What to Expect from the Russian Tourism Embargo
Russian President Vladimir Putin has banned Russian airlines from performing flights to Georgia, starting July 8th, including commercial flights, under the pretext of ensuring national security and protecting Russian citizens.
At the same time, tour operators and travel agencies were advised to abstain from selling tourism packages to Georgia.
This decision was made following mass protests and rallies that broke out regarding Russian parliament member Sergey Gavrilov, who addressed the participants of the International Orthodox Assembly, from the chair of the Georgian Parliament’s chairman. Anti-government and anti-occupation rallies broke out in Tbilisi, immediately.
According to Putin’s decision, direct flights between Russia and Georgia will be banned starting July 8th, 2019. According to the statistics, more than 40,000 passengers would have used this channel of transportation in July 2018.
Shalva Alaverdashvili, head of the Georgian Federation of Hotels and Restaurants, has prepared a report about expected outcomes after July 8, 2019 if no Russian tourist enters the country. The Georgian tourist industry will lose 2.1 billion GEL, he said.
A total of 539,432 Russian visitors arrived in Georgia in January-May 2019, which is 21.6% of the total number of visits, of which 429,179 visitors stayed in Georgia for more than 24 hours. This category is regarded as international tourists, and this is a 25.9% share of the total number of international tourists.
According to a report by Shalva Alaverdashvili, Russian tourists were expected to spend 1.1 billion USD in 2019, however, if tourist inflows stop by the end of 2019, and incomes will decline by 750 million USD.
Both the business sector and government officials have appraised the Russian President’s decision. Everybody agrees that financial inflows are declining from Russian visitors, but the scale of this slowdown and expected negative effects will be outlined later. Anyway, both parties have pessimistic forecasts.
“Our country hosted 8.7 million international visitors in 2018, and they spent 3.2 billion USD. As for Russia’s role in this statistics: more than 1.4 million Russian citizens visited Georgia in 2018, and they spent 2 billion GEL in the country. Naturally, we should not be populist by saying that the Russian president’s decision will not affect Georgia. Our government didn’t spend a penny on marketing campaigns in Russia in 2018, because the Russian market was stable, with a growing inflow of visitors.
This year, Georgia is expected to host more than 1.7 million Russian visitors, and they would spend 2.5 billion GEL. Naturally, today, we face challenges. Our role and function is to alleviate these shocks and losses. We should provide huge numbers of jobs to help the economy recover as soon as possible, and prevent people from losing their jobs, so they could host visitors and tourists.
The current 10-clause plan is not a final document. This is just a draft document, because it is impossible to determine in 3 days how to replace 1 million visitors, Mariam Kvrivishvili, the head of the National Tourism Administration, noted.
“At this stage it is impossible to make useful forecasts, however, according to primary calculations, the Georgian economy will lose about 200-300 million USD by the end of 2019, as a result of declining visits from Russia. This external shock will place influence on the balance of payments, and the currency exchange rate. However, according to current account indicators of 1Q19, the current account has almost doubled, (+207 million USD) year on year. This means that, in all other, equal conditions, the external balance will improve, even by a small volume”, the National Bank’s statement reads.
“The Russian tourism embargo will mainly hit small and medium hotels”, businessman Lasha Papashvili noted. Russia has banned direct flights, but visitors will find alternative routes, he said. This is a small shock for Georgia, even more so as the country had a similar experience.
“The first test came in 2006, and I believe we will overcome this challenge easily. Naturally, we will have little inconveniences in the tourism sector, especially in small hotels, but we will survive”, Papashvili said.