for tourism growth would not suffice in terms of competitiveness or economic and social benefits. Simply banking on Georgia’s rich cultural history, natural beauty, wine, and gastronomy would not ensure competitiveness in the global market. To accommodate millions of visitors, the nation required suitable public and private infrastructure at the regional level, particularly in destinations with high tourism potential. Between 2009 and 2012, the country attained one of the fastest growth rates of tourism worldwide: visitors increased by almost 300%, from 1.5 million to 4.4 million. In 2012, Georgia had one of the world‘s most competitive business 1 https://gnta.ge/statistics/ 2 Pertaia, G. Dynamic Investment Growth in Georgia (p. 6); In THE GEORGIAN -Travel and Trade Guide; TTG Georgia Ltd.: Tbilisi, Georgia, 2013; Available online:www.issuu.com/lelakhartishvili/docs/the_georgian_2013 (accessed on 26 May 2024). 3 Papava, N.; Iremashvili, G. Georgia’s Tourism Sector: Shifting into High Gear; Industry overview; Galt & Taggart Ltd.: Tbilisi, Georgia, 2016. 4 TTG Georgia. 2017. Available online: www.issuu.com/lelakhartishvili/docs/the_georgian_print_-_web_gverdistvi. (accessed on 26 May 2024). 7 Georgia: Tourism Trends Analysis and Recommendations environments — ranked 16th out of 183 countries according to the “Doing Business Report” 5, IFC 2012. From 2012 to 2017, the number of international visits further rose to 7.5 million. Total tourism income jumped from US$475 million to US$2.7 billion, and tourism made up 6.9% of the total GDP in 2017. Already at that stage (started in 2015), it was clear that tourism development objectives should be re-focused from “quantity to quality,” shifting customers' target markets from low to high - value visitors. The national tourism strategy of 2015-2025 stated it as a main objective for the next 10 years with the slogan “Value vs Volume”. The growth in arrivals can be attributed to several factors such as improved connectivity, political stability, geographical proximity and marketing and promotion. Before the onset of the global COVID-19 lockdown in 2020, Georgia's tourism sector experienced significant growth throughout 2019. The number of international visitors reached 5 million and revenues from international tourism also saw a continuous upward trajectory, achieving a record USD 3.3 billion in 2019, contributing 8.1% to the total GDP6 (GNTA 2019 based on Geostat). However, by the end of 2021, the COVID-19 pandemic had dealt a severe blow to Georgia's tourism industry, with international visitor numbers plummeting by 83%, alongside a downturn in all other economic indicators. Furthermore, in February 2022, the commencement of Russia’s invasion of Ukraine had a profound impact on visitor flow from key source markets such as Russia, Belarus, and Ukraine, and affecting businesses in the hotel, restaurant and catering (HoReCA) sector. Today, Georgia is a leading contender in the competitive tourism market. While Georgia attained an overall ranking of 44th out of 117 countries in the World Economic Forum (WEF) Travel and Tourism Development Index of 2021, similar to its competitors Slovenia (39th), Turkiye (45th) or Croatia (46th). Its ranking in terms of overall infrastructure development was lower. Consequently, strategic investments in infrastructure development, underpinned by resilient, inclusive, and sustainable approaches, are essential for managing and enhancing the sector's positioning moving forward. Purpose of the report The objective of this report is to identify key bottlenecks and challenges still affecting tourism sector development in Georgia and provide recommendations to enhance future economic development through sustainable, inclusive, and resilient tourism approaches. The study used the following methodology: ▪ A stock taking desk review and analysis of the sector to review the national, regional, and local development plans and strategies, primary and secondary data and statistics, etc., as well as existing and past analytical work developed by the government, the WB and other partners in the sector. ▪ Consultative workshops to share and gather information on the broader tourism vision, fill data gaps, and understand the infrastructure and tourism service delivery gaps. ▪ Surveys and focus groups to understand the tourism value chain, private suppliers and local level needs, etc. The analysis presented in the report is also complemented with the assessment of the experience from over 10 years implementing the World Bank’s Regional Development Projects (Annex 1). To foster the forward look, benchmarking with similar economies has been implemented, that involved comparing the performance and characteristics of Georgia with relevant countries that share similar geographical, socio-economical, cultural factors and product offerings, highlighting relevant sector development examples. Prioritization of recommendations considers impact, feasibility, sustainability and alignment with key performance indicators and objectives of the sector’s national agenda. 5 IFC 2012 6 GNTA 2019. Georgian Tourism in Figures (p.29) 8 Georgia: Tourism Trends Analysis and Recommendations 3. OVERVIEW OF GEORGIA'S TOURISM INDUSTRY 3.1 Arrivals: Volume and Evolution Georgia has become an increasingly popular tourist destination in recent years, attracting visitors from around the world with its diverse landscape, including the stunning Caucasus Mountain range7. Today, Georgia, with its 3,7 million population, receives up to 5 million international visitors a year, and the growth of international tourism in the country is high. Figure 1: International and Local Tourist Flows in Georgia, thousand, 2015-2023 Source: GEOSTAT Travel restrictions in 2020 caused an 80-90% decline in domestic and international tourism (GNTA, 2020). However, after the pandemic, tourism in Georgia initially recovered with domestic tourists and visitors from the Gulf states, the Philippines, Israel, Kazakhstan (GNTA, 2021), and other international markets. It should be noted that in 2022, after the Russia’s invasion of Ukraine, there was a large tourist inflow of the citizens of Russia, Ukraine and Belarus in Georgia, which showed a positive impact on the general indicators of the tourism sector. Based on 2023 full-year data, international tourism numbers represent a 91.9% recovery from 2019 data and +27.8% growth from 2022 data. From the total number of international visitor trips 3,6 million (+131.6%) were tourist trips (overnight trips) and 1 million. (+631%) were same-day trips. Local tourism indicator has amounted to 12.7 million in 2023, with a 6% increase since the previous year and 28% increase compared to the pre-pandemic numbers (GEOSTAT 2023). In 2023, Georgia was the host country of the international tourism exhibition ITB Berlin and presented itself to up to two hundred thousand visitors worldwide. This year (2024), Georgia will host the World Tourism Day and will also be the host country of the M&I Forum (June 30-July 4, 2024), a Meeting, Incentives, Conferences and Events (MICE) event for global networking. Conducting such events and the new tourist flights scheduled for the end of this year will further bolster the rate of tourist growth in the country. 3.2 Tourism Contribution to Georgia's Economy Over the last decades, tourism has become one of the leading industries in Georgia in terms of generating income and compensating the country’s trade deficit. The expenditures of foreign visitors in Georgia have a huge effect on the national balance of payments. With recovery on the rise, revenue generated by international visitors amounted to 4,1 billion USD in 7 Municipal Development Fund of Georgia & GNTA (2018) Marketing, Branding and Promotional Strategy form Georgia. Part II-Strategy. GNTA. 9 Georgia: Tourism Trends Analysis and Recommendations 2023, exceeding 2022 by 17%8 (3.5 billion USD) and was 26% higher than in 2019. Thus, compared to 2019, travel receipts fully recovered in 2022. However, this unprecedented increase was also an effect of the temporary migration of the citizens of Russia, Ukraine and Belarus9. International Travel Receipts. Thousands. USD. 4,500,000 4,125,329 4,000,000 3,516,634 3,268,654 3,500,000 2,704,340 3,000,000 2,500,000 2,110,709 1,719,700 1,868,479 2,000,000 1,244,942 1,500,000 1,000,000 541,687 500,000 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Figure 2 International travel receipts. Source: BoG 2023 The average trip expenditures per person in 2023 averaged 2,097 GEL (equal to 720 USD) and was significantly higher than in pre-pandemic visits (350 USD). The introduction of new flight routes (see next chapters) to the east countries has not only made it easier and more convenient for travelers from the Far East and the Middle East to visit Georgia but has also contributed to the growth of the country's tourism industry. Tourists from these countries tend to spend more and have longer stays than visitors from other regions. This increased spending and longer stays positively impact Georgia's economy, further emphasizing the importance of these new air routes in driving tourism growth and economic development in the country. Average expenditure per visit in GEL 2,500 2,283 2,097 2,000 1,500 1,102 1,000 500 0 2019 2022 2023 Figure 3: Average expenditure per visit. Source: GEOSTAT 2023 8 More detailed information about the contribution of tourism to the economy can be found on the National Statistics Office website – www.geostat.ge, the National Bank of Georgia website – www.nbg.ge, and the Georgian National Tourism Administration website www.gnta.ge. 9 GRETA 2023. Svaneti Tourism Strategy Assessment 10 Georgia: Tourism Trends Analysis and Recommendations As a result, the added value of tourism-related industries as a share of GDP increased from 6.7% to 7.2% in 2023 (GEOSTAT, 2024). According to GEOSTAT, the tourism sector contributed 7.2% to the country's GDP. The increase is 0.5% from 2022 and only 1.2% below 2019. Evolution of the share of Tourism in GDP 8.4% 7.3% 7.8% 6.7% 7.0% 7.2% 6.5% 6.2% 5.9% 2015 2016 2017 2018 2019 2020 2021 2022 2023* Figure 4: Evolution of the share of tourism in GDP (2015-2023). Source: GEOSTAT In tourism-related industries10, created added value is primarily driven by transport (43.5%), accommodation (32.3%), food and beverage services (21.1%), and travel companies (3.1%) (GEOSTAT 2023). Figure 5: Value added on tourism industries. Source: GNTA 2024 According to the World Travel and Tourism Council (WTTC), the tourism sector in Georgia directly employed 170,000 people in 2019, which represented 5.6% of total employment in the country. The pandemic’s impact on the tourism industry caused a significant 40% reduction in the number of people employed by the end of 2021 from 2019 levels. 10 Note: tourism-related industries includes the following industries – land transportation and transportation through pipelines, water transport, air transport, accommodation, food and beverage service, tourist agencies, tour-operators and other booking services and related activities. 11 Georgia: Tourism Trends Analysis and Recommendations The diagram below shows the dynamics of the number of persons employed by hotels 11 over the years, focusing on gender. Employed persons in hotels and number of female employees 25,000 20,000 15,000 10,000 5,000 0 2015 2016 2017 2018 2019 2020 2021 2022 Number of employed persons in hotels of which women . Figure 6: Employed persons in hotels. Source: GEOSTAT 4. TOURISM TRENDS AND DEVELOPMENTS 4.1 Recent Trends in Visitor Arrivals Georgia's tourism industry is primarily driven (61% in 2023) by its proximity to neighboring countries such as Armenia, Turkiye, Azerbaijan, and Russia. In 2023 Georgia has seen growth rates from non-neighboring countries such as Israel, Ukraine, Kazakhstan, and Saudi Arabia. About 5% are citizens of Israel, 4% are from Ukraine. Among EU visitors, the largest number derived from Germany, Poland and UK (GNTA 2023). 11Defined as “legal and individual enterprises registered in accordance with the Georgian legislation, including local units and branches“. 12 Georgia: Tourism Trends Analysis and Recommendations International visit trips by countries in 2019-2023, thousand other countries EU member countries Israel Iran Ukraine Turkey Russia Azerbaijan Armenia 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 2023 2022 2021 2020 2019 Figure 7 International Visit Trip by Countries in 2019-2023. Source: GEOSTAT 2023 Figure 8 Top 15 countries by international visitor trips. Source: Ministry of Internal Affairs of Georgia One of the emerging post-pandemic travel trends in Georgia is a growing interest in sustainable environmentally friendly adventure activities and ecotourism. The country's mountainous regions, including the Caucasus, offer an abundance of outdoor activities and natural beauty, which appeals to travelers seeking a more authentic and environmentally friendly travel experience. This aligns with the worldwide increasing demand for open-air and nature-based tourism, as projected by UNWTO in 2021. Additionally, there has been a trend towards domestic travel, as people look to explore their own country and support local businesses. The figure below shows the number of visits in protected areas of Georgia over the past 15 years. 13 Georgia: Tourism Trends Analysis and Recommendations Evolution of Visitors to Protected Areas 1,400,000 1,199,011 1,200,000 1,105,503 1,078,112 1,000,000 902,063 800,000 734,874 589,098 600,000 420,166 400,000 303,686 298,910 240,268 200,000 123,315 0 2010 2011 2012 2014 2016 2018 2019 2020 2021 2022 2023 Figure 9: Number of visitors to Protected Areas. Source: WWW.APA.GOV.GE 4.2 Emerging Tourism Source Markets Improvements in trade relations and the establishment of new air traffic routes with Asian countries have indeed contributed to a significant increase in the number of tourists from the Far East and the Middle East visiting Georgia, particularly from Arab states of the Persian Gulf, particularly from Saudi Arabia. The introduction of new flight connections, such as those operated by Thai AirAsia X, Varesh Airlines, and others, has provided alternative direct access to Saudi Arabia, United Arab Emirates, Thailand, and other countries in Asia. An important factor in the growth of the tourist flow from the Arab countries was the increase in the number of 3-3.5 hours direct flights to Georgia from various airports of the region: Dubai, Doha, Sharjah, Abu Dhabi, Riyadh, Jeddah, Dammam. This allowed Georgia to become an easily accessible, convenient and close destination. While the number of tourists from these regions is relatively low, there is potential to draw more visitors from these areas. New market opportunities for the tourism sector leads to a more resilient industry through diversification. Moreover, tourists from these countries tend to spend more and have longer durations of stay compared to visitors from other regions, such as visitors from Kuwait who have spent GEL 812 (approx. 325 USD) in hotels in 2019 and are still in first place in terms of average spending in hotels, according to TBC Capital12. In addition to the tourist flow from the countries of the Gulf region there were also investment flows (mostly from the UAE) directed mainly to the hotel sector of Georgia which contributed to the sec tor’s development (Middle East Monitor, 2022)13. In the overall picture of inbound tourism, the share of visitors from the Middle East is very small but dynamics are important in this case. At the end of 2022, Georgia has received 208,341 tourists from the Middle East, which is 15 times more than ten years before. Georgia is popular among tourists from the Middle East not only because of its scenic views, affordable hotels and relative proximity but also because of the growing availability of halal food and Arabic-speaking guides (Middle East Monitor, 2022)14. 12 GRETA 2023. Svaneti Strategy Assessment 13 https://armenpress.am/eng/news/1127707.html 14 https://armenpress.am/eng/news/1127707.html 14 Georgia: Tourism Trends Analysis and Recommendations Figure 10: Dynamics of the tourist flow from the Middle East countries to Georgia. Source: GNTA 4.3 Analysis of the main segments/regions: Culture, Nature, MICE, Gastronomic Georgia's rise as a globally renowned tourist destination is attributed to its unique and picturesque natural landscapes, adventures, hospitality, culture, and history. With an area of just 69,700 km2, Georgia offers natural diversity, from green valleys and seaside to deserts and high mountains of the Greater and Lesser Caucasus. The country is located within one of World Wildlife Fund’s (WWF) 35 “priority places” (the greater Black Sea basin) and is also part of two of the 34 “biodiversity hotspots” (the Caucasus and Iran-Anatolian hotspots) which, according to Conservation International, are both the richest and threatened reservoirs of plant and animal life15. The majority of forests in Georgia, which currently cover about 41% of the total land area, are natural and hold significant importance for tourism and recreation development 16. The country has more than a 100-year-old tradition for the protection of nature and its richness. Nowadays, 13% of the country’s territory is included in Georgia’s protected areas system, and planned protected areas (in Samegrelo-Upper Svaneti) are expected to join the PAs territory system soon. The territory is very diverse with high mountain peaks, alpine and subalpine grasslands, old volcano plateaus, caves and chasms, wetlands, and semi-deserts. Both PAs and country other forest areas offer diverse landscapes, making them ideal for various outdoor activities such as hiking, camping, wildlife watching, and other types of nature-based adventures and eco-tourism activities. The table below describes the country's tangible and intangible assets, establishing the main pillars of Georgian branding17. Table 1: Georgia positioning and strategic pillars GEORGIA’S POSITIONING AND STRATEGIC PILLARS ‘The feelings and emotions that tourists experience when visiting Georgia’ STRATEGIC PILLARS NATURE & ADVENTURE HISTORY, CULTURE, CULTURAL WINE & CUISINE HERITAGE & TRADITIONS Unspoiled, breathtaking Ancient and rich Georgian history, Rich, tasty, diverse Georgian wine Georgian nature, landscape cultural heritage and traditions and cuisine. Unique wine making and biodiversity tradition (‘the cradle of wine’) 15 Ministry of Environment Protection and Agriculture of Georgia & NFA (2019): Georgia’s Fifth National Report to the Convention on Biological Diversity 16 CENN (2016): Assessment of the Recreational Potential of Georgian Forests. Sustainable Forest Governance in Georgia: Phase 2 project. 17 GNTA: Marketing, Branding and Promotional Strategy for Georgia. 2017 15 Georgia: Tourism Trends Analysis and Recommendations HOSPITALITY The legendary friendliness and hospitality of Georgian people The table below summarizes the distinctive character of the country and its attractiveness and unique product. Table 2. Georgia´s unique destination product and experience themes GEORGIA’S UNIQUE DESTINATION PRODUCT AND EXPERIENCE THEMES NATURE & ADVENTURE Natural landmarks: Caves, canyons, mineral lakes, gorges, waterfalls; Caucasus adventure: Hiking and trekking, mountain climbing, rock climbing, paragliding, off-piste and heli-skiing, mountain biking, white-water rafting, horseback riding; Water-sport: Kayaking, sport fishing; and Wildlife tourism: Flora and fauna, forest walks, hunting and fishing. CULTURAL HERITAGE UNESCO World Heritage Sites; Ancient churches and monasteries; Medieval stone-carved cities; Fortresses; Ethnographic museums; Unique architecture; Ancient churches and monasteries; Traditional Georgian Experience: Supra and toasting; Georgian music and dance. WINE & FOOD “The Cradle of Wine“: 8,000 -year history of winemaking and 525 indigenous grape varieties; Wine routes / Wine trails; Unique cuisine; Festivals HEALTH & WELLNESS Health and medical tourism; Healing and beauty; Physical wellbeing SUN & SEA Black Sea beach holidays with nightlife/entertainment and family vacation: Non-beach attractions such as protected areas, national parks, forests, arch bridges MICE Conferences, fairs and exhibitions; Culture-themes experiences and team- building activities; Sports/Recreation events; Music/Movie/Theatre festivals; Local festivals CITY BREAKS Modern nightlife and entertainment; Art and creative industry; Gambling and gaming; Botanical gardens; Lakes; National parks According to USAID Economic Security Program tourism sector analysis and gaps three primary value chains in the tourism sector have been identified, namely adventure, cultural, and gastronomic 18. Within these value chains, specific business activities hold the most potential for investment, high(er)-value job creation, and/or increased revenues. Within the adventure tourism value chain, rafting, hiking, trekking, birding, and eco-tourism hold the most potential. Skiing, while long a staple of Georgia’s winter tourism offerings, will continue to have growth potential, but over -development, lack of investment in infrastructure, and increased competition among tourism providers are eroding the busi ness activity’s competitiveness. Cultural tourism includes religious and historical attractions. It remains strong, though there are definite gaps in infrastructure (e.g., maintenance of attractions), support facilities, and marketing. Also, it is the lowest value of the three identified value chains due to its core demographic, which is mass (bus) tourism where travelers spend proportionately less money than individual travelers. The final value chain in tourism, gastronomic, contains two business activities: culinary and wine. This segment of Georgia’s tourism is a major differentiator and will continue to provide economic opportunities in terms of revenues and overall visibility. However, this value chain's “Achilles Heel” is a weak supply chain and spotty customer service that erodes the visitor experience. In addition, leveraging Georgia's tourism resources, such as the Black Sea beaches with vibrant nightlife and entertainment and mountain resorts and forest areas, presents significant potential for developing a recreational tourism value chain. 18 DAI Global/Solimar and PMCG (2029) Value chain prioritization and gaps assessment USAID Ecnomic Security Program. 16 Georgia: Tourism Trends Analysis and Recommendations It is worth noting that these value chains do not work in silos. Tourism products developed primarily for the cultural or culinary tourism value chains can be clustered into nature-adventure or ecotourism packages as long as they comply with the sustainability and community engagement principles of ecotourism. Numerous and diverse small businesses, including local ones, provide services at different levels of these value chains. For example, many of the international and domestic “Wine Tourists” in Kakheti eagerly search for activities to do with their families and friends, beyond staying at a hotel and drinking wine and dining. There is a great opportunity to capture and expand this market and provide community-based activities, such as horseback riding tours and hiking excursions in the nearby forests, zip-lining or culinary visits to Kakhetian villages. According to USAID Economic Security Program tourism sector analysis and gaps cultural tourism has the highest investment potential, while gastronomy is the pioneer in employment generation in the country. As for revenue generation, all three pillars are equally beneficial. Table 3. Georgia´s main tourism value chains based on USAID tourism sector analysis and gaps. VALUE CHAINS ASSETS TYPE OF BUSINESS NATURE (ecotourism) & Ski and Winter Sports Tour and Ground Operators ADVENTURE Hiking, Trekking, Climbing Mountain Guides Rafting, Kayaking Lift operators Bird Watching Bars & restaurants Adventure & Bird Watching Guides Lodges Guesthouses Bus or Transportation Companies CULTURAL/HERITAGE TOURISM Cultural Heritage Visits Tour and Ground Operators Religious Sites and Pilgrimages History Guides Bars & Restaurants Lodges Guesthouses Bus or Transportation Companies CULINARY TOURISM Wine Tourism Vineyard operators Traditional Georgian Food Bars & Restaurants Lodges Guesthouses Bus, transportation companies RECREATIONAL TOURISM Beach tourism Guesthouses. Hotels and Spas Shopping Shops/Entertainment Enterprises Spa/Health Tourism Bars & Restaurants Transportation Gambling/Casino Tourism Below is a description of regions, which are distinctive and popular with their tourism value chains. Mountainous areas like Upper Svaneti, Kazbegi, and Racha, renowned for their unspoiled natural beauty, are particularly favored by enthusiasts of nature-based adventure and ecotourism. Meanwhile, National Parks such as Kolkheti NP, Martvili Canyon, Mtirala NP, and Lagodekhi NP attract many eco-conscious and adventure-seeking visitors. Georgia's primary wine-producing regions include Kakheti or Imereti. Yet, Samtskhe-Javakheti, Guria, and Samegrelo stand out for their indigenous grape varieties and longstanding winemaking traditions. a) Regions for Nature (ecotourism) and Adventure Tourism in Georgia Region Attractions Mestia, Svaneti Svaneti, located in the northwestern region of Georgia holds significant historical importance. Stretching alongside the Great Caucasus mountains, it stands out as one of the most rugged and mountainous areas in the country. Mestia, located in the center of Svaneti, serves as the focal point for Georgia's Svanetian community, known for its unique language, architectural 17 Georgia: Tourism Trends Analysis and Recommendations style and culinary traditions. Svaneti is home to approximately two hundred towers, which were primarily constructed for defense purposes. Mestia draws visitors year-round. During the summer months it attracts adventure enthusiasts with activities like trekking, hiking and mountaineering. In recent years, it has also emerged as a winter destination for skiing and snowboarding, with the Hatsvali and Tetnuldi ski resorts. Additionally, opportunities for horse riding, paragliding and rope park adventures are available at any season. Stepantsminda, Kazbegi Kazbegi municipality situated in the northern region of East Georgia within the Greater Caucasus mountains, with the town of Stepantsminda as its administrative center. Its remarkable location has turned Stepantsminda into a popular destination among trekkers and mountain climbers. Notable landmarks include the Kazbegi Museum and Ethnographic Museum located within the town and the iconic Gergeti Trinity Church. Additionally, the area offers numerous hiking spots including the Kazbegi National Park, Village Juta and Chaukhi Mountains, Gveleti Waterfall and the Truso Valley. Stepantsminda's proximity to one of Georgia's most well-known peaks Mkinvartsveri (also known as Mount Kazbek), standing at 5054 meters above sea level increases its demand for activities such as mountain climbing, hiking, trekking and camping The country offers a wide range of both hard and soft adventures, including hiking, mountain biking, paragliding, rafting, speleology, climbing, mountaineering, alpine and downhill skiing etc. Hiking trails in rural mountain areas in several national parks, alpine meadows and forests are popular. Tourism trails are well accepted by the international travel market, but tourists have noted the lack of variety and quality of tracks. Currently, hiking, horse-riding and biking trails in most places of the regions go along the same routes. Some trails are overcrowded, and visitor management is missing. For example, the popular trails, such as the boat tour in Martvili Canyon, walking trails through Prometheus Caves and Okatse Canyon and hiking routes to the Gergeti Trinity Church or Sabertse camp, are crowded, and there is a problem of waste management during the tourist season. Trails need to be separated for conservation purposes and visitor management19, popular paths need proper planning and management. Additional challenges around the Ecotourism/Adventure Tourism in Georgia relate to the quality of services, especially those managed by local communities. There is a need to improve the standards to an international level and improve guides and rescue services (USAID, 2021). b) Regions for Wine Tourism and Gastronomy in Georgia The importance of gastronomic tourism in Georgia’s tourism sector is highlighted by the fact that 70% of visitors in Georgia engaged in tasting local cuisine and wine (USAID; 2021). This is also aligned with the international travel trends that modern travelers are looking for experiences that are authentic and immersive and culinary tourism offers a means of engaging with the local culture. Kakheti Kakheti is located in eastern Georgia and is a main destination for wine tourism and gastronomy. With its ancient winemaking traditions, numerous vineyards and renowned wine festivals, it offers a unique experience for visitors. Famous Georgian wines, crafted in Qvevri using old technique and inscribed on the UNESCO intangible heritage list, are produced in Kakheti region. Authentic local cuisine offers variety of dishes to be presented with wine. Cultural landmarks include Alaverdi Monastery, Shuamta and Bodbe monasteries, town of Signagi and others. The optimal season for exploring the region is autumn, particularly during the "Rtveli" festival when locals collect grapes and get ready for winemaking. It's also the period when the traditional Georgian sweets known as Churchkhelas made from grape juice and nuts are produced. 19 Ecotourism Market Potential Analysis of Georgia (2020); GIZ/VET project 18 Georgia: Tourism Trends Analysis and Recommendations Samtskhe- Samtskhe-Javakheti is a picturesque region in southern Georgia known for its top attractions, including the Javakheti stunning cave city of Vardzia, the remarkable Rabati Fortress and the beautiful Borjomi-Kharagauli National Park, which is great for mountain hiking. The Region has long held a significant role in the cultural, political and economic life of the country and was once a primary gateway to southern Georgia. In addition to its historical monuments, cuisine and traditional winemaking are essential aspects of this ancient culture. Currently, it is one of the smallest wine-producing areas in the country, yet it boasts some very unique grape varieties. Numerous grape varieties have spread across the country from here. Despite its historical significance in wine production, the region is only now beginning to revive its long-lost winemaking traditions. The region's rich culinary legacy is exemplified by the renowned Chechili and tenili cheeses, representing authentic cornerstones of local gastronomy. These cheeses are crafted using traditional methods passed down through generations, a practice recognized and honored by their inclusion on the UNESCO Intangible Cultural Heritage Lists since 2013. Key stakeholders highlighted challenges that gastronomic tourism faces, including gaps in local supply linkages, as the consumption of locally produced products is very limited. Service quality is also not up to international standards, mostly due to a lack of labor force (USAID, 2021). c) Regions for Cultural tourism in Georgia Cultural tourism in Georgia holds significant potential as the country boasts a rich and diverse cultural heritage, spanning millennia of history, art, architecture, music, and traditions. Kvemo Kartli Kvemo Kartli, situated in eastern Georgia, is a rich historical region that spans from ancient times to the present day. The region is rich with cultural and archaeological sites, churches, monasteries and castles. Archaeological excavations in Kvemo Kartli have revealed evidence of early European human presence, demonstrated by the Dmanisi Archaeological site and offering insight into early human migration with 1.8 million-year-old remains. Additionally, the Gold Mine of Sakdrisi dating back to the 3rd Millennium BC is also located in the region. Kvemo Kartli has diverse natural landscapes including forests, lakes, mineral springs, as well as thermal resorts. Imereti Imereti Region in west Georgia is an attractive destination for cultural tourism. The region is distinguished by its heritage, remarkable landscapes and warm hospitality. Imereti is rich in history, with numerous historical sites scattered across the region. Among these is the UNESCO World Heritage Site of Gelati Monastery with its 12th century frescoes, and Kutaisi - the capital of the region and a cultural center that combines timeless charm with contemporary style. Imereti’s rich cultural traditions, are reflected in its polyphonic music, dance and cuisine. In addition, Borjomi-Kharagauli National Park offers many opportunities for outdoor adventures such as hiking, rafting and horseback riding. One of the famous tourist destinations is a Prometheus Cave in Tskaltubo, featuring stalactites and stalagmites. Guided tours provide insight into the cave's history and its significance. Samtskhe- Samtskhe-Javakheti region in the south part of Georgia offers numerous historical sites dating back Javakheti centuries. One of the most prominent is the 12th century cave city of Vardzia. The region is home to a several significant religious sites. The town of Akhaltsikhe features the impressive Rabati Fortress, which includes a mosque, a synagogue and a Christian church. Additionally, there are number of ancient churches and monasteries such as Sapara Monastery and Khertvisi Fortress. The region is known for its ethnic diversity, with significant populations of Armenians, Georgians and other ethnic groups. The astrophysical observatory in Abastumani, operational since 1932, was the first of its kind in the former Soviet Union and serves as one of the key attractions in the region. The region also offers diverse landscapes and outdoor activities like hiking, horseback riding, birdwatching. Lake Paravani is ideal for fishing and boating. 19 Georgia: Tourism Trends Analysis and Recommendations Kakheti Some of the most prominent tourist attractions in Kakheti include 11th century Alaverdi Monastery; Tsinandali historic estate which belonged to the noble Chavchavadze family and famous for its winemaking heritage and wine cellars; Gremi Citadel and Church of the Archangels - a well-preserved medieval fortress complex that dates back to the 16th century offering insight into Kakheti's turbulent past and provides views of the surrounding countryside; David Gareja Monastery Complex carved into the cliffs of the Gareja Desert on the Georgia-Azerbaijan border, featuring cave monasteries with ancient frescoes. Cultural tourism in Georgia also faces several challenges. One of the primary challenges is the need for sustainable management and preservation of cultural assets in the face of increasing tourism pressures. Balancing the conservation of heritage sites with visitor access and infrastructure development is crucial to ensure the long-term sustainability of cultural tourism in Georgia. Additionally, there is a need for capacity-building and training within the cultural tourism sector to enhance the quality of visitor experiences. d) The most visited sites/popular destinations Among the top tourism destinations20 in Georgia are Mestia in Samegrelo- Zemo Svaneti and Stepantsminda in Mtskheta- Mtianeti regions, Mtirala National Park, Prometheus Cave in Tskaltubo and the town of Telavi in Kakheti. Svaneti stands out as one of the most frequently visited mountain destinations by both international and national tourists. Each of these mentioned destinations have some distinct features presented in the below overview: Mestia is approximately 1500 meters above sea level in the northwest part of Georgia, in the Greater Caucasus range. It is a picturesque mountain town known for its ancient defensive towers, rugged mountainous landscape and a gateway to hiking in the Caucasus Mountains. A small ski facility of Hatsvali located right above the town offers a range of ski runs. • Natural landmarks: Snow-covered peaks, glaciers, alpine meadows, and lush valleys in Mestia and the surrounding area provide habitats for a variety of plant and animal species, including Caucasian tur, chamois, and bears. • Visited sites: Mestia town center, traditional Svanetian towers, Ushguli - UNESCO World Heritage village; Museum of History and Ethnography, Mikheil Khergiani house museum, Margiani house museum, Hatsvali ski resort, Koruldi Lakes. • Activities: trekking, hiking, mountaineering, horseback riding, skiing/snowboarding, mountain cycling. Visitors can hire local guides and equipment to explore the area's stunning natural beauty, enjoy panoramic views of the Caucasus Mountains, explore the area's many Figure 11: Mestia. Credit GNTA hiking trails, and learn about Svan culture by visiting the Svaneti Museum of History and Ethnography or exploring the region's historic churches and towers. • Tourist infrastructure: hotels, guesthouses, mountain huts and campsites that suit every budget and preference. • Visitors21: In 2023, 77 143 tourists visited Mestia and surrounding areas. Stepantsminda, also known as Kazbegi, a small town located in the northern region of the Greater Caucasus mountains. Its iconic landmark is the Gergeti Trinity Church, offering spectacular views of Mount Kazbek (5054 m). Stepantsminda and surrounding areas are popular for outdoor activities like hiking, trekking and mountain climbing. The Newly opened Kobi- Gudauri ski lift enables Stepantsminda and surrounding villages to develop 4 Season Tourism throughout the year. 20 GNTA (2022): Georgian Tourism in Figures, Structure and Industry Data 21 GNTA (2023): International and Local Visitor Survey 20 Georgia: Tourism Trends Analysis and Recommendations • Natural landmarks: alpine pastures, snow-covered peaks and impregnable rocks; native areas for many rare and unique animal and bird species. • Visited sites: Truso Gorge, Dariali and Khde Gorges, Gveleti Waterfall, Juta, Sno Valley, Gergeti Trinity Church, Sabetrse and Bethlemi Hut area. • Activities: trekking, hiking, bird watching, climbing, paragliding. The routes function throughout the year. • Tourist Infrastructure: big chain hotels, medium and small size hotels, hostels, guesthouses, mountain huts, and campsites that suit every budget and preference. • Visitors15: in 2023, 432 798 tourists visited Stepantsminda and Figure 12: Stepantsminda. Credit: GNTA surrounding areas. Mtirala National Park is known for its dense, misty forests and abundant biodiversity. Its name, "Mtirala," translates to "crying" in Georgian, suggesting at the frequent rainfall sustaining its vibrant ecosystem. Mtirala is the home of diverse flora and fauna, including rare species like the Colchic salamander. With its mystical atmosphere and natural beauty, Mtirala National Park offers a calm retreat for nature enthusiasts. • Natural landmarks: unique Colchis forests, distinguished by dense evergreen understory and lianas, remarkably rich in endemic and endangered Red List species such as Colchis box-trees, yew-trees, rhododendron, brown bear, chamois, Caucasian salamander etc. • Visited sites: Chakvistavi, Korolistavi, Tsablnari and Tsvitskaro, waterfall, medieval arch bridges and other ethnographic attractions. Villages with organic farms and local products. • Activities: hiking, trekking, zip line, rope park adventure. • Tourist infrastructure: medium and small size hotels, guesthouses, campsites, huts Figure 13: Mtirala National Park. • Visitors22: In 2023, 95 225 tourists visited Mtirala National Park Credit: GNTA Prometheus Cave is one of the most popular natural attractions in Georgia, located near the town of Tskaltubo in the western part of the country. It is named after Prometheus, the Greek mythological figure who gave fire to humanity. The karst cave formed over millions of years by the action of underground rivers on the limestone rock. It stretches for about 11 kilometers, although only about 1.6 kilometers are open to visitors. Guided tours and boat ride are available along with a visitor center, souvenir shop and a café. 22 Agency of Protected Areas (2023): Visitors Statistics 21 Georgia: Tourism Trends Analysis and Recommendations • Natural landmarks: geological, speleological and botanical monuments. Subtropical young forest of Colchis type box-tree, stalactites, stalagmites, “stone curtains,” an arch ceiling, and a domed hall in the caves. • Visited sites: The Prometheus cave natural monument. • Activities: educational, a 1.420 m. long cave trail with a short boat trip to the exit of the cave. • Tourist infrastructure: medium and small size hotels, guesthouses, campsite • Visitors23: In 2023, 230 677 tourists visited Prometheus Cave. Figure 14: Prometheus Cave. Credit: GNTA Telavi is a picturesque city and is renowned for its historic significance and stunning landscapes. It serves as the administrative center of Kakheti and is rich with cultural heritage, ancient churches, traditional wineries and charming streets. Telavi is surrounded by vineyards, which produce some of Georgia's finest wines. • Natural landmarks: mountain ranges, vineyards, lush valleys, river valley, gardens and parkland • Visited sites: giant plane tree, Batonistsikhe fortress, Nadikvari Park, King Erekle II Palace, Telavi Historical Museum, Cholokashvili street, Vaziani Winery, Dzveli Shuamta Monastery, Tsinandali Estate • Activities: sightseeing, wine tasting, hiking Figure 15: Telavi. Credit: GNTA • Tourist infrastructure: Chain hotels, medium and small size hotels, hostels, guesthouses • Visitors: In 2023, 105 052 tourists visited Telavi According to figures from GEOSTAT and GNTA, the regions most visited by local travelers are Tbilisi and Imereti, followed by Ajara and Kakheti. International visitors tend to visit Tbilisi and Ajara and then prefer Mtskheta-Mtianeti, Samtskhe- Javakheti, and Kvemo Kartli, which borders Armenia. 23 Agency of Protected Areas (2023): Visitors Statistics 22 Georgia: Tourism Trends Analysis and Recommendations Figure 17 Visited regions by local visitors. Source: GEOSTAT Figure 16 Visited regions by international visitors. Source: GEOSTAT International visitors' distribuition by the regions of Georgia Kvemo Kartli Other regions 6% 5% Samtskhe-Javakheti 5% Tbilisi 33% Mtskheta-Mtianeti 12% Kakheti 4% Imereti 5% Ajara 30% Figure 18 International visitors' distribution by the regions. Source: GEOSTAT 23 Georgia: Tourism Trends Analysis and Recommendations e) Winter Tourism in Georgia Although the most popular tourist season in Georgia is summer, around 25% of total Georgian tourism comes from the winter months24. Georgia holds significant potential for winter tourism due to its diverse geography and several key factors. The natural landscape, particularly the Caucasus Mountains, offers excellent opportunities for winter sports such as skiing, snowboarding, and snowshoeing. The magnificent mountain scenery also attracts tourists interested in winter hiking and mountaineering. Georgia's winter tourism is well established, with roots going back to the Soviet tie. Consequently, Georgia currently boasts four main ski resorts: Gudauri, Bakuriani, Mestia (including Tetnuldi and Hatsvali), and Goderdzi. These resorts offer a variety of activities, including downhill and cross-country skiing, heli-skiing, night skiing, and snowboarding. In recent years, the GNTA has launched an active promotional campaign to market Georgia as a winter tourism destination, inviting European media outlets to feature the country's winter resorts and adventure tourism opportunities. In 2024, GNTA hosted a press tour for journalists to promote Georgia´s Winter resorts and the Freeride World Tour Pro, a sporting event held in the northwestern highland region of Svaneti25. Due to the efforts of the Georgian government, the Georgian Ski Federation and the Mountain Resorts Development Company, Georgia began hosting various international championships, including races in all disciplines of the European and World Freestyle Cup. In 2013, Georgian Government decided to establish the Mountain Resorts Development Company Ltd, operating under the Ministry of Economy and Sustainable Development of Georgia. One of its branches, specifically the Mountain Trails Agency (MTA), has been tasked with overseeing the ski facilities at these resorts. The agency is responsible for strategic planning and meticulous management of ski lifts and slopes. Their pivotal responsibilities include upkeep of skiing infrastructure, improving visitor experiences and upholding safety standards to establish a safe and pleasurable environment for skiing enthusiasts. Furthermore, MTA is notable in coordinating local and international ski sporting events. Thanks to the efforts of various agencies, all four winter resorts are now offering active summer holidays as well. The Mountain Resorts Development Company has been actively adjusting the infrastructure of these ski resorts to cater to summer tourists. For example, they have established mountain biking and hiking trails in Gudauri for summer visitors and installed the Toboggan sled track on Didveli Mountain. Additionally, all ski lifts and gondolas at the four ski resorts remain open during the summer and allowing visitors to enjoy the stunning scenery. As a result, these winter resorts have effectively become all-season holiday destinations. Despite the opportunities, winter tourism faces several challenges such as inadequate basic infrastructure (roads) or the absence of a comprehensive mobility plan, among other issues. Over the past decade, Georgian ski resorts have struggled due to insufficient snow conditions. For instance, in the winter season of 2013, Gudauri ski resort experienced a lack of snow, rendering it unable to cater to winter tourism visitors. Amid intense global debates surrounding climate change and global warming in recent years, the absence of snow in Georgian ski resorts has sparked inquiries into the prospective economic sustainability of winter tourism. This occurrence is not surprising, given that the World Tourism Organization acknowledges the heightened susceptibility of mountain tourism to climate change impacts 26. Consequently, unforeseen shifts in climate patterns could impose significant financial and economic challenges on the country, potentially impeding any economic progress derived from the winter tourism industry. 24 GNTA 2023 25 https://georgiatoday.ge/a-tour-of-europes-leading-media-outlets-was-held-in-georgia/ 26 UNWTO, 2015 24 Georgia: Tourism Trends Analysis and Recommendations 4.4 Tourism supply assessment The structure of the tourism sector in Georgia in the context of product supply chains and consumer preferences is described in the chart below. Figure 19. Tourism value chain in Georgia. Source. Own preparation. The accommodation sector contributes 32.3% to the added value of tourism GDP, followed by food and beverage services at 21.1%. The largest share, accounting for 43.5%, comes from transport, including land transportation, pipelines, water transport, and air transport. Although travel companies hold a relatively small share at 3.1%, their role remains vital in popularizing and packaging tours, especially for emerging tourism markets. a) Accommodation Georgia has a wide range of accommodation options (hotels and guesthouses). Among them are Georgian traditional-style hotels, family-run guesthouses, and international brands. Both high-end expensive hotels, as well as worldwide middle-class brands, operate in Georgia, mainly in capital city and Ajara region. Private investment is growing in the hospitality sector, and the number of newly opened accommodation units and corresponding bed-places has increased in the country. The largest number of hotels and bed-places are Tbilisi and Ajara region followed by the Samegrelo-Zemo Svaneti region, with its share constituting 19%. However, the regional share distribution significantly shifts when analyzed in terms of a number of rooms or number of bed-places offered, indicating that accommodation units in regions including Samegrelo-Zemo Svaneti mostly have family hotels with small number of rooms and bed-places. 25 Georgia: Tourism Trends Analysis and Recommendations Hotels and other types of accommodation 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2015 2016 2017 2018 2019 2020 2021 2022 Number of hotels Number of hotel rooms Figure 20: Hotels and other types of accommodation. Source: GEOSTAT Hotel infrastructure is least represented in Guria, Shida, and Kvemo Kartli regions. There are ten times more visitors to Mtskheta-Mtianeti than to Guria and twice more in Kakheti – with the same number of registered beds – the official occupancy rates are the lowest in Guria. This could be explained by these regions having a high number of same-day visitors and an abundance of larger hotels located in nearby cities or seaside regions (in the case of Guria). Although there are no official statistics on local tourism business incomes, interviews with the owners of a typical small bed and breakfast give a good idea of the potential benefits locals can derive from tourism. These B&Bs were restored and made operational from 10,000 - 25,000 GEL from their own funds, using an existing house and land and a 30,000 GEL grant from Enterprise Georgia (EG). This program started in 2015, within the Micro and Small Business Support Program framework administered by Georgia's Ministry of Economy and Sustainable Development. Grants of up to 30,000 GEL were provided to guesthouse owners to enhance their facilities. Recipients were required to contribute 10% of the total grant amount, with residents of mountainous regions only needing to invest 5%. According to respondents interviewed during the project (see Annex 3), the annual net profit to the owners in 2023 was around 10,000 GEL. Most of the respondents indicated that they pay 18-20% commission to booking.com. Only a few guests mentioned using word of mouth to find accommodations through friends or acquaintances. A grant from Enterprise Georgia helped make a break-even point on investments after three years. This would not have been possible if the Bed and Breakfast (B&B) had been constructed from scratch without startup grants . It highlights how community-based SMEs can succeed with relatively modest grant support with the right entrepreneurs. Some research has shown that guest houses run by women tend to be successful, and the tourism industry can enhance the role of women in rural society (Khartishvili et al., 2019). 26 Georgia: Tourism Trends Analysis and Recommendations Figure 21 Number of hotels and hotel-beds by the regions. GEOSTAT, 2024 Figure 22. Accommodation unites by type and regions. Source: GEOSTAT, 2024 27 Georgia: Tourism Trends Analysis and Recommendations Countries of origin of hotel guests From Georgia 40% 40% From EU countries From CIS countries From other countries 4% 16% Figure 23 The countries of origin of hotel guests. Source: GEOSTAT The average hotel price in 2021 was equal to USD 49.6, which is 48.5% higher compared to 2020 and 8.3% higher when compared to pre-pandemic 2019 value, thus indicating the recovery of average prices for hotels and hotel-type enterprises. Looking at specific categories, the price increase throughout 2021 has been most significant for 5-star hotels (by 12.1% compared to 2019 and by 51.4% compared to 2020), while for 3-star hotels, the price increase has been least significant (by 4.8% compared to 2019 and by 20.1% compared to 2020) (USAID, 2021). b) Tour operators Today, more visitors plan their trips to Georgia independently, which aligns with international trends and is very common in countries with a safe travel environment27 . Georgia is one of the safest countries in the world according to the WTO indicator despite its border with Russia. According to data from GNTA, the average visitor satisfaction score in 2022 was about 4.5 out of 528. Generally, Georgian tour operators work with international partners and are contracted by an intermediary in the source market, such as a travel agency. This model remains prevalent, particularly in destinations with poor travel connections. However, as Georgia’s connectivity improves, the bargaining power of tour operators is expected to weaken. In 2022, only 6.4% of visitors use tour operator companies when they plan to visit Georgia. Figure 24: Package tours by international Tour operators. Source: GNTA, 2022 Interviews with tour operators based in Tbilisi indicate that approximately 25-40% of the cost of any trip package is funneled directly back to the local communities. Most of this revenue comes from payments for accommodations, food, beverages, 27 Ecotourism Market Potential Analysis of Georgia 2019, PSD TVET SC/GIZ 28 GRETA 2022. Svanety Strategy Assessment 28 Georgia: Tourism Trends Analysis and Recommendations guides, and other local staff services. This means that local communities receive a substantial portion of the tourism revenues generated from packaged trips. Another benefit for locals from engaging with tour operators is the opportunity to enhance their hospitality skills. Tour operators typically set required quality standards, which may necessitate specific efforts and investments by local entrepreneurs. It remains to be seen whether communities can strengthen capacities to develop, operate, and market their products to independent travelers, potentially benefiting more from the ecotourism value chain. 4.5 Connectivity Due to the fact that the share of the neighboring countries in Georgia's tourism is rather significant, the majority of the international visitors travel by land. According to GNTA 2022 statistics, 65% of international visitors came via land transport in Georgia, followed by border crossings by air (33%), mainly using Tbilisi and Kutaisi international airports 29. Trips by rail and sea were less than 1% respectively. The busiest border was Sarpi (22.5%), followed by Tbilisi International Airport (22.1%), Kazbegi (Russian border) (17.9%), and Sadakhlo (Armenian border) (15%). The number of trips through these five border crossings accounted for 75% of all trips. a) Air connectivity Currently three international and two domestic airports operate in Georgia. The annual capacities of Tbilisi and Batumi International Airports are 6.1 million and 600,000 passengers, respectively. Other airports hold the following capacity: Kutaisi International Airport, 600,000; Ambrolauri, 50,000; and Mestia, 50,000 passengers/year (GNTA, 2022). Figure 25: Georgia Transport & Pipeline Network. Source; Caspian policy center In 2023, Georgian airports served 6 million passengers. Recent years were ended with significant results for the aviation industry, namely: 9 new airlines entered the Georgian market in 2023, and 21, including 6 new European destinations, were 29 Technical-Economic Feasibility Study 29 Georgia: Tourism Trends Analysis and Recommendations added to the air flight directions. Among the strategic new destinations are Hamburg, Copenhagen, Madrid, Frankfurt, Brussels, Poznan, Cologne and Delhi. Today, leading airlines operate on the Georgian air market including Wizz Air Hungary, Turkish Airlines, Pegasus, Georgian Airways, Azerbaijan Airlines, Fly Dubai, Air Arabia, etc. As for domestic flights, the number of transported passengers is 33,187, of which 62% were citizens of Georgia, and 38% were citizens of foreign countries. Among the planned development projects, the construction of the new terminal of Mestia Airport, the expansion of Kutaisi International Airport and the development of Telavi Airport are planned. Work on the new project of Tbilisi International Airport have been announced. b) Road connectivity The road network is about 22,000 km, with a road density of 318 km per 1,000 km30. Roads are functionally classified as international, secondary (interprovincial), and local (municipal). Secondary and local roads make up most of the country’s road network, about 20,500 kilometers. These roads are mostly in bad condition hindering the tourism development of rural/mountain areas31. Although rural tourism has great potential in Georgia, the lack of support, the limited infrastructure, and the connectivity limit its development. c) Rail connectivity Railway links between Georgia and Armenia are active, transporting visitors to the Black Sea during the summer season. Currently, the railway connection with Azerbaijan remains inactive, with plans for it to launch operations by the summer of 2024. The Baku-Tbilisi-Kars railway, also known as the "Iron Silk Road," is set to commence in May, primarily catering to trade purposes rather than passenger transport. The total network length is 1,443 kilometers (km), with 51 passenger and 100 goods stations. Railway passenger traffic, during 2013–2018 passenger numbers initially declined but then recovered to previous levels. Domestic passengers account for most of the traffic (about 2.8 million in 2018), with only small numbers of international passengers (about 100,000 in 2018). Passenger traffic is quite seasonal, with capacity fully utilized in the summer months when holidaymakers travel to Black Sea resorts, but around 60% of occupancy at other times of the year.32 30 Georgia Transport Sector Assessment, Strategy and Road Map (ADB, 2014) https://www.adb.org/sites/default/files/institutional-document/34108/files/georgia-transport-assessment-strategy-road- map.pdf 31 https://ieg.worldbankgroup.org/sites/default/files/Data/ppar_georgiasecondarylocalroads.pdf 32Railway Assessment for Georgia (March 2021) https://www.carecprogram.org/uploads/2020-CAREC-Railway- Assessment_GEO_7th_2021-3-4_WEB.pdf 30 Georgia: Tourism Trends Analysis and Recommendations Figure 26: International visitor trips by border, 2023. Source: Ministry of Internal Affairs of Georgia 4.6 Level of Achievement of the Tourism Strategy 2015-2025 In 2015, the Government of Georgia (GoG) initiated "Georgia Tourism 2025," a 10-year-long vision and strategic plan for increasing the value and importance of tourism for the benefit of the country’s economy and, ultimately, its citizens. This plan, developed with support from the WBG, encompassed various initiatives such as infrastructure development, country promotion, service quality improvement, and diversification of tourism offerings. Expanding upon this initiative, in 2018, the GoG formulated a comprehensive marketing, branding, and promotional strategy to effectively convey Georgia's brand identity, establish visual and verbal guidelines, and target key high-growth and high-spending source markets. One of the primary objectives of Strategy 2025 was to attract tourists with significant spending power from the EU, North America, and other neighboring regions. To achieve the above-mentioned goal, an eight-step implementation plan has been created along with several targets listed below: 31 Georgia: Tourism Trends Analysis and Recommendations Figure 27. Baseline and target indicators. Source: www.gnta.ge Although it may be premature to discuss the achievement of target indicators, as of now, the GNTA 2023 report 33 provides some data indicating obvious progress. For instance, in 2023, income from international tourism reached 4.1 billion USD, demonstrating a consistent rise and suggesting the potential to meet the target by 2025. Additionally, there were 7,072,220 international visitors to Georgia in 2023, marking a 75.6% recovery from pre-pandemic levels and a 30.3% increase from 2022. However, the tourism development objectives outlined in the strategy for 2025 also face some challenges in achievement. For instance, one of the goals, “Improve air access from those high -spending markets and internal transport networks to facilitate the free flow of visitors to and within the country,” has encountered several obstacles. These difficulties stem from the disruptions caused by the COVID-19 pandemic on airline operations and their readiness to expand to new destinations, including Georgia, as one cause. For instance, during the initial phase of the pandemic, Ryanair ceased its operations in Georgia without providing a definite timeline for resuming its flights to the country. WizzAir canceled several destinations from Kutaisi to various major European cities. Although recovery efforts are underway, it's evident that this specific objective is being somewhat impeded. Another goal – “Create unique, high-quality visitor experiences that are increasingly in demand in the world’s highest spending outbound markets, centered on the country’s rich mix of cultural and natural assets” has adjusted with influx of migrants. However, this process did not result in the development of the tourism sector since there is no (or very low compared to the increase in the number of tourists) demand for unique tourism products or high-quality visitor experiences. The mentioned fact creates a reasonable doubt that, in reality, people who are registered as tourists in the statistics consume Georgian tourism products less and represent the low-spending segment contrary to the objective of attracting the world’s highest spending outbound markets34. 33Source: https://gnta.ge/ge/2023-statistics info/?fbclid=IwAR3xD0boFcMaTR_L3jKrhwz_WQOGN_Eb4zOBaB0gQ6wMdePxx648hU2GFa4 34 “Modern Challenges of Georgian Tourism” https://ojs.publisher.agency/index.php/SR/issue/view/48/134 32 Georgia: Tourism Trends Analysis and Recommendations Nevertheless, as the Strategy's final year of implementation approaches and the timeline for achieving its targets and objectives is still not concluded, more concrete results are expected to become evident by 2025. This period will facilitate a more focused discussion on the accomplishments and obstacles the Tourism Strategy faces in realizing its objectives. 5. PATTERNS OF TRAVEL AND VISITOR FLOWS 5.1 Analysis of International Tourism d) Demographics In terms of demographics, the majority of trips to Georgia were conducted by male visitors 3,038,051 (64.6%), while female visits amounted to 1,665,894 (35.4%). According to GNTA, in 2023, approximately 50% of international travelers in Georgia were within 31 -51 age category, followed by the 15-30 age group (25%) and 51-70 (23%). In comparison, only 2% of travelers were 70 years and older. However, there has been an increase in the number of senior travelers compared to last year. Figure 28. Distribution of international travelers by age group. Source: GEOSTAT e) Psychographics The indicated purposes of a majority of visits, accounting for 53 %, were holiday, leisure, and recreation, which also encompass ecotourism practices (GEOSTAT, 2023). The next largest share, 21% of international visitors, came to the country to visit their friends and relatives. 7% of international tourists visited Georgia for professional and economic activities. The number of international guests who came to the country for medical treatment, wellness and shopping equally distributed by 1% for each purpose. Other trips were for transit and other purposes. 33 Georgia: Tourism Trends Analysis and Recommendations Purpose of international visits to Georgia Figure 29: Purpose of international visits to Georgia. Source: GEOSTAT 2023 According to APA’s statistics, the main motivation for visiting the Parks is hiking in wild nature, biodiversity, and cultura l heritage as well as research and education . Internationals are interested in experiencing the natural heritage of Georgia by engaging in physical outdoor activities such as hiking, trekking, and mountain biking. Local villages and rural areas that are “less touristy/commercialized” or “off the beaten track”, providing “authentic experiences” are of particular interest35. Motivations of visits to the PAs 14% Wildlife Adventure 8% Biodiversity 44% Scientific Activities 34% Cultural Heritage in and around PAs Figure 30: Motivation of visitors to the PAs. Source: APA f) Behavioral factors Georgia's tourism industry has seen a mix of solo travelers, couples, families, and groups, with a particular increase in the number of millennial travelers in recent years36. 35 Ecotourism Market Potential Analysis of Georgia 2019, PSD TVET SC/GIZ 36 Greta 2023. Svaneti Strategy Assessment. 34 Georgia: Tourism Trends Analysis and Recommendations In 2023, out of the total number of trips, 69.1% were repeat trips and 30.9% of trips were for the first time (GEOSTAT, 2024). Most of the residents of neighboring countries have traveled to Georgia before. Armenian visitors, Turkiye and Russia conducted the largest share of repeat trips. Turkiye and Russia were also the leaders among first-time trips. A high number of repeated trips could be explained by the other “non -travel” but business interests in visiting the country. Figure 31. International Visitor Trips by Visiting Practice and Average Satisfaction. Source: TBC Capital. Figure 32. Average number of international visits. Source: GEOSTAT The highest numbers of international visitors were recorded in the third quarter of the year, with August having the most visits, followed by July and September. Together, these three months accounted for 41.8% of the total annual international visitor trips. Conversely, the lowest number of trips were observed in January, February with 165,626 visits (3.1%), and March. 35 Georgia: Tourism Trends Analysis and Recommendations Figure 33: Monthly average number of international visitors. Source: GEOSTAT, 2023 Between 2015 and 2023, the average length of stay for international visitors compared to local visitors is different. International visitors typically stay longer in Georgia than local visitors during their trips. This could be attributed to various factors such as tourism preferences and itineraries. It is worth noting that the average length of stay varies greatly depending on the purpose of travel and the specific destination within the country. For example, visitors to popular destinations like Tbilisi or Batumi may stay for a shorter period, while those traveling to more remote areas such as Svaneti or Kazbegi may stay longer. GEOSTAT did not collect statistical data for these indicators in 2020 and 2021. However, according to the data of 2022, international tourists spent, on average, an unusually long time in Georgia - about 6.25 nights. This data can be explained by the inflow of the Russian Federation, Ukraine, and Belarus citizens, who stayed in the country for a relatively long period of time. In 2023, the average length of stay of new international visitors in Georgia is 5.4 nights (GEOSTAT 2023), which surpasses the stay duration of those arriving from neighboring countries (Armenia, Turkiye, and Azerbaijan), except for tourists from Russia who averaged 7 nights. It should be noted that last year, newly emerged Central and Eastern European tourists stayed for the longest period in the country, with an average number of 9.7 days. 36 Georgia: Tourism Trends Analysis and Recommendations Average length of stay of visitors 7.00 6.25 6.00 5.4 5.00 4.17 4.19 4.11 3.85 4.00 3.37 Domestic 3.00 2.18 2.22 visitors 1.90 1.89 1.97 1.87 2.00 1.54 International 1.00 visitors 0.00 2015 2016 2017 2018 2019 2022 2023 Figure 34: Average length of stay for international and domestic visitors to Georgia between 2015 and 2023. Source: GEOSTAT The average length of stay in Georgia has slightly decreased compared to 2022, with 6.2 nights recorded last year. This decline occurred against the backdrop of reduced visitor flows from Russia and Ukraine to Georgia from 2022 to 2023. Visitor expenses in Georgia have increased significantly. In 2023, the average cost per visit amounted to 3,580 GEL (approx. 1,400 USD), which is 650 GEL (approx. 260 USD) more than the previous year. The largest share of expenditures was registered on accommodation (31%) and served food and drinks (33% of total expenditure). Spending on shopping was also a significant share (15%), and only 10 % of expenditure was made on Cultural and Entertainment Services. The average expenditure of visits for holiday, recreation and leisure was 2,905 GEL (approx. 1,100 USD) per visit, and the average expenditure of the segment of professional and business was determined at 2,725 GEL (GNTA 2022). Figure 35. Monthly average expenditures of inbound visitors by inbound visitors. GEOSTAT 37 Georgia: Tourism Trends Analysis and Recommendations 5.2 Analysis of Domestic Tourism Most domestic tourists visit Tbilisi, Imereti, Ajara, Kakheti, Mtskheta-Mtianeti, Kvemo Kartli, etc. The purposes of a majority of domestic visits were Visiting friends or relatives (VFR) with 50.4%, followed by shopping (13.4%), health and medical treatment (11.2%), and holiday, leisure, and recreation (9.9%) 37. Figure 36. The main purpose of domestic travelers. Source: GEOSTAT 2023 As noted above, domestic travelers most frequently visited places are Tbilisi and Imereti, followed by Ajara, Kakheti, and Mtskheta-Mtianeti. Figure 37. Most visited regions by domestic travelers. Source: GEOSTAT An important local market embraces youth and families seeking adventures and arranging outdoor activities in a pristine environment. This tendency is likely to continue in the future38, especially in national parks and forest areas39. Domestic visitor spending has increased since 2019 (GEOSTAT). The average expenditure per visit in 2022 amounted to 182.4 GEL (approx. 65 USD), which slightly decreased in 2023 (GNTA, 2023). The decrease was caused by the increase in the outflow of Georgian residents abroad for vacation. 37 https://www.geostat.ge/media/52167/Domestic-Tourism-Survey---2022.pdf 38 Manual for elaboration of strategy and management plans for individual territories. Adapted to Tourism National Strategy and strategic objectives of PAs. 39 Ecotourism Market Potential Analysis of Georgia 2019, PSD TVET SC/GIZ 38 Georgia: Tourism Trends Analysis and Recommendations 200.0 Domestic visitor´s expenditure per visit 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2019 2020 2021 2022 2023 Figure 38. Domestic visitors’ expenditure per visit. Source: GEOSTAT 2023 6. BENCHMARKING WITH COMPETITOR DESTINATIONS Tourism benchmarking is a valuable tool for analysis, allowing countries to assess their performance against comparable destinations and identify best practices for sustainable tourism development. In this section, we examine key elements of Georgia, Turkiye, Croatia, and Slovenia's tourism industry and identify best practices. Georgia, Turkiye, Croatia, and Slovenia each offer unique tourism experiences characterized by rich cultural heritage, diverse landscapes, and a wide range of attractions. By benchmarking against these countries, Georgia aims to identify opportunities for growth and improvement in its tourism sector while drawing inspiration from successful strategies put into practice by its counterparts. a) Tourism-related Infrastructure The Travel and Tourism Development Index (TTDI) results indicate that Georgia faces several challenges compared to the competitive set and overall destinations. According to the TTDI report, Georgia ranks 44th out of 117 economies. The index analyzes 17 pillars based on 112 indicators, each representing an important enabler of T&T development. The subindex in which Georgia performs lower than competitors is in terms of infrastructure. In Georgia, the underdeveloped transport network and poor conditions of the roads are affecting the tourist flow to some regions/destinations outside Tbilisi, Kutaisi, and Batumi. Equally, the availability of basic and tourism-related infrastructure affects the further development of the destinations, affecting not only their attractiveness and competitiveness but also their perceived quality. For instance, important and popular destinations lack basic infrastructure such as roads, water and sanitation networks as well as tourism infrastructure like public toilets, adequate accommodation, signposting 40, among others. By contrast, Turkiye has a more developed tourism infrastructure, including transportation networks, accommodation options, and tourism facilities. Turkiye's extensive infrastructure supports the seamless movement of tourists within the country and enhances their overall travel experience. The country boasts extensive road, rail, air, and maritime networks. The country has significantly expanded its road network, including constructing modern highways connecting major cities and tourist destinations. Turkiye has carried out multibillion-dollar projects over the last two decades, and its nationwide highway and divided roads expanded to 3,633 kilometers and 28,647 kilometers, respectively. Its railway network has been expanded to more than 13,000 kilometers, making it easy to connect to different destinations, and providing a diversified offering. Likewise, Turkiye 40https://www.researchgate.net/publication/341279264_Challenges_and_Opportunities_of_Cultural_Tourism_Development _in_the_Kvemo_Kartli_Region 39 Georgia: Tourism Trends Analysis and Recommendations has invested in the modernization of hotels, restaurants, and other tourism facilities to support the competitiveness of the national tourism sector. Equally, Croatia has invested in the transportation network related to tourism. According to the Transport Development Strategy of the Republic of Croatia (2017-2030), the traffic volumes along the main touristic routes double during the tourist season compared with the off-season period. Regarding tourism-related infrastructures, in recent years, the Croatian government has strongly committed to supporting local and foreign investment in tourism infrastructure. Some examples include the award in 2023 of €106.4 million in grants for 16 projects for the construction and update of public tourism infrastructure and health and wellness tourism 41. Most recently, in March 2024, the Ministry of Tourism and Sports has launched a call for proposals to subsidize the development of public tourist infrastructure. These proposals will be eligible to receive a maximum contribution of €69,000 to restore beaches, visitor centers, campsites, and pedestrian and cycle paths, among others42. Much of the aid allocated to the tourism sector in the last 2 years is part of the National Recovery and Resilience Plan endowed with €292million from the EU Recovery and Resilience Mechanism . These investments must contribute to the recovery, resilience, and green and digital transition of tourism. Likewise, it is estimated that 60% of the funds allocated to the tourism sector will serve as direct investment in the private sector and the remaining part in public tourism infrastructure43. b) Support to SMEs While Georgia increasingly recognizes the importance of supporting SMEs in the tourism sector, the availability of government-funded financial support programs may be more limited than other countries in the region. However, there has been a growing emphasis on providing grants, loans, and financial incentives to encourage entrepreneurship, investment, and business development in the tourism industry. The government of Georgia has prioritized SME development as the primary source of private sector growth, job creation, and innovation. For instance, the Innovation and Entrepreneurship Policy is one of the Georgian Government's successful reforms. The agencies Georgia’s Innovation and Technology Agency (GITA) and Enterprise Georgia were created to promote SME development and strengthen SME competitiveness, provide financial support to SMEs, mentoring, training, and various advisory services44. The average interest rate charged to SMEs in Georgia is high by OECD standards but has significantly declined over the last decade, from 17.5% in 2010 to 9.3% in 2020. In 2020, Georgia started developing a new National SME Development Strategy 2021-25 that focuses, among other priorities, on improving the SME's access to finance. However, despite all efforts, the biggest obstacle is a lack of qualified human resources, and the inequality of the regions of Georgia. In Slovenia, the state supports the growth and development of small and medium-sized enterprises through financial incentives from the Ministry of Economy, Tourism, and Sport, as well as institutions specializing in corporate financing, such as the Slovenian Enterprise Fund and SID Bank. Support is also provided by Slovenia for the Promotion of Entrepreneurship, Innovation, Technological Development, Investment, and Tourism (SPIRIT), and entrepreneurs may find various information on the SPOT portal. The Slovene Enterprise Fund offers favorable financial resources, grants (for innovative startups, for the digital transformation of SMEs, etc.), seed capital, and microloans (all of them also tailored for tourism enterprises). Relevant initiatives are those related to financing Innovation and Product Development. This could include grants or co-financing for the development of new tourism experiences, enhancement of existing attractions or services, adoption of new technologies 41 https://mint.gov.hr/news-11455/106m-in-grants-awarded-for-16-public-tourism-infrastructure-projects/23812 42 https://hrturizam.hr/en/for-the-development-of-public-tourist-infrastructure%2C-149-million-euros-in-2024 43 https://www.oecd-ilibrary.org/sites/98e4b3dd-en/index.html?itemId=/content/component/98e4b3dd-en 44 https://www.slovenia.info/en/business/green-scheme-of-slovenian-tourism 40 Georgia: Tourism Trends Analysis and Recommendations to improve visitor experiences, etc. Other initiatives support digital transformation and the transition to a low-carbon economy for small businesses. SPIRIT is a single point of contact for businesses and investors looking for new opportunities. SPIRIT helps Slovenian SMEs increase their competitiveness and accelerate their development through numerous educational courses free of charge or by supporting young entrepreneurs, encouraging them to start a business and giving them all the necessary information to get started. Interest rates for SMEs declined recently, from 6% in 2011 to 2.5% in 2020. The main areas of incentives for SMEs in Slovenia are: » provision of an efficient business environment for enterprises, » access to appropriate funds for projects of enterprises, » incentives for development and innovation projects of enterprises, » promotion of digitalization of enterprises, » provision of suitable infrastructure for the operation of enterprises, » incentives for training of employees, » assisting in appearance on foreign markets. In the case of Turkiye, 99.8% of enterprises are SMEs45. The Turkish SME Agency (KOSGEB) is the main body in charge of providing support to SMEs in Turkiye, leading a variety of programs such as the Entrepreneurship Support Programme, the Innovation Programme, or the General Support Programme. The latter offers support to SMEs on 13 different items: domestic fairs, foreign travel, promotion, qualified staff recruitment, training, energy efficiency, and consulting, among others. SME policies in Turkiye are defined as part of a multi-annual Action Plan. The KOSGEB Strategic Plan 2019-2023 has led SME policies focused on fostering their access to innovation, technology, and entrepreneurship and supporting the strengthening skills, internationalization, and productivity of SMEs. According to the OECD46, over the last years, Turkiye has improved its support services to SMEs in various ways, including centralizing all information available on SMEs' support services on an easily accessible website, conducting studies on SME needs relating to training and demand for specific support services, and surveying regional institutions on their capacity to collaborate and support SMEs locally, among others. In addition to KOSGEB's programs to support SMEs (including tourism businesses), Turkiye has developed different specific programs for the tourism sector. Between 2012 and 2021, with the support of UNDP, Turkiye implemented the “Future is in Tourism Project,” launched with a view to establishing tourism as an alternative developmental tool in the country, creating local models by encouraging entrepreneurship, and bringing together the public, private sector, universities, civil society and local communities. More than 18 projects received support under this programme 47. Likewise, in 2020, in the context of the COVID-19 pandemic, Turkiye launched the Tourism Support Program to ensure coverage of all fixed expenses and cash needs of enterprises operating in the tourism sector, especially the wages and rent payments, and thus reduce the negative impact of the pandemic on cash flows and to protect their production and employment capacities48. c) Sustainability Sustainability is a core focus of Slovenia's tourism strategy, with an emphasis on responsible tourism practices, environmental conservation, and community engagement. The country has implemented various initiatives to promote 45: https://www.oecd-ilibrary.org/sites/1bcd7e1f-en/index.html?itemId=/content/component/1bcd7e1f-en 46 https://www.oecd-ilibrary.org/docserver/4bc6d557- en.pdf?expires=1715615605&id=id&accname=guest&checksum=F1B38534C8698AA1EB4671255F47C5BA 47 https://sdgs.un.org/partnerships/future-tourism-0 48 https://www.oecd-ilibrary.org/sites/1bcd7e1f-en/index.html?itemId=/content/component/1bcd7e1f-en 41 Georgia: Tourism Trends Analysis and Recommendations sustainable tourism, including eco-certification programs for accommodations, nature conservation projects, and community-based tourism initiatives. o Green Certification Programs – Slovenia Green Label49: Slovenia has established several green certification programs for accommodations, restaurants, and other tourism businesses. These programs, such as the Green Scheme of Slovenian Tourism (GSST) and the European Eco-label, encourage businesses to adopt environmentally friendly practices, such as waste reduction, energy efficiency, water conservation, and use of renewable energy sources. Ljubljana was awarded the title of European Green Capital and aims to be an “attractive, green and environmentally friendly destination.” Tourism Ljubljana monitors key sustainable indicators that cover the environment, economy, society, culture, ecotourism, and human rights at the destination. o Public Transportation and Sustainable Mobility: Slovenia encourages sustainable mobility options for travelers, including public transportation, cycling, and walking. The country has invested in well-developed public transportation networks, bike-friendly infrastructure, and pedestrian-friendly urban spaces to reduce carbon emissions, alleviate traffic congestion, and enhance the visitor experience. The center of Ljubljana has been traffic-free since 2008. The area closed to traffic covers 12 hectares and is the largest car-free zone in the European Union. Visitors can tour the city center aboard the Urban Electric tourist train. o Green Supply Chain: This project encourages the use of local ingredients by local tourism providers and more widely. The idea was to connect the city’s green hinterland, in which more than 800 farms supply the capital with their produce, with tourism providers in the city itself. The project is highly sustainable—it shortens the supply chains and thus reduces the carbon footprint and use of fertilizers and other chemicals 50. In recent years, Croatia has also firmly committed to tourism sustainability, as has been reflected in adopting the new Tourism Act and the Strategy for the Sustainable Development of Tourism until 2030. The new Croatian Tourism Law has included sustainability as one of the central pillars, focusing on regular planning and ensuring the levels of satisfaction of locals with the tourism activity, focusing on quality rather than numbers. The Sustainable Tourism Development Strategy until 2030 has as priorities to contribute to the development of sustainable tourism the investment in sustainable, low- carbon tourism development, development of functional and sustainable tourist regions for the sake of a complete tourist experience; extending the season through investments in public tourist infrastructure and promotion; integrated management of destinations to find appropriate specializations, Croatia has recently launched (April 2024) the Croatian Sustainable Tourism Centre51, a research and development centre that will be focused on developing sustainable policies in tourism, promoting of sustainable tourism and creating guidelines and recommendations for the development of sustainable tourism, sharing knowledge and best practices for sustainable tourism, as well as transferring knowledge about its management development52. This center is involving also the University and other members of the academic and scientific community. 49 https://www.slovenia.info/en/business/green-scheme-of-slovenian-tourism 50: https://www.visitljubljana.com/en/about-ljubljana-tourism/projects/green-supply-chains/ 51 https://www.unwto.org/news/un-tourism-and-croatia-to-establish-research-centre-for-sustainable-tourism 52 https://total-croatia-news.com/news/croatian-sustainable-tourism- centre/#:~:text=croatia%20is%20a%20leading%20sustainable%20tourism%20example&text=%E2%80%9CThe%20new%20res earch%20centre%20here,the%20benefit%20of%20communities%20everywhere 42 Georgia: Tourism Trends Analysis and Recommendations d) Destination management & governance Tourism demand is becoming increasingly sophisticated, and managing tourism on all levels of decision-making is, therefore, ever more complex. Public institutions at the central and local level play a key role in enhancing the cooperation between the public sector, private sector and the local population in offering tourism services, thus guiding tourism development. Although Georgia has been making relevant improvements in terms of destination management and governance through the creation of the DMOs, there is still room for further improvement , especially in terms of actively integrating the private sector, and providing regional and local administrations with the necessary tools for the adequate management of the destination (capacity building, funding, investments, etc.), developing adequate planning tools, etc. In Slovenia, the Ministry of Economic Development and Technology (MEDT) is the main government department responsible for providing and implementing national tourism policy. MEDT cooperates and consults with the tourism sector and social partners to reflect the close partnership between the public and private sectors. The Slovenian Tourist Board (STB) oversees the promotion of Slovenia as a tourism destination and related marketing activities 53. The STB works with Destination Marketing Organizations54 and it has a development program to build the digital skills of those DMOs. These DMOs work on promoting tourism on a specific destination and they collaborate also with private stakeholders. Twelve Regional Development Agencies (RDAs) aim to promote balanced and sustainable growth within a region by supporting businesses, communities, and public sector entities They undertake tourism (among other topics) development at the regional level. RDAs report to the Regional Councils, which are comprised of the mayors of the local communities in each region55. These agencies cooperate with municipalities, companies, regional chambers of commerce, non-governmental organizations, etc. Regional tourism development is governed according to national legislation and strategic development objectives, but specific regional development objectives are included in the overall regional plans. At the local level, each mayor and Community Council is responsible for tourism development according to national legislation and strategic objectives, but with specific local tourism development goals. These agencies and projects are mostly funded by European Union Funds supporting regional development and tourism (i.e Interreg), national and regional budgets, public-private partnerships financing some tourism initiatives, etc. DMOs and RDAs both contribute to the overall development of a destination, they have distinct roles, functions, and stakeholders within the tourism ecosystem. Collaboration between DMOs and RDAs is essential to ensure coordinated and integrated efforts towards sustainable destination development. According to the OECD, in 2020, Slovenia established a Tourism Advisory Council as a special working group comprised of industry representatives, tourism policymakers, the STB, and NGOs related to tourism to monitor the tourism situation. However, no further information has been identified regarding this Tourism Council. Normally, this type of advisory bodies is a way of fostering collaboration between government and industry stakeholders, providing recommendations on priorities, regulatory frameworks, etc. On the other hand, Croatia's tourism governance structure involves both governmental and non-governmental entities working together to manage and promote the country's tourism industry. The Ministry of Tourism and Sports is the main governmental body responsible for formulating and implementing tourism policies, strategies, and regulations, while the Croatian National Tourist Board is a government-funded organization responsible for promoting Croatia as a tourist destination both domestically and internationally. It conducts marketing campaigns, participates in tourism fairs and exhibitions, and provides information and assistance to tourists. Both of them also receive support from the Chamber of Commerce and Tourism Associations of the country, which play a relevant role in the tourism industry by providing support 53 Tourism Trends and Policies 2022 OECD 54 Example of DMO: https://www.visitljubljana.com/en/visitors/ 55 Example of RDA and associated projects: https://www.rra-zk.si/en/about-rda/shareholders/ 43 Georgia: Tourism Trends Analysis and Recommendations and resources to tourism businesses, advocating for their interests, and facilitating networking and collaboration among industry stakeholders. Croatia is divided into regions and municipalities, each with its own tourist board responsible for promoting tourism at the regional or local level. These boards work to develop tourism infrastructure, promote local attractions, and support tourism businesses within their respective areas. At the regional level, there are 21 county administrative offices with a tourism department which are responsible for accommodation classification and permits associated with services relating to tourism and hospitality. Additionally, 280 local tourist offices in towns and municipalities are in charge of developing tourist products and distributing marketing materials under guidance from regional tourism offices 56. Despite having a defined structure, some studies57 still identify Croatia's potential to improve stakeholders’ involvement and coordination, reduce the fragmentation of local government levels, ensure funding accessibility, and support training programs for human resources. To sum up, there are still some challenges to overcome in Croatia’s tourism governance, for which a reinforced collaboration among stakeholders will be key. 56https://www.oecd-ilibrary.org/sites/98e4b3dd-en/index.html?itemId=/content/component/98e4b3dd-en 57Orsini, K. and Ostojic, V. (2018) Croatia’s Tourism Industry: Beyond the Sun and Sea, European Commission, ISSN 2443 - 8030. 44 Georgia: Tourism Trends Analysis and Recommendations 7. MAIN SHORTCOMINGS & RECOMMENDATIONS FOR IMPROVEMENT In recent years the country has seen a noticeable increase in the number of tourists, driven by its unique blend of attractions and a growing reputation as a must-visit destination. However, along with this increase, several challenges arise that threaten the fundamentals of the sustainable, inclusive, and resilient tourism development. From infrastructure limitations to environmental concerns, from heritage conservation to complexities of the tourism product development, from ensuring sustainable operation and management to sustainable tourism development in Georgia, all these involves navigating various obstacles that require consideration and strategic intervention. Figure 39. Recommended lines of action 1. IMPROVE TOURISM-RELATED INFRASTRUCTURE Public tourism infrastructure serves as the foundation for tourism development and accessibility, while private tourism infrastructure encompasses the commercial aspects of the tourism industry aimed at meeting tourists' needs and desires while generating revenue. The specific recommendations are: In order to offer tourism products in Georgia, the government or public agencies must develop the basic facilities and services of proper public tourism infrastructure. This includes a well-functioning transport network, public amenities such as parks, public toilets, and visitor centres, as well as access to cultural and heritage sites. The new Tourism Law of Georgia includes requirements for implementing updated tourism standards. Complying with these standards holds significant potential for enhancing the country's tourism sector. Based on this, it can involve improving the transportation infrastructure, including municipal transport and expanding the railway network to ensure easier access to tourist areas. Additionally, making transportation information accessible online can be part of this initiative. These measures could well align with the newly established standards outlined in Georgia's tourism legislation. It is important to support private tourism infrastructure (through access to finance, ease of business environment, etc.), which includes hotels, resorts, restaurants, transportation services, and other privately owned or operated facilities catering to visitors. Meeting the needs and desires of modern tourists requires adherence to service quality standards and providing a nature-friendly environment. This combination ensures a positive and sustainable tourism experience that aligns with contemporary traveler expectations and values. 45 Georgia: Tourism Trends Analysis and Recommendations During the development of tourism action plans and associated capacity development activities – and in line with the national tourism strategy and ecotourism strategy action plan – it is suggested to consider key initiatives for tourism development. Development area Domestic market International market Public infrastructure Improve access to existing natural/cultural Up-grade and develop infrastructure around attractions; existing natural/cultural attractions, adhering to international standards; Improve easy-to-access picnic sites, short trails, hiking and biking trails and signage for Support the restoration and/or new one-day excursions; development of more international standard natural/cultural attractions countrywide. Improve site waste management systems, incl. local educational campaigns; Establish easy, on-line reservation systems for tourism products. Private infrastructure Provide financial support to local tourism en- Provide International standard training of trepreneurs; local tourism entrepreneurs; Provide training of local entrepreneurs and Establish an international standard staff in basic hospitality services; certification system for services and accommodations. Strengthen local concession and business in- volvement. Enhancement of partnership with private sector to improve tourism related infrastructure: A comprehensive approach involving the private sector at various stages of project development is recommended to ensure competitive, sustainable and adequately qualified offering. • Early Engagement: Involving private sector representatives from the beginning ensures their expertise is incorporated into the project's design and planning phases. This can lead to more tailored and competitive services for visitors, enhancing the project's overall success. As well, to ensure the timely delivery of "ready-to-go" facilities to reliable operators. Facilities such as tourism information centers, cafes, restaurants, shops, mountain huts, and other commercial spaces within public domains like municipal parks, national parks, site museum reserves, and sports complexes should be operated by private companies acting as economic entities under concession, lease, or direct management contracts. • Risk Transfer: By partnering with the private sector, governments can transfer some financial risks and liabilities associated with project implementation and operation. This is particularly beneficial in sectors requiring specialized expertise or significant capital investment. • Incentives for Private Sector: Offering competitive mechanism to operate facilities can incentivize private sector participation. Granting these rights can attract the right companies and ensure sustainability through joint operations. • Support Initiatives to Enhance Capacity: Providing support initiatives such as feasibility studies, international consultations, and management plans can increase investor confidence and appetite. These initiatives can be funded through grants or technical assistance components. Training, expert opinions, and other assistance are essential for both private sector entities and local municipalities before launching operations. This ensures that all stakeholders are equipped with the necessary skills and knowledge. • Early Engagement for Readiness: Engaging the private sector early ensures that facilities are handed over to reliable operators promptly. This is crucial for "ready to go" facilities, such as tourism information centers, cafes, and shops, within public domains. • Inclusion of local population in management and operational practices: The involvement of the local community and the development of alternative tourism products/offers linked to specific destinations, particularly in buffer zones of protected areas or on municipality lands, will create more benefits for both locals and tourists. 46 Georgia: Tourism Trends Analysis and Recommendations Improved and sustainable approach to urban planning: The need for robust destination vision, aligned with urban planning practices and existing documents, and land use master plans is becoming increasingly apparent and vital for the sustainable development of communities. These documents serve as essential blueprints guiding the sustainable growth, operation and maintenance of existing and to be built infrastructure, attracting private investment and enh ancing community’s development potential. Given the complexity of modern urban environments and the pressing need for effective planning, international expertise is crucial. More extensive territories and intricate development challenges require insights and approaches that may not be readily available locally. At the same time, apart from selecting the most effective method of procurement, the implementation of complex urban documentation often requires high levels of technical and institutional capacity and coordination efforts from national government ministries and agencies with regional/local government and municipalities in the implementation process. This suggests that a thorough assessment and enhancement of the capacity of the clients and important stakeholders at both national and local levels is critical. And facing considerable lack of field experts among procuring agencies who are ultimate beneficiaries of the deliverables produced under the complex contracts, hindering the review and quality of deliverables joint efforts from development partners and state are required to improve mechanisms of attracting and enhancing the capacity of relevant coordinating agencies. Established in 2022, SUDA, Spatial and Urban Development Agency under the Ministry of Economy and Sustainable Development of Georgia now oversees spatial and urban development policy of the country. SUDA can directly benefit from the capacity building opportunities of such kind. 2. MOVING TOWARDS AN EFFECTIVE MANAGEMENT OF SITES AND DESTINATIONS The inclusive and sustainable development of any type of tourism at the local level requires appropriate participatory planning tools and an iterative process in which governmental organizations, local authorities, private entrepreneurs from the tourism and other sectors, and local communities can build together a common vision for the territory’s development, allocate resources and distribute responsibilities to achieve their objectives. Main strategic principle to be kept in mind while designing projects for both single destination development and/or regional level developments is to keep transparent and clear cooperation mechanism among relevant state agencies, development partners, local communities, and existing and potential private sector, while preserving the interests and needs of the local people and their livelihood at the core. To fully realize the potential of regional development, it is essential for various stakeholders to collaborate effectively, each undertaking specific responsibilities within their respective areas of expertise. These areas encompass a broad spectrum, while having a clear vision it should encompass urban planning, transportation and other basic infrastructure, cultural heritage preservation, utility planning and management, environmental conservation, tourism promotion, agricultural development, resilience management, healthcare infrastructure, academic and vocational institutions and more . Communication between stakeholders at national, regional, and local levels: Participatory planning and management should be fully integrated into municipal practices in adherence to development vision and urban plan of that particular destination. This approach also includes cooperation between state agencies, international financial institutions and development partners that can support with introduction of sustainable solutions encompassing global best practices and external financial support, as well as foster environment for local businesses, enabling access to diverse financing channels. Commercial banks can benefit from risk-sharing opportunities facilitated by international financial institutions and development partners, encouraging local businesses to invest in targeted areas and spur economic growth. Overall, this approach emphasizes collaboration between stakeholders, leveraging each other's strengths to achieve sustainable development goals and promote economic growth in targeted areas. Effective and sustainable destination management: The rapid growth of the tourism industry often leads to environmental degradation if sustainability measures are not prioritized. There is a need to integrate sustainability principles, environmental 47 Georgia: Tourism Trends Analysis and Recommendations conservation, and responsible tourism practices in destination management. Effective destination management in a regional development context involves a comprehensive approach that considers various aspects such as infrastructure development, community engagement, sustainability, economic growth and social benefits of tourism while preserving the region's unique cultural and natural heritage. The role of the regional DMOs should be to compile the vast amount of history, navigation, transportation and accommodation information for easy access and maybe later feed into the main portal. When RDPs were initially designed, the establishment of DMOs was a relatively new concept. At that time, the World Bank had just begun pioneering tourism projects. In Georgia, the Georgian National Tourism Administration (GNTA) took the innovative approach of establishing regional DMOs, with municipalities forming the foundation aligned with Georgia's regional division. Each regional DMO, such as those in Kakheti, Imereti, Samegrelo, and Samtskhe-Javakheti, was established with the municipalities as founders. These municipalities contributed finances and assets, including buildings, equipment, and operational budgets. However, at the stage of establishment, there was limited engagement with the private sector. Consequently, the DMOs operated as publicly funded and managed entities. While this ensured a degree of sustainability through municipal funding, it also meant that private sector partners and founders were not actively involved. One notable consequence was the lack of proper commercial management for many visitor centers overseen by the regional DMOs. Individual destinations lack management organization to guide the development process and ensure destination branding, management, and marketing. For example, the Tskaltubo resort, which has received significant state and private investments, lacks destination management, and its promotion falls under the responsibility of the Imereti Destination Management Organization (DMO). The Imereti DMO oversees the entire region apart from Tskaltubo, including resorts like Sairme and Kutaisi. Individual territories need their own management organization, which will collaborate with government agencies, private sector entities, and community organizations to promote the destination and attract tourists. To address this challenge and enhance the effectiveness and sustainability of the DMOs, there is a need to revisit the organizational structure and funding mechanisms. As it is also outlined in the newly adopted Tourism Law 58, DMOs should play a crucial role in the development and promotion of specific tourist destinations, often through collaboration between the public and private sectors. This collaboration is essential for effective destination management, as it allows for the pooling of resources, expertise and networks to promote and sustain tourism in the specific municipality. This collaborative approach would not only improve the financial viability of the DMOs but also enhance their capacity to deliver high-quality visitor experiences and contribute to the overall development of the tourism sector in Georgia. 3. PRODUCT DIVERSIFICATION / SERVICES QUALITY & PROMOTION Product diversification and the creation of niche tourism products are essential strategies for attracting new visitor segments and encouraging travel to lesser-known destinations (provided that basic infrastructure is available). The design of unique and compelling tourism products involves crafting experiences that highlight local culture, traditions, nature, etc. and that adapt to visitors’ preferences. As the demand for authentic cultural and natural experiences continues to grow, Georgia has an opportunity to increase its visitor offerings by integrating its cultural and natural assets more effectively. At this stage, it is essential to establish and maintain a national tourism asset inventory and information system. This initiative will promote continued growth of cultural heritage tourism as well as nature and adventure tourism. This involves establishing a comprehensive national tourism asset inventory and information system for Georgia, consolidating centralized data on all cultural heritage assets within the country. Collaborative efforts between public and private sectors can leverage mutual strengths to develop creative and competitive tourism products and market them appropriately. Additionally, to increase the duration of visitors’ overnight stays and increase spending within the regions, it is necessary to deve lop various events, festivals as well as winter offers that attract high-value tourists willing to stay longer. 58 Law of Georgia on Tourism: https://matsne.gov.ge/ka/document/view/6012850?publication=0 48 Georgia: Tourism Trends Analysis and Recommendations Product design and development should also have domestic tourism as a preference. UNWTO data shows that in 2018, around 9 billion domestic tourism trips were made worldwide – six times the number of international tourist arrivals (1.4 billion in 2018)59. The relevance of the economic impact of domestic tourism should not be overlooked and additional efforts should be done to increase the numbers. National government can plan an active role if fostering domestic tourism through subsidies, as they have been proven to be a great tool to revitalize tourism industry during the pandemic. Human resource development and training needs in the tourism industry are critical for ensuring the quality of services, enhancing visitor experiences, and supporting sustainable tourism development. There is a lack of industry specific skills including customer service, hospitality, language proficiency, cultural awareness, marketing, and destination management. With advancements in technology, tourism businesses need employees who are proficient in using booking systems, online marketing platforms, social media, and other digital tools. Furthermore, service tourism providers in the regions continue to face challenges in delivering high-quality services and lack the necessary expertise to offer a diverse range of tourism products to visitors. Simultaneously, the tourism industry faces a shortage of human resources. Consequently, according to a representative of the Georgian Tourism Association, there is a recognized need to develop more diverse professional education courses to attract additional individuals to work in tourism. Lack of promotion and visibility of destinations remains a challenge. It lies in the fragmentation of tourism information across various websites, making it difficult for visitors to find comprehensive details in one place. Online resources lack information on transportation options, tickets for events and attractions and directions to popular tourist sites. As tourists today are increasingly looking for unique and memorable experiences thematic trails and routes are an excellent way to both celebrate the diversity of the tourism products while also attracting more niche travelers. To promote destination in the regional and global market, various marketing and promotional activities, including the development of marketing plans, maintaining an online presence, storytelling campaigns, engagement with content creators and influencers, collaboration with tour operators and travel agents (organizing package deals, loyalty programs, etc.), hosting international events, participation in travel trade shows and exhibitions are to name a few of the initiatives to be considered. This should be supported by a careful analysis of existing data on segments (Big Data) that allow GNTA to create specific content that addresses the unique needs and interests of each segment or allows the design and implementation of personalized promotions and campaigns. Environmental considerations in the development of In general, ecotourism makes much less impact on the environment tourism: Another primary challenge lies in the uneven than other types of tourism such as 4WD-tourism or other motorized distribution of tourists in popular destination areas, sightseeing tours. However, Tbilisi-based tourist companies that are contradicting with the principles of sustainable operating ecotourism tours in APA and NFA administered territories stressed the need to have a more efficient waste management system. development. Accumulation of a big number of tourists in Many places near communities and popular tourist attractions are top tourist places poses struggles to the effective littered with garbage and often, there is no maintenance of toilets or management of these places, as well as over-tourism, affects basic sanitation and waste disposal at campsites. the destination’s natural and cultural environment. NFA has developed a concession mechanism, including environmental Additionally, it is necessary to assess tourism carrying safeguards and specific safeguards on maintaining forest ecosystems capacity in certain tourism destinations, particularly those and biodiversity, water quality, and wildlife habitats. But so far, no with ecological sensitivity. However currently, the country information is available on how these safeguards will be lacks clear methodologies or expertise specifically tailored operationalized or whether they are realistic at all if concessions are granted primarily according to financial criteria. for this purpose. 59https://www.unwto.org/news/unwto-highlights-potential-of-domestic-tourism-to-help-drive-economic-recovery-in- destinations- worldwide#:~:text=Initiatives%20to%20boost%20domestic%20tourism&text=Examples%20of%20countries%20taking%20tar geted,spend%20in%20domestic%20tourism%20accommodation. 49 Georgia: Tourism Trends Analysis and Recommendations 4. CREATE ECONOMIC OPPORTUNITIES FOR LOCAL COMMUNITIES Tourism offers great opportunities for local communities, creating job opportunities, driving infrastructure development, and generating revenue growth. Tourism also showcases the unique heritage of local communities, their traditions, way of life, etc., preserving the authenticity of the place. Community-based tourism development to discover the authentic experience of Geogia , facilitating access to local activities and catering services that offer traditional dishes. This approach can enhance the overall visitor experience and highlight local culinary traditions and hospitality. Support the establishment of smaller and authentic B&B in less visited areas, away from cities and towns as well as the coast (Ajara), that would cater to the high-end markets and for a longer season outside the summer. Linkages with local farmers and agro-producers: Many tourists look for diverse experiences even during short holiday stays in rural areas. They seek locally produced products, especially the ones used on a daily basis such as herbal tea, eggs, honey, milk, cheese60 and ready to pay high prices for authentic local products if regular farmers' markets exist. Traditional products are not visible in the regions, while the practices of geographical indications, product labeling, marketing and quality assurance of traditional products have been introduced in Georgia since 2017. To increase the economic impact of tourism, local internet booking capacity needs to be developed in the communities, and the locals need to learn how to provide pre-trip tourism marketing and services as well as post-trip communications. The biggest market opportunity for local communities is the segment of independent travelers This means that local community offerings must be posted on the internet, which is the main marketing channel where foreigners research and book prior to their trip. This requires computer literacy, language skills as well as sales/marketing. Facilitate access to tourism development grants, even with some co-financing requirements. Governmental programs like Enterprise Georgia and RDA substantially support local entrepreneurs through micro-grants and low-interest rate credits. Additionally, local communities may also benefit by introducing campaigns to promote local tourism in the domestic market (i.e, through travel vouchers or the recreation allowance as a tax-deductible expense)61 The principles of sustainable tourism require good links between local agricultural product chains and tourism. Today, these links are missing, and tourism is competing with other sectors and not cooperating. The reasons for the latter are mainly the high prices of local products, unsystematic delivery of products (seasonality, poor storage conditions, poor road infrastructure, etc.), and access to certified and labeled products. In addition, food safety and hygiene standards are not appropriate for services. Food facility owners need to be trained in food safety and hygiene standards (HACCP), financial management of catering facilities, development and promotion of local cuisine, diversification of their products as well as types of food facilities, related infrastructure, and attributes. In recent years the country has seen a noticeable increase in the number of tourists, driven by its unique blend of attractions and a growing reputation as a must-visit destination. However, along with this increase, several challenges arise that threaten the fundamentals of the sustainable, inclusive, and resilient tourism development. From infrastructure limitations to environmental concerns, and heritage conservation to complexities of the tourism product development, achieving sustainable tourism development in Georgia involves navigating various obstacles that require consideration and strategic intervention. 60Khartishvili, L.; Muhar, A.; Dax, T.; Khelashvili, I. Rural Tourism in Georgia in Transition: Challenges for Regional Sustainability 2019, 11, 410. 61 Tourism voucher – Spain: https://bonoturismo.gal/es/client 50 Georgia: Tourism Trends Analysis and Recommendations ANNEX 1. WORLD BANK REGIONAL DEVELOPMENT SUPPORT The World Bank (WB) has been supporting Georgia to enhance its balanced regional development, tourism policy, destination positioning, improvement of infrastructure and institutional capacity for more than a decade now. This includes such key and transformative activities as the development of Georgia National Tourism Strategy 2015-25 (first tourism strategy for the country), a number of analytical and advisory studies on tourism development and value chain analysis in selected regions, and three series of Regional Development Projects (since 2012, with total budget US$159 million) aimed at improving infrastructure services and institutional capacities for the increased contribution of tourism in local economies. Through these various initiatives and projects, the World Bank aimed to enhance the competitiveness and sustainability of Georgia's tourism industry, thereby fostering inclusive growth and poverty reduction. Two ongoing projects, the Third Regional Development Project, and the Second Municipal Infrastructure Development Project, are scheduled to be completed during 2024. The genesis of the Regional Development Program stemmed from the realization that without adequate infrastructure linking destination sites, including cultural heritage sites, national parks, resorts, and historic towns, sustained growth and competitiveness as a tourism destination would remain unattainable. This emphasizes the importance of not only improving public infrastructure at destination sites but equally important to bolster institutional capacity to implement and manage facilities that promote regional competitiveness. Based on knowledge gained through instrumental support from the WB and other development partners, in 2021, Government of Georgia initiated 4-year program encompassing all 63 municipalities of Georgia, with its initial orientation budget of 500 million GEL (app. US$ 200 million), anticipating urban revitalization in regions, namely the refurbishment of significant public, municipal and private assets. Box 1: WB supported Regional Development Projects Project Name/Budget/PDO Outputs Lessons learned RDP 1 (Kakheti) RDP addressed multiple elements of the tourism The success of the RDP was largely secured by the correct USD 60 MLN supply chain: upgrading urban centers (Telavi and identification of Telavi and Kvareli as main hubs of the Kakheti tourism The Project Development Kvareli), cultural heritage sites (11 cultural heritage circuits which was informed by a thorough study of the potential of Objective is to improve destinations), transport accessibility (improve the tourism industry in the region. The revitalization of these towns infrastructure services and accessibility and road quality), capacity building for and their key tourism attractions have made the most substantial institutional capacity to SME owners (trainings), produced Georgia’s contribution to the growth of visitor numbers and allowed them to support the development of branding strategy and strategy paper for promotion rise to being the most popular destinations in the region. tourism-based economy and & management of destinations (supporting DMOs PPI - While growth in visitor arrivals often leads to growth in business cultural heritage circuits in the and local communities). Infrastructure activity, the speed of private sector response to this opportunity can Kakheti region. investments were accompanied by the funds for be slow in the regions where tourism is not well established, and the the institutional development and public-private expertise and skills are limited. For this reason, support for pilot partnership (PPI). initiatives of the private sector is critical to pave the future path for more investors to come. Most of the subprojects supported through public-private investment would have either not happened, or would have taken much longer, and this would have likely slowed down the pace of investment growth overall, and thus economic growth and job creation. Maintenance and operation of the assets remained a significant challenge throughout the project's duration and after its completion. RDP 2 (Imereti) Rehabilitation of Vani Museum and the adjacent DMOs were found ineffective under the current management USD 39 MLN archeological framework. The Project Development area, and the upgrading of cultural Merely organizing one-time trainings proved to be unsustainable. It's Objective is to improve heritage assets along the tourism circuit of the imperative to establish permanent or demand-based infrastructure services and Imereti region; these comprise the UNESCO World courses/curriculum within the region. institutional capacity to Heritage Site Gelati There is no information available regarding the extent to which site support increased Monastery, Ubisa Church, Katskhi Church, Katskhi Management Plans were utilized and whether they are still in use and contribution of tourism to the Column Monastery, and Motsameta Monastery. effective. local economy of the Imereti Completed under Technical assistance component: . Region. establishment of a Destination Management Poor quality designs were one of the main issues throughout the Office in Tskaltubo; (b)The Project financed a project’s duration. Available rigid mechanisms to terminate comprehensive consultancy contracts limit swift substitution of the new contract for sustainable tourism development, consultants/designers to meet completion deadlines. This remains marketing and promotion, and destination significant challenge for the project. management for the Imereti (and the Kakheti) region, under which a branding, marketing, and 51 Georgia: Tourism Trends Analysis and Recommendations promotion strategy, including brand identity for the regions, as well as for Georgia, was produced. (c) six visitor management plans were created for the cultural heritage sites covered under the Project. (d) skilled in workforce development and capacity building. 360 hours of training were delivered to 300 participants. RDP 3 Third RDP introduced a new approach to regional Through RDP3 concentrated more on larger investments in fewer (Mtskheta, Samtskhe- development, a more holistic approach to urban areas/hubs, complex urban upgrade designs proved to be a challenge Javakheti) regeneration. Focusing on fewer hub destinations even for international design firms. USD 60 MLN (Abastumani, Bakuriani, Satskhe tourism circuit) There was evident demand in the private sector, while RDP3 lacked The Project Development compared to more scattered locations and scaling- provision for PPI. Objective is to improve up the investments in the targeted areas. Maintenance and operation of the assets remained a significant infrastructure services and challenge throughout the project's duration and after its completion. institutional capacity to Poor quality designs were one of the main issues throughout the support increased project’s duration. Available rigid mechanisms to terminate contribution of tourism in the consultancy contracts limit swift substitution of the new local economy of the consultants/designers to meet completion deadlines. This remains Samtskhe-Javakheti and significant challenge for the project. Mtskheta-Mtianeti regions. 52 Georgia: Tourism Trends Analysis and Recommendations ANNEX 2. CONSULTATIONS WITH KEY STAKEHOLDERS Focus Group Discussion with Tour Operators In order to understand the tourism performance of the different Georgian tourism segments, identify main constraints and opportunities and recognize the existing demand, focus group discussions (FDG) were undertaken with five chosen tour operators and one freelance tour guide (Caucasus Travel, Georgia Travel, Promote Georgia, My Wine Travel, Georgia Insight and a freelance guide Ms. Natia Khidasheli). Some significant insights gained from the FDGs show that the initial five countries from which tour operators receive visitors are France, Germany, the USA, the UAE, and the United Kingdom, along with the Netherlands. Typically, visitors lean towards cultural tours, wine tasting and gastronomy experiences. Additionally, the beautiful nature of Georgia significantly influences their choice of travel destination. On the other hand, the tourists complain about the garbage and waste scattered in the countryside, inadequate road infrastructure in remote regions, high prices relative to the level of service received and a lack of public toilets. Majority of the tour operators offer Tbilisi, Kakheti, Imereti, Mtskheta-Mtianeti and Samtshkhe-Javakheti as main travel destinations within the country. When asked about whether the tour operators incorporate visits to Tetritskaro and Kvareli municipalities, most indicated that Tetritskaro is only included upon request, while Kvareli is commonly featured as one of the destinations on wine tours. Only one tour operator has mentioned that Tetritskaro, particularly the Samshvilde Canyon, is consistently included in their tourism packages. When asked how they would describe the current state of tourism in Georgia in general and also within their specific segment (adventure/mountain, cultural, gastronomic, rural and other), some of them mentioned that they are still recovering from the impact of the Covid-19, also the current regional uncertainties play a role and visitor numbers are gradually returning to their pre-Covid levels at a slow pace. In addition, permanent increase in prices negatively influence the number of visitors booking the trips. Due to the continued unrest in the wider region, one tour operator mentioned that 10% of the reservations are already cancelled this year. This negative situation applies to all tourism segments more or less equally. The primary challenges in the tourism market include the need to enhance Georgia's positioning as a safe travel destination, particularly considering the ongoing unrest in the region. Also, unqualified tourism personnel, lack of regulations and continuously rising prices pose significant constraints to the development of tourism. The continuous challenge of improving public infrastructure, including toilets and access roads, as well as parking spaces has been mentioned as persisting problem for years. Another challenge is the need to diversify tourism offers, since many tour operators tend to focus on popular destinations. This concentration often leads to overcrowding and negative environmental impact on tourist sites. Tour operators have highlighted various infrastructural issues, such as inappropriate building construction that doesn't harmonize with the landscape and local architectural style, insufficient availability of public toilets and parking spaces, poor infrastructure in and around tourist destinations. When discussing about the future development of tourism in Georgia, various recommendations were highlighted, such as: o Improvement tourism service quality o Strengthening tourism regulations to ensure that attraction and retention of qualified individuals o Expanding the network of direct flights connecting Tbilisi with numerous capital cities o Diversifying tourism offers such as type of tours and destinations o Improvement of tourism infrastructure including access roads to attractions, toilets, parking areas o Governmental oversight on construction projects should prioritize authentic architectural styles o Comprehensive information and marketing initiative aimed at attracting high-paying visitors. 53 Georgia: Tourism Trends Analysis and Recommendations Final remarks and recommendations included discussion about the need for diversifying tourism experiences, underscoring the importance of research for the possible alternative options. This involves not only identifying new directions but also investing in infrastructure, training and equipping tourism service providers accordingly. The lack of a robust support system encompassing guides, transportation, hospitality services and entertainment venues worsens the issue. Consolidating comprehensive information about Georgia into a single online platform would be invaluable. Currently, basic details such as for example funicular ticket prices or the operating hours of some of the attractions remain unavailable online. Furthermore, festival schedules and museum information often lag behind, making it difficult to do the planning. 54 Georgia: Tourism Trends Analysis and Recommendations ANNEX 3. LIST OF PARTICIPANTS OF FGDS AND INTERVIEWED STAKEHOLDERS Month / Date / format Meetings / interviewees week April Pshav-Khevsureti / Individual interviews Koba Gvritishvili, guesthouse owner in Magharoskari village Enterprise Georgia Beneficiary 2 Online Lia Bodzashvili, guesthouse owner in Sharakhevi village, Enterprise Georgia Beneficiary Nukri Lashkarashvili, guesthouse owner in Tsiprani village, Enterprise Georgia Beneficiary Barbare Janabishvili, guesthouse owner in Tkhiliana village, Enterprise Georgia Beneficiary Tariel Bekauri, guesthouse owner in village Gamsi, Enterprise Georgia Beneficiary Gocha Bekauri, guesthouse owner in village Gamsi, Enterprise Georgia Beneficiary April Tbilisi / FGD 4 Online Ketevan Aspindzelashvili, products and sales manager at Caucasus Travel Irakli Uratadze, founder and executive director of Travel Promotions Georgia Nino Chavchanidze, executive director at Georgica Travel Maka Tarashvili, founder of My Wine Travel Zaira Soloeva, executive director at Georgia Insight Natia Khudasheli, freelance travel and tour guide May Tbilisi / Individual interviews 1 Online Tamar Maisuradze, Head of the Department of Tourism Product and Infrastructure Development at Georgian National Tourism Administration Natalia Bakhtadze-Englaender, founder at Georgian Eco-tourism Association Natalia Sultanishvili, Head of Planning and Development Division at the Agency of Protected Areas Natalia Kvachantiradze, founder of Georgian Tourism Association 55 Georgia: Tourism Trends Analysis and Recommendations ANNEX 4. A FEW BEST PRACTICES OF GEORGIA'S TOURISM SECTOR Governance & Government Policies and Initiatives Over the past two decades, tourism as an alternative way of development for the diversification of the regional economy has become a topic of discussion among country governments and international aid institutions working in Georgia. Programs emphasize the role of tourism in revitalizing rural areas, especially mountain rural areas, promoting local production, conserving and conserving protected areas, and the multifunctional development of forests. In this regard, alternative forms of tourism, such as rural, agri-, ecological, creative, and experiential tourism, as opposed to traditional conventional tourism, have become an integral part of government policy documents and projects. Institutions are promoting tourism as a supporting practice to develop sustainable small and medium business models to diversify the local (rural) economy, increase the self-reliance of local residents and invent creative and innovative activities. In Georgia, several regional and national organizations play a critical role in the decision-making and implementation of actions that impact the tourism industry and the visitor experience. At the national level, the GNTA is responsible for developing and implementing tourism development, marketing, and promotion policies. The policy direction is a sustainable and profit-oriented tourism development model that aims to increase the number of international travelers to the country annually by attracting quality, higher-spending tourists62. The Tourism Development Strategy (2015-2025) refers to the conservation of nature and cultural heritage, unique, authentic, and diverse visitor experiences, quality and profitable tourism products (public and private sector investments), as well as the inclusion of the community in tourism planning processes and the development of multispectral partnerships. The GNTA collaborates closely with the Ministry of Economy and Sustainable Development, the Agency of Protected Areas (APA), the Georgian National Agency for Cultural Heritage Preservation (NACH), Resorts Development Agency (RDA), Mountains Trails Agency (MTA) and other government agencies to ensure that policies and initiatives align with broader economic and social development goals. National Tourism strategy emphasizes collaboration with RDA, APA and NFA to identify new recreational areas and develop ecotourism products. Recently, regional Destination Management Organizations (DMOs) were established in five regions to support tourism development at the local level. They work to promote tourism in their respective regions by organizing events, supporting local businesses, and promoting cultural and natural attractions. These organizations are newly created. Their budget is determined by state funding (municipalities' budgets) and supplemented with individual donor organizations' assistance. While their role in tourism sector is growing, destination management, especially at the level of individual resorts and venues, remains a challenge in the country. If managed well, DMOs are a promising model for decentralizing tourism management systems in the country and marketing tourism destinations. A DMO’s goals and objectives are: • To develop unique tourism products and services in the regions based on the sustainable development principles • To promote the tourism in the regions by organizing and supporting different activities with close cooperation and involvement of public and private sectors • To support regions’ promotion both in Georgia and abroad • To develop and implement the tourism strategy in accordance with the sustainable development principles and the National Tourism Development Strategy • Contribute to the development process of improving the service quality of the businesses in the regions 62 Georgia National Tourism Strategy 2025, Volume 1: Situation Analysis. 56 Georgia: Tourism Trends Analysis and Recommendations • Ensure to increase the length of visits and visitor expenditures in the regions Figure 40. Tourism management model in Georgia. Source: Ecotourism market analysis (GIZ, 2020) In recent years, several associations have also emerged to support the growth of Georgia's tourism industry. These include the Georgian Tourism Association, the Georgian Association of Incoming Tour Operators, the Ecotourism Association, Tourism Industry Alliance, Mountain Guides Association and other sector-oriented professional unions which advocate for the interests of tourism businesses and provide training and support to industry professionals. Overall, the involvement of these organizations at various levels of government and the private sector is essential to ensuring the sustainable growth and development of Georgia's tourism industry. Policy Documents Georgian National Tourism Strategy 2015-2025 Back in 2013-2014, Georgian Government delegated to GNTA (Georgian National Tourism Administration) to elaborate 10 years national tourism development strategy, that will reflect development achievements made by country and set the new strategic objectives and goals to achieve over the 10 years. The document was designed with the intention to map out the needs for the infrastructure upgrade, effective public-private cooperation, targeted promotion and market readiness to increase competitiveness of Georgia at global scale. The World Bank has been asked to support such initiative by recruiting international consultants to support GNTA and assisting process through its resources allocated from the ongoing Regional Development Program , at that time, focused to support improvement of the tourism infrastructure (public and private) at municipal/regional destinations. Strategy and Action Plan defines the Vision 2025 – “Value vs. Volume” By 2025, Georgia will be well known as a premier, year-round, high quality tourism destination, centered on its unique cultural and natural heritage, world-class customer service, and timeless tradition of hospitality. Georgia will be at the forefront of tourism competitiveness, through strategic investments in infrastructure, education and marketing. Tourism will significantly increase its contribution to Georgian economic growth through increases in visitor spending, creating high value jobs and supporting local economies. The focus will be on the quality of travel services and diversity of visitors’ unique experiences. 57 Georgia: Tourism Trends Analysis and Recommendations Document was elaborated through intensive public-private consultations and served as a development road map for government, tourism stakeholders and development aid. (Source: National Tourism Strategy and Action Plan 2015-2025, public dissemination version). Tourism Recovery Strategy and Action Plan 2020-2025 Travel restrictions in 2020 caused an 80-90% decline in domestic and international tourism (GNTA, 2020). In 2021, Georgian government was supported by USAID Economic Security Program to mitigate dramatic changes and engage consultant firms (Solimar International, GTG and others) to create action-oriented strategy document “Recovery Action Plan 2020-2030”, reinforced by the “One year marketing strategy” and “Benchmarking countries competitors analyzes” . Based on extensive consultation with industry experts and tourism national authorities 10 bold strategic actions were identified alongside the specific recommendations to plan and implement under the Recovery Action Plan : 1. COVID Safe Certification and Hospitality Vaccination Campaign 2. Stimulus Package to Invest in Cultural and Natural Sites 3. Air Service Development Campaign “Come Alive Again in Georgia” 4. A One-Year Marketing Plan 5. Increase use of Public Assets through Public-Private Partnership (PPP) 6. Become the Adventure Tourism Capital of the World (Winter and Summer) 7. Declare 2022 Year of Wine & Gastronomy and Promote it at Global scale 8. GNTA promotes “Destination Development Best Practices” 9. Promote concept of “Tourism Districts” – Tourism Destination Places 10. GNTA optimize Marketing and Promotion became a ITB Host Country 2023 (ITB’s first event after Covid 19 pandemic) National Tourism Recovery Strategy and Action Plan defined target indicators: LEPL National Forestry Agency Development Strategy and Action Plan 2021-2026 In the past years, NFA has actively worked on the development of tools and procedures to promote and formalize tourism- related activities, for example, by introducing a tourism planning system at the municipal level. National Forest Concept of Georgia supports planning and implementation of multipurpose and efficient forest use, through strengthening the touristic and recreational forest use. The agency initiated to support: 58 Georgia: Tourism Trends Analysis and Recommendations development of recreational forest management and eco-tourism; use of non-timber resources; and sustainable use of timber resources and development of service types. The agency put efforts to develop: 1. Tourism infrastructure and services in forests. In particular, guidelines and standards for ecotourism planning, development and evaluation in forest areas; ecotourism development plans and Investment packages, a voluntary system of public and private sector involvement in maintenance and arrangement of recreational areas; 2. Create additional opportunities for the local population and the private sector (the assessment of the potential of non-timber resources, development of standards and procedures for the use of non-timber resources); 3. access to alternative fuels and business timber and introduce an effective forest waste management mechanism. Since the approval of the new Forest Code, the multifunctional use of forests opens new opportunities for NFA to further engage in tourism development and to generate an income from tourism activities 63. A sub-legal act of the Forest Code of Georgia provides an instruction for different types of forest use, including concession - instruction on granting the right to special forest use for resort, recreational, sports, and other cultural and recreational purposes, which supports balancing the needs of the development of the private sector in forest areas and a certain number of controlled types of economic activity. Private recreational facilities developed in NFA-managed areas are subject to certain regulations outlined in instruction on granting the right to special forest use (concession). This approach allows private businesses to conduct commercial operations on state land while the state (in this case, the NFA) receives direct financial benefits from the business being used for forest conservation. In this context, NFA is currently verifying different options for a concession mechanism, which would strengthen private investments in ecotourism development and generate incomes for the Agency. NFA works on an institutional and economic model and action plan for the management of recreational forests in Georgia, for using the welfare function of forests sustainably and managing forest territories64. NFA developed the tools and procedures to regulate tourism-related activities. An Operational Manual for the development of footpaths in forest areas was developed with technical regulations for planning and marking of footpaths. The agency actively participates in developing ecotourism strategic directions and action plans for Georgia. Due to a lack of human resources and services in NFA territories, an NFA ownership model where NFA provides funds, owns, manages, and profits from the operations is not appropriate at this moment. The suggested model of a concession mechanism by Kauri Sparff (2020), envisages a public and for-profit combination model the most appropriate for NFA, where the government ownership of all resources and management and finance undertaken by a combination of public and private organizations. The actual transaction process could be done in several alternative ways: tendering, auctioning, or direct procurement of an outstanding, unsolicited proposal. Ecotourism Strategy of Georgia (2020-2030) and Action Plan (2020 -2022) In order to ensure sustainable development of Georgia’s tourism industry, the GNTA together with GIZ, the Georgian Ecotourism Association and other parties created the “Ecotourism Strategy 2020 -2030”. The strategy is in line with 63 MEPA & NFA (2019): Forest Sector Communication Strategy and Action Plan 2020-2024 64 CENN (2018): An institutional Model and Action Plan for Management of Recreational Forests in Georgia 59 Georgia: Tourism Trends Analysis and Recommendations Georgia’s National Tourism Strategy (2025), vision and strategies of ecotourism development for Protected Areas and National Forestry Agencies65. The document proposes the term and strategic vision of ecotourism for Georgia, which was elaborated by different actors during the workshops. Ecotourism strategy sets following objectives: 1. Development of high-quality eco-tourism offers and products, based on common Ecotourism Principles 2. Development and maintenance of ecotourism-related infrastructure fitting to different areas according their natural and cultural values 3. Development of interpretation and educational services fitting to different areas according their natural and cultural values 4. Increase of the local and regional benefit through ecotourism offers 5. Support of local commitment for and high service quality of all eco-tourism offers and products 6. Development and implement effective target-oriented organizational and marketing measures 7. Avoidance of over use and destruction of eco-touristic resources 8. Effective and efficient use of financial means in the spirit of this strategy Strategy emphasizes the importance of inventory of historical-cultural resources in forest and PAs territories; Development of the criteria for selecting the recreational forest use projects; Elaboration of ecotourism/recreational development plans in forest areas; Development of internal guidelines for environmentally friendly construction, relevant to landscape and nature (nature-friendly materials, septic toilets, light constructions), which will be used in and around NPs and forests; Preparation of at least 10 recreational zones in forest areas; Elaboration of ecotourism training materials (for service providers, rangers, nature guides) to acquire knowledge of local culture and nature, to get practical skills in interpretation of product, business planning, marking and management. Other priority actions are investigation for and development of ecotourism (circular and short) trails (in and around certain locations that are nearby rural guesthouses, Support in development and promotion of traditional local production (handy crafts, products, non-tangible product components: local folk buildings, traditional way of product processing, storage, Georgian hospitality). Guideline on the Identification of Touristic-Recreational Forests and their Management in Georgia To support planning and implementation of multipurpose and efficient forest use, as defined by the National Forest Concept of Georgia, NFA in cooperation with CENN developed the Guideline on the Identification of Touristic-Recreational Forests and their Management in Georgia. It supports NFA to enhance the touristic and recreational forest use by using a standardized tool, which assist in decision-making situations, such as: - detailed criteria for the identification/selection of forest touristic-recreational areas - standards for the maintenance, management and control of forest touristic-recreational areas - management permits to third parties (commerce and services), and - the criteria for site operators’ selection workable and clear environmental, social and cultural safeguards for inclusive and gender-sensitive local impact - specific safeguards on maintaining forest ecosystem and biodiversity, water quality, wildlife habitats - suggestions on the educational component and effective info-sharing tools (infographics, multimedia, videos, etc.) 65A core group of strategy implementation and monitoring consist of representatives of GNTA, the National Forestry Agency, the Agency of Protected Areas, the Georgian Ecotourism Association, and the colleagues from the GIZ office in Tbilisi. Further professional associations, experts and other donor organizations could be additionally invited to the Committee, if appropriate and in service to the cause. The document has been elaborated with the support of he Deutsche Gesellschaft f ür Internationale Zusammenarbeit (GIZ) GmbH program “Private Sector Development and Technical Vocational Education and Training South Caucasus'' (PSD TVET SC). 60 Georgia: Tourism Trends Analysis and Recommendations The document explains options for transferring the right to a third party to manage ecotourism sites. The definitions of concession, license and management agreements are given in detail. It also introduces many approaches to the management of recreation and tourism services in parks and protected areas and proposes the NFA's preferred model - Public and for-profit combination model, with government ownership of all resources, with management and finance undertaken by a combination of public and private organizations. The document emphasizes that the tourism-recreational activities’ impact is most often a slow, gradual loss of the quality of soil and water, or to a lesser extent, in peak season air pollution. On rare occasions, a sudden impact may hit through a technical accident sparked by flawed planning of infrastructure or buildings, or technical malpractice. Increased human activity also creates various forms of litter, waste and pollution. Collaboration between Stakeholders Effective destination development necessitates the adoption of more "bottom-up" collaboration and decentralized destination groups, fostering stakeholder engagement wherein local residents are encouraged to assume greater responsibility for management. Public-Private Partnerships (PPPs) in destination management have become increasingly prevalent as more destinations recognize the synergies derived from combining government with private enterprise to accomplish specific projects within destinations. The National Tourism Strategy of Georgia underscores the importance of stakeholder collaboration in sustainable design and construction initiatives, such as roads, entrance gates, signage, interpretation centers, trails, picnic areas, bathrooms, parking facilities, etc., around significant cultural and heritage sites (Strategy 2, p. 39). It also emphasizes the involvement of industry operators and public asset holders/operators at the early planning stages. The strategy has established an objective wherein each agency should conduct a tourism infrastructure needs assessment in collaboration with the tourism industry, DMOs, and local municipalities for certain cultural sites, forestry and protected areas. There are several examples of PPPs cooperation in the country. One notable example is the recently launched Shuamta Gateway Project, which represents a collaborative model for the Shuamta Heritage Trail (see next chapter for more details). Large-scale development projects, often facilitated through loans, have received backing from international financing institutions including the World Bank, particularly the International Bank for Reconstruction and Development (IBRD) and the International Finance Corporation (IFC), the Asian Development Bank (ADB), the KfW Development Bank, the European Investment Bank (EIB), and others. Many international donors and development agencies supporting programs and initiatives aimed at bolstering the tourism sector. These efforts place particular emphasis on workforce development, destination management, public-private partnerships, information and communication technologies (ICT), as well as marketing and promotion. The focus remains on strategically significant value chains such as adventure and nature tourism, cultural heritage preservation, and wine and gastronomy. There are ongoing efforts to modernize traditionally robust sectors like wellness and health tourism, Meetings, Incentives, Conferences, and Exhibitions (MICE), commerce, and digital technologies through new strategic interventions. The table below outlines the donor (grant) funded programs that could complement to the large infrastructure and institutional investments. Tourism projects EU4ITD - Catalysing Economic CESL aims at rebalancing economic and social life in Georgia away from the metropolitan and Social Life in PIRDP centres of Tbilisi and Batumi. The project is being implemented in the four regions - Regions (CESL) Guria, Imereti, Kakheti, Racha-Lechkhumi and Kvemo Svaneti. The project is financed by the CESL finances investments and accompanying “soft” measures which contribute to European Union and the economic and social re-balancing in the following three priority areas: 1) urban renewal German Government. With 61 Georgia: Tourism Trends Analysis and Recommendations GIZ responsible for – i.e. projects which aim to turn unused or under-used “spaces” in urban centres into implementation and the “places” for commercial and social Ministry of Regional exchange, 2) tourism development - i.e. initiatives which concern improving the tourist Development and offer in PIRDP regions or mitigate negative impacts resulting from tourism, 3) income Infrastructure as the partner generation and economic activation - i.e. projects whose goal is either a) to develop or institution, it runs from fill a gap in a specific value chain to enable an increase in price or sales of a particular February 2022 to September product; or b) to kick-start or increase income generation of marginalised groups (e.g. 2025. rural women, youth). The specific objective is “municipalities, businesses, and citizens in PIRDP regions realise untapped economic and social potential”. Expected Results  Municipalities turn “spaces” into “places”  Income generation and economic activation are catalysed  Institutions are enabled to tap unrealized economic and social potential Until April 2024, the list of completed projects includes:  Enhancements to agricultural market infrastructure in the Lentekhi, Kvemo Svaneti region.  Upgrades to pedestrian trail infrastructure adjacent to the Sairme Pillars Nature monument in Sairme village, Racha region.  Support for women-led agribusiness startups in Chokhatauri and Lanchkuti, Guria region.  Development of infrastructure for the youth digital space in Kharagauli. The South Caucasus Regional SCRTP aims to build durable regional cooperation among Armenia, Azerbaijan, Tourism Program (SCRTP) and Georgia, based on market drivers and shared economic interests in the tourism sector, thereby contributing to cohesion and peace in the South Caucasus region. It will USAID create new market linkages between private sector actors which establish shared interests and generate win-win-win gains for collaboration and peace in the region. The program also facilitates collaboration and regional dialogue involving government and civil society actors to support tourism development. This will serve as a model for more expansive engagement across other sectors and issues, expanding upon the program’s work to promote peace and prosperity in the region. The Program provides technical assistance and training to improve the organizational capacity, tourism, and economic development of Georgia’s parks and nature/cultural monuments. Enabling the Implementation The Project supports the Government of Georgia in implementing its transformational of Georgia’s Forest Sector forest sector reform agenda to put the entire nation’s forests under the framework of Reform—ECO.Georgia sustainable forest management (SFM). It provides support for the following components: nationwide SFM system implementation (component 1); Support of The projects is implemented energy-efficient mechanisms and alternative fuel markets to address key drivers of by the Deutsche Gesellschaft forest degradation (component 2); Strengthening livelihood diversification and local für Internationale self-government in rural communities near forests (component 3). Zusammenarbeit (GIZ) GmbH with the financial support of Under the component 3 the project provides support to businesses, including the Green Climate Fund ecotourism business entrepreneurs, by enabling access to sufficient investment capital (GCF), the German Federal finances and increasing the necessary knowledge and skills. In the context of Ministry for Economic ecotourism, the Component 3 will support strengthening the participation of local Cooperation and communities in forest management plan (FMP) development and implementation; Development (BMZ) and the applying joint management and benefit sharing mechanisms (e.g. on recreation and Swiss Agency for tourism); capacity building of the target groups through short-cycle education Development and programmes, strengthening selected value-chains. Cooperation (SDC). 62 Georgia: Tourism Trends Analysis and Recommendations Assessment of the ecotourism potential on the NFAs and municipal lands includes an analysis of the status quo of the ecotourism market in eight municipalities of three regions of Georgia: Akhmeta, Telavi, Kvareli and Dedoplistskaro Municipalities (Kakheti region), Chokhatauri, Lanchkhuti, and Ozurgeti municipalities, (Guria Region), and Tianeti municipality (Mtskheta-Mtianeti region). Project suppports (co-finances) an installment and operation of energy efficient technologies for the small guesthouses, huts and shelters at remote destinations – along the mountain trails. Agriculture Program The Program targets agricultural value chains that show the most potential to generate revenues and create high-value jobs in rural Georgia, including the production and USAID processing of fruits, vegetables, herbs, and other horticulture products. Preserve traditional agriculture and land-use that makes destination places unique; Strengthen production of the traditional plants and species and culinary masterpieces, support experience-based travel concept merging heritage, culinary, agro-tourism. 63 Georgia: Tourism Trends Analysis and Recommendations Case Studies of Successful Tourism related PPI Projects Case examples of the facilities - Matsoni house at Alaverdi Monastery, Shuamta Gateway and Ikalto Qvevri School, recently became operational after signing lease agreement between Eparchy of Alaverdi and Badagoni winery and are good examples of efficient partnerships between public-private donor entities. Matsoni House was founded in 2014 with support from the World Bank as part of the RDP 1 Kakheti Development Project and is a unique cultural and culinary destination that celebrates the traditional Georgian yogurt called matsoni. Apart from serving as a restaurant, Matsoni House provides various activities for visitors, including matsoni making demonstrations that often include explanations of the ingredients used and the fermentation process, tastings of freshly made matsoni workshops where it is possible to learn how to make own matsoni at home, using local/traditional recipes. It also often provides opportunities for visitors to immerse themselves in traditional music performances, dance demonstrations, baking bread or making cheese. The key to the success of Matsoni House likely lies in several factors:  Authenticity: it prioritizes authenticity in its approach to showcasing Georgian culinary traditions;  Quality: Maintaining high-quality standards as it is essential for any culinary establishment;  Cultural Experience: provides visitors with a comprehensive experience that encompasses Georgian hospitality, music, dance;  Innovation and Adaptation: while it celebrates tradition, it may also incorporate elements of innovation and adaptation to meet the needs and preferences of modern consumers;  Regarding the economic and social advantages, the creation of Matsoni House has generated employment opportunities within the local community. During the construction period, 50 residents from the area were involved, and currently, approximately 30 individuals from the vicinity are actively engaged in its management and operations. Shuamta Getaway and Ikalto Qvevry-school academy were facilitated USAID/ESP (USAID Economic Security Program) commenced in May 2023. As a result, Shuamta gateway visitors’ center and Badagoni Restaurant “Shuamta Gateway” opened to the public in June 2023 and Ikalto Qvevry -school academy opened to the public March 2024. Shuamta Gateway, located between Gombori Pass and the Alazani Valley in Kakheti, is a tourist hub offering a range of amenities such as the well-equipped visitor center, access points to an interpretive trail network and provides with food and beverage options, as well as services like cycling, hiking and horseback riding. Old and New Shuamta is a Georgian Orthodox monastery complex in the Kakheti region, Telavi municipality. Natural and cultural values, remoteness, and infrastructure are the three key variables influencing park visitation. Shuamta recreational park is located around the Shuamta monastery complex and its surrounding forest. According to the report of the Municipal Development Fund of Georgia, the sub project "Arrangement of tourist infrastructure near cultural heritage monuments (Old Shuamta, New Shuamta, Ikalto) started in 2012. It included construction works in the vicinity of cultural heritage monuments (Old Shuamta Monastery, New Shuamta Monastery, Ikalto Monastery) and the arrangement of light tourist infrastructure parking lots, souvenir shops, toilets, access roads, internal and external water supply, sewage and electricity supply systems. Shuamta Gateway includes “Heritage Trail”, which bridge together three key historical sites in Kak heti. It meets the demands of the growing segments of “Free and Independent Travelers'' and experience -oriented tourists, an important market and is aligned with Georgia’s commitment to bring in high spending and culturally engaged tourists while combating the phenomenon of mass tourism. The goal of Shuamta Gateway is to introduce and promote historical places and cultural heritage for visitors in order to increase the economic opportunities of Kakheti region, to develop a unique tourist destination that also combines three outstanding historical monuments: Shuamta, Ikalto and Alaverdi. Best examples of community inclusion in tourism development practices exist in certain National Parks of Georgia. Through public-private partnerships, tourism offerings are established onsite on a concession basis. For instance, the National Park possesses resources, infrastructure, and equipment that are overseen and managed by the local community. 64