As Georgia and Russia move from the battlefield to the negotiating table, there is hope that Georgians soon may be able to put the messy incident behind them and get on with their daily lives. However, a study conducted by the Association of Young Economists of Georgia (AYEG) points to a particular issue that may hinder Georgia’s return to normalcy – the war’s effect on the country’s tourism industry.
The study, which AYEG conducted as part of a CIPE-supported project, focused on the conflict’s impact on the Georgian business environment. AYEG asked representatives of 1,000 businesses of all sizes what effect the conflict had on their ability to conduct business and on their plans for the future.
Among the key findings of the study was that that, while most industries reported decreased demand and trouble securing loans, the tourism sector was particularly hard-hit. Of tourism-related businesses surveyed, 45% reported a decrease in sales of 81-100%, compared with 10% of manufacturers and 15% of service providers. Respondents from the tourism industry were also relatively pessimistic about their ability to recover quickly. Only 5% of tourism-related businesses believed that the recovery period could take fewer than three months, while 21% of manufacturers and 15% of service providers believed the recovery could be accomplished in that time frame.
While tourism is not among Georgia’s top industries, it has grown rapidly in recent years and thus represents an important factor in the country’s overall development. According to UN data, tourism in Georgia grew from $97 million to $313 million from 2000-2006. Fallout from the conflict with Russia has the potential to reverse this trend.
This article in Transitions Online details the harsh impact the conflict had on Georgia’s resort operators. On August 7, the day the conflict began, the port city of Ajara hosted 34,000 vacationers, most of who understandably fled. Instead of travelers with fat wallets, guesthouse owners found themselves hosting Georgian civilians displaced by war. In all, Ajara’s tourist industry suffered losses of around 6 million lari (more than $4 million), which equals its total revenue from 2007. Georgia must now find a way to reestablish its image as a welcoming destination of unique culture and beautiful landscapes, rather than a land racked by violence and separatism.