How does a monopoly in prices make a negative affect on the development of tourism

Maka Ghaniashvili

‘Despite World’s global current economic crisis, international tourism develops quickly’ – this is how situation in tourism was estimated on January 21, 2008 in Dubai by different international organizations and countries.

Due to economic, social, cultural meaning, and generally due to high growth rates, tourism has been considered to be a discovery of XX century. Development of tourism has the role of catalyst in developing quite a big number of other related as well as not related spheres. Creating a single vacancy in the sphere of tourism enables to create three new vacancies in related spheres (transport, service, trade etc.) it is a well known fact, that if a single tourist visits a country during a week, he/she spends about USD 1000. Therefore, tourism has a great importance in increasing country’s incomes.
it is emphasized in reviews provided by World Travel & Tourism Council – WTTC and Oxford Economics experts that, number of international tourists have increased in 6% and their number reaches about 900 million by the year of 2007. number of international passengers have also increased and reached 9%. In spite of the fact that global tourism was quite promising by the beginning of 2007, experts were surprised by such a significant growth.
If we take it as a united market, the European Union is the biggest tourist market in the world, tourism share in GDP is 10.9%. 25.7 million People are employed in this business – that is about 11.8% of total employed population. as for the largest tourist market by incomes – according to 2007 data the US is leading again with USD 1, 689,3 billion.
It was emphasized at the above mentioned meeting that tourism develops especially quickly in developing countries where it the role of tourism has well been realized. These countries started attracting important investments and renewing infrastructures. The most growing average percentage of receiving tourists are in countries of Middle East.
the world council of travel and tourism, that observes tourism development in more that 176 countries makes a 10 year forecast of global tourism development according to individual, business and government expenditures as well as capital investment, GDP and employment indicator. Travel and tourism incomes were USD 7,060 billion in 2007. Experts believe that by the year of 2017 the amount will reach USD 13,231 billion. 231.2 million people were employed in this sphere in 2007, 8.3% of total employment (1 of every 12 persons). it is supposed that by 2017 the number will reach 262.6 million.
World Tourism Organization (UNWTO) has published 25 year trends of tourism development that covers 1995- 2020. During the given period number of tourist increases annually butthere are certain periods when growth is relatively low. Growth rates were quite high in 1995, 1996, 2000 followed by lowering tourist flow during 2001-2003. according to UNWTO experts number of international tourists will reach 1.6 billion by 2020. 1.2 billion of them will be inside continents, as for 380 million people, they will be intercontinental tourists.
leading three regions according to receiving tourists by 2020 will be Europe (717 tourists), East Asia and the Pacific (397 million) and the US (282 million) followed by Africa, Middle East and South Asia.
East Aria and the Pacific, Asia, Middle East and Africa will face drastic increase of tourists 9about 5%) while the same world indicator by 2020 will be 4%. At the same time average percentage growth decreases in Europe and the US. Tourists visiting Europe comprised 60% of the world’s tourists in 1995. The indicator will decrease to 46% by 2020.
One more trend is worth noting: number of intercontinental tourists is drastically increasing – 5,4% annually. Number of tourists inside continent increases only by 3,8%. Accordingly, correlation between them changes. Correlation between intercontinental and intra continental tourists was 82:18, the correlation will be 76:24 by 2020.

Tourism in Georgia
Georgian government discussed tourism development strategic plan in 1998 planning to receive a million tourists in the country. According to data provided by Department of Tourism and Resorts of Georgia the indicator exceeded half million in 2005, when Georgia hosted 560021 foreign visitors. Their number increased by 76% in 2006, tourist number reached 983114. In 2007 the number exceeded one million.
It is of utmost importance to distinguish priority criteria of tourism in Georgia, the country with high tourist potential.
· High level of tourism exportability and its huge potential in increasing country’s incomes;
· population employment possibility;
· natural and geographic arrangement of tourism potential on the territory of the whole country , enabling to equalize regional economic development level;
· promoting the development of other spheres of economy (transport and communication, trade and service, insurance and banking, rural sector, food production, construction etc);
Government promotes the development of tourism in a country in a number of ways. Countries like great Britain, Portugal, Spain and others use different methods in order to develop the sphere. these are: government grants, assistance in financing projects, loan grants, liberal policy of issuing working permission, currency exchanging unlimited model, //// customs taxes on import, less taxes, forming organizations that assist investors etc,.
there are some means of promoting tourism development in Georgia as well. For instance, currency exchanging unlimited model, as practice shows it is especially attractive for a foreign investor to face the environment, where different sources and amount among countries move freely. foreign currency should be easily available for a foreign investor. With the initiative of the department of tourism and resorts of Georgia law on ‘Changes and amendments in Georgian tax code’ entered into force in 2003. According to the above mentioned, law investments used for building a hotel, the construction of which requires USD 3 million or 0,25 million in case the investment is made in high mountain regions , is totally free of property and profit tax after its exploitation during the period of 4 years. for next two years it covers only 50% of the above mentioned taxes. Construction process is free of VAT. The country went through other reforms making positive affect on the development of tourism: Visa and customs formalities have simplified, there is no visa regime for EU member states and for other states of the world. Besides, Georgia annually participates in about 20 important tourist exhibitions and fairs where together with private sector Georgian tourist products are presented.
Implementing marketing policy is also of utmost importance fore the development of tourism in the country. It’s absolutely necessary that more and more tourists are informed about Georgia, so that they are interested in it and have desire to visit the country. For this reason department of tourism and resorts of Georgia annually hosts about 15 groups of journalists. As a result of it, hundreds of articles are written in leading European magazines and newspapers on Georgia’s tourism potential. Several TV films have been made by such well known TV channels as the Travel Channel, Dutch RT etc,.
According to World Economic Forum data, Georgian tourist industry is one of quickly growing in the world. Georgia was one of the leading countries with tourist percentage growth in 2006.
about USD 650 million was invested in Georgia’s tourist industry in 2005-2006 mainly in building and modernizing hotels. The world famous and leading networks of Hyatt Hilton, Intercontinental, SAS Radisson, Marriot and Kempinski five star hotels will open in the nearest future in Tbilisi. It’s worth noting that Silk Road – Kazak Company purchased 24 old hotels and sanatoriums on Adjaria sea side resorts for USD 150 million with the purpose of changing them into high class hotels. Tourist infrastructure does not imply only hotels. sanatoriums, resting houses or tourist accommodations. Roads, communication, airports, stations, ports are of great importance. there are number of challenges. we have spoken to Mr. Amiran Archvadze, Director of tourist company ASA:
– Has the number of tourists been increasing during recent years in Georgia?
– Number of tourists has really been increasing during recent years. it is a natural process while stability grows in a country. When a person visits Georgia and looks around, he/she may find accommodation and ticket prices expensive. but peoples nature attracts visitors and they want to come again and again. Pleased tourist returns to his/her country and advises a friend to see Georgia. the information spreads and accordingly number of tourists increases. more pleased a tourist is, the better advertisement he/she makes.
– How well is tourist infrastructure developed in Georgia?
– Although infrastructure is improving, still we are quite far from European standards. a lot needs to be changed and renewed. hotel accommodation is quite expensive due to obvious reasons – there are few hotels and owners may sell rooms at high prices. Flight is also expensive. Today Georgia hosts mainly those people, who want to do business. As for a tourist, like those we send to France or to Italy for sightseeing, also come to Georgi, but relatively less. the sphere is less developed nowadays. A foreigner does not imagine Georgia as a tourist country yet.
– Perhaps the reason lies in poor promotion and lack of advertisement of Georgian resorts on international level
– For sure. We are far from necessary advertisements.but as I have already mentioned, there is another challenge – high prices. Regulation of prices is a necessity. as soon as accommodation and ticket prices are cheaper, the development of tourism will begin. Let’s make a small comparison: a week in France, full package covering tickets, meeting and seeing off, an average hotel, insurance and sightseeing program costs about 1000 Euro per person. a tourist pays about 1200 euros for the same conditions in Georgia at the same type of hotel. Still, it is not the only challenge in Georgia. problems related to roads and toilets need to be solved as well.
Archil Datashidze, representative of tourist company Fresh Travel
– What are tourists’ requests regarding hotels and service?
– There are cases, when a family or an individual tourist arrives to Georgia being interested in peasants lives and ask to live in private house, in a family. In this case tourists do not pay attention to special comfort or communications of different types. they require clean atmosphere, hot and cold water and food. but when a tourist asks for a hotel, he/she demands comfort as well. there is a big demand on hotels having amusing centers. Tourists spend evenings at hotels and means of entertainment, sport halls, gaming equipments, and pools are highly requested.
– What other complains does a tourist have except for hotels and problems related to it?
– One of important issues is the fact that there are no toilets on roads. Most of them are uncomfortable and cause lots of troubles. In some of regions the low quality service at hotels is not a problem due to the fact that there is no hotel at all and tourists stay at private houses. Despite tourists find Svaneti an extremely interesting place and like it a lot, problems related to roads often make it impossible to reach this region. One can not take tourists to Svaneti by bus. The only way of reaching it is a Jeep tour by autos, being related to additional troubles and expenditures. Due to the above mentioned reason Svaneti is often excluded form out tourist routs
Following from all the above said, tourists visiting Georgia mostly complain on service. hotel and restaurant staff is often unqualified. Although tourists have really insignificant demands, still several unimportant things change their mood. Waiter hands a plate or a glass, as a result guest is greatly surprised. Personnel does not speak a foreign language, does not smile, cleans in the presence of a guest etc,. Unqualified personnel cause lots of troubles: like in case of booking a room that is already reserved. there are different reason of it: ‘ It was not my working day and I wasn’t informed’ or ‘ guest stayed longer’ etc,. As operators explain, these reasons are not clear to tourists and they face additional problems due to them. the way out of this inconvenient situation ,is rising qualification of personnel. One of first significant steps related to it is the opening of professional education centre of tourism, Ikaros, the new School of Tourism in September 2007 with the support of Ministry of Science and Education of Georgia and Department of Tourism and Resorts of Georgia . The project has been implemented within the framework of Greece government technical support. The school prepares about 400 specialists per year (waiters, barmen, cook, receptionist, booking operator etc,.) Similar schools are in Kobuleti and Kachreti.
In spite of problems, more and more tourists visit Georgia, the sphere is quickly developing. the most attractive factor in Georgian tourism is Georgian cuisine, wine and cultural tourism. goerigna tourist market may be divided into 14 travel segments. according to data provided by Department of Tourism and Resorts of Georgia main demand of visitors is on cultural and advantageous tourism (86,5%), local tourists request rest on resorts (72,8%). Medicinal tourism is less attractive to foreign tourists (1,6%). 37% of Georgian citizens visit climate and balneology resorts at different times of year with the purpose of improving their health. This segment of tourism may be one of the most competitive in the word in case it is equipped with the right infrastructure and technology.
The country has 103 resorts and 182 resort places. Ecotourism is developing as well. Number of tourists visiting protected territories rises annually. 63% of tourists visiting Georgia have business and professional goals (like participation in seminars, conferences, business meetings), 25% comes for a rest, and 13% comes just to see relatives and friends. Tourists enjoy peoples attitude toward them, hospitality and traditions most of all. They start talking on their impressions with people, and only then move to cultural places.
Georgia hosts the biggest number of tourists from Europe, especially from Germany and Israel. lots of tourists come from Armenia – most of them rest in Adjaria sea resorts in summer. number of Armenian guests has increased by 114%. Azerbaijan comes on the second place. they also prefer resting on a sea side. Number of foreign visitors in Adjaria region increased in 67 % in 2007. its worth noting that Ukrainian share on Georgian tourist market has increased by 135%. they are mostly attracted by cultural and mountain tours in Bakuriani and Gudauri. The role of central and Eastern European countries share, especially of Baltic countries, Bulgaria, Czech republic and Poland, is increasing on Georgian tourist market. it has been caused by several reasons: geographical location of Georgia, membership in European Council, Christian culture and many others. Europe is followed by the US.
A foreign tourist spends about 1160 USD during his/her stay in Georgia, mainly on accommodation and food. the most popular resorts are: Kobuleti and Batumi, with 60% of Georgian visitors; Borjomi, Bakuriani as well as Ureki and Surami.
228,541 local tourists rested at Adjaria sea resorts in 2007 that is 25% more in comparison with the previous year. Bakuriani resort hosted 40000 visitors in winter season of 2007. Experts believe, their number will increase by 30-40% this year.