DOI:  10.36172/EKONOMISTI.2020.XVI.03.GUCHUA

Annotation

The paper presents the geo-economic approach of tourism development and the state of this sector сonsidering Covid-19 Pandemic of 2020. The response measures taken by the state government and possible risks and threats of implementing the anti-crisis plan of the tourism sector are analyzed, as well as ways to overcome them.The future geoeconomic opportunities of tourism and new direction of the country, that have emerged since the spread of the pandemic, are explored.

Keywords:pandemic, tourism, geoeconomics

Introduction

Geoeconomics gained great importance in the system of modern science, because of the development of global economic processes. The tourism space, tourist flows, as well as dividing the world into countries that receive tourists (with a favorable climate and tourist infrastructure) and ensure the flow of tourists are among the modern, major trends of geoeconomics [Ignatyeva…, 2018:515-517]. However, tourism (including international) was not part of the problem field of modern geoeconomics. Tourism is beyond the study of modern geoeconomics, although it is a factor of international economic relations, regional development and the most dynamic socio-economic phenomenon of the countries in the XX-XXI century, along with urbanization, industrialization and the spread of information technology.

Lack of research on geoeconomic topics in tourism restricts adequate assessment of the main factors influencing the development of tourism in Georgia. One of these factors is the geographical position of the country, which  allows to develop intense tourist flows.

The aim of this article is to evaluate the geoeconomic position of Georgia as a tourist destination and to justify the potential base vector of the future tourism policy сonsidering Covid-19 Pandemic of 2020. The paper also analyzes the need of promoting the directions that have emerged as a result of the above circumstance. 

Impact of the 2020 pandemicon tourism sector

From the point of view  of geoeconomics, the main beneficiary of the tourism system is a destination. Destination is a specific target object for a particular geographic group of tourists. According to Bieger a destination is a geographical area (location, region, country), which is the purpose of travel for visitors (or segment of visitors), has the necessary infrastructure for accommodation, nourishment, entertainment, informative and recreational activities, and is a subject of competition in the tourism market and a strategic business object [Bieger, 2000:56-59]. Based on these research premises the geoeconomics of tourism can be defined as a science of spatial and economic relations, which involve destinations that have a goal to successfully compete for consumers of tourist products and to maximize income from tourism. Development of a tourist destination depends on its inclusion in the global tourist, investment and innovation flows, i.e. geoeconomic position of the country [Tarasionak..., 2016:17].

As on other sectors of the economy, numerous factors are affecting the tourism industry and its development. Among them are such external, unforeseen factors as, for example, the spread of the Covid-19. Tourism industry has suffered the most the in Georgia from this pandemic. Without considering this event, any discussion in the field of tourism at this stage would be devoid of reality. Thus, it is important to briefly consider the impact of the pandemic on this sector in general, including by analyzing the response measures taken by the state.

There is no analogue of this challenge in the history of mankind. In a short and specific moment of time, the world faced three major mega challenges: The failure of global health, the problems in the economic sector and a completely different reality in international relations [Papava..., 2020]. Naturally, this viral event has dealt the biggest blow to the healthcare sector, however, the large-scale fluctuations caused by this have been no less detrimental effects on such important and fundamental geoeconomic factors as the economy and international relations. As a result, the modern world, countries and people have to deal not only the typical recession, but with a deeper, more comprehensive and global challenge. The results are reflected in all geographical units of the world and in almost every segment with devastating impact on industry.

The impact of the unprecedented crisis of the coronavirus pandemic is huge in the world economy and especially in the tourism economy, given the direct and huge shock of this sector. According to the OECD, the COVID-19 impact point to 60% decline in international tourism in 2020. This could rise to 80% if recovery is delayed until December [OECD, 2020]. In Georgia the COVID-19 pandemic has had a significant impact the country's fastest growing industry – tourism.

According to the National Statistical Office, real Gross Domestic Product (GDP) declined by 7.7 percent in June 2020 compared to the same period of the previous year, while the average rate for the first six months of 2020 stood at 5.8 percent. In June 2020 a downward trend was observed in almost all sectors compared to the same period of the previous year, namely in mining and quarrying and water supply, sewerage, waste management and remediation activities [GEOSTAT A, 2020].

Under the baseline scenario, the economy will shrink 4.5-5.5% in 2020 and will grow by 5.0-6.0% in 2021. Under the same scenario, GDP will return to its level of the 4-th quarter of 2019 in the 3-rd quarter of 2021. It is true that “there will be greater decline in 2020, however, unlike the previous crisis, recovery is expected to be faster” [Nadaraia..., 2020:7]. As for the tourism sector and related statistics before and after the 2020 pandemic, up to 9.4 million visitors visited Georgia, and tourism inflows stood at US$ 3.3 billion in 2019 [Government of Georgia, 2020]. In January-February 2020, the number of international travelers increased by 10% and revenue by 6%. The number of arrivals of international non-resident travellers to Georgia equalled 1.3 million in the first quarter of 2020, which is 17.6 per cent lower compared to the previous year [GEOSTAT B, 2020].   

As for the local tourism statistics for the first quarter of 2020, about 887.2 thousand Georgian resident visitors aged 15 years and older made on average 1.0 million visits per month on the territory of Georgia. The number of visitors during the reporting period is 3.4% lower than the corresponding data for the first quarter of 2019 [GEOSTAT C, 2020]. A total of 619,900 Georgian resident travellers took a trip outside of the country in the first quarter of 2020, which is 8.5 per cent lower compared to the same quarter of the previous year. The forecast for tourism inflows in 2020 has deteriorated, although a return to 2019 levels in the second half of 2021 is still considered a baseline scenario. Forecast deterioration of tourist inflows and FDI, as well as less-than-expected fiscal stimulus effect, is offset by relatively improved expectations for exports and remittances. According to the baseline scenario, the economic growth expectation for 2020-21 is unchanged: in 2020 the economy will shrink 4.5-5.5%, and in 2021 growth is expected in the range of 5.0-6.0% [Nadaraia..., 2020:2-5].

According to 2019 data, the tourism sector employs about 150,000 people and tourism’s contribution to GDP is 11.5% in Georgia [Government of Georgia, 2020]. According to industry experts, by 2020, the contribution of tourism to economic is more than 8% and its share in GDP is estimated at about GEL 4 billion [Chikhladze, 2020]. Expected losses only at the expense of this sector could be GEL 3 billion. However, tourism is not considered as a single sector, as it has close economic ties with other sectors, such as transport, communications, food production and supply. A chain reaction will lead to a sharp decrease in supply and demand. Thus, the above mentioned amount can be further increased, which will reflected in other sectors as well.

What has been done to overcome the crisis in the tourism industry

Due to the 2020 pandemic, the state government implemented certain benefits, which is reflected in the three-stage Tourism Revival Anti-Crisis Plan. The first stage concerned the assistance to tourism related business entities. In the second stage, the remuneration of the employees in the industry and state subsidies according to different categories of employees was implemented. The third stage involved various facilities for accommodation and food objects, as well as travel companies and guides. The total budget of the above-mentioned anti-crisis plan is GEL 200 million [Government of Georgia, 2020]. It includes a tourism implementation plan, which also consists of three phases. Given the new competitive advantages (E.g., an internationally recognized, successful country in the fight against pandemics) and against the background of the possibility of existence and development of new, demanded tourism products (Medical and health tourism, etc.), For the first preparatory phase the government is planning to introduce safety standards to the following facilities: border checkpoints and airports (IATA/ICAO/EC); accommodation facilities / guides / food facilities (WHO&UNWTO); transport companies, intercity transport. Also will be implemented: the support of the private sector to implement standards, trainings, guidelines; creation of a safe corridor between countries; Georgia's integration into the cooperation of EU countries; international marketing campaign with the slogan “Georgia – a safe destination”.

Second phase aimed to create safe tourist zones and activate domestic tourism. From July 1, the third phase - the launch of international tourism - was planned, which involved the opening of land and air borders in accordance with safe corridors and the gradual restoration of flights. However, the change and postponement of these plans became necessary due to the given epidemiological situation in Georgia and in the world. According to the EU’s recommendation (presented on June 11), A foreign country can not open its borders only withindividual EU countries,Borders should be opened with all countries. According to the current assessment, Georgia meets the requirements of the EU in terms of opening the border [Nadaraia..., 2020:22]. At this stage, according to the decision of the Interagency Coordination Council in Georgia on July 8, the border is open with 5 EU member states. (Germany, France, Latvia, Lithuania and Estonia). Despite the decision of border opening, the exact date of restoration of regular flights is unknown.

Thus, it is necessary to focus more on domestic tourism, its development and promotion. According to the OECD, domestic tourism accounts for around 75% of the tourism economy in OECD countries, which they consider as a main priority of recovering this sector. Consequently, countries where domestic tourism already accounts for a significant share of the tourism economy are expected to recover more quickly than countries that are largely dependent on international tourism flows [OECD, 2020]. This once again emphasizes the neccessity of promoting domestic tourism and providing the desired attention to the country’s own visitors.

This period is important to be used to create a quality infrastructure, to improve infrastructure and services at hotels and various tourist facilities, to introduce technologies and new management systems and to create tourism products in a new direction, which includes the development of national parks, nature reserves and protected areas, health tourism. It should be noted, that the geoeconomic potential of Georgia provides a full opportunity for this.

The COVID-19 pandemic brought to the fore the need of self-sufficiency of states, Emphasized the importance of local production and the need to diversify supply networks, because, after the lockdown of China disruption of supply chains has been a major problem for companies. In recent years, Georgia's economic development has been largely driven by the development of services, where tourism has been a major catalyst together with trade, construction, and other services. In 2009-2019, the share of services in the Georgian economy increased from 60% to 78%. At the same time, due to the lack of production, most of this income comes from imports. Therefore, for Georgia's economic growth, the focus should be on strengthening production capacity. In this regard, it is important to stimulate both local companies and attract foreign investment. Georgia, with its physical-geographical and climatic conditions, has a good potential to develop the agricultural sector, to diversify exports [Galt & Taggart, 2020:2].

Georgia has a favorable geoeconomic position for the development of exports, which is a very important and profitable condition for its promotion. Moreover, it is evident, that as a result of the virus spreading worldwide the world trade order is changing. Developed countries will try to maximize diversification by moving most of their enterprises from China to their own countries, as the costs there will be high and inefficient. In this logistics chain, Georgia has all the prerequisites (strategic location, low taxes, etc.) to be economically strengthened.

Geoeconomic factors of Georgia - an advantage of tourism restoration

Physical-geographical analysis of the geoeconomy of Georgia is closely related to the tourism industry. Moreover, it is one of the crucial factors in the development of tourism, for the simple reason that the location, the side of the travel area chosen by the tourist, given the natural conditions, plays an important role. This is primarily due to the proximity to the sea, mountains and forests, as well as the peculiarities of the coastline. In this regard, Georgia has all the advantages to meet the abovementioned needs of travellers.

It is also important to consider the physical-geographical advantages of the country such as the relief of the country. In particular, it refers to mountain relief, which in addition to the aesthetic point of view is the most important recreational resource - with fresh mountain air, increased degree of ultraviolet radiation or destination for mountain skiing. Also, forest resources are important, which, with a healing function, allows the vacationer to isolate. The existance of seaside is also important; river and lake resources, which enables climate enrichment at the country level. This also make the tourists able to relax on the water and engage in water sports. It should be noted, that the abundance and diversity of these resources in Georgia especially ensures the attractiveness of the country for foreign visitors who will decide to travel after the pandemic 2020. In addition, resources such as mineral waters, healing muds, etc. play an important role for many foreign vacationer.

The influence of economic-geographical factors in the tourism industry is great. This influence is manifested in two main directions, in particular, economic-geographical factors as: 1) the object, the means of attracting tourists and 2) the means of tourism development. The first of these refers to the differences between countries and regions and the ability of the country to respond the visitors’ relevant requirements with considering these factors. In the second factor is implied infrastructure in a particular country or region, the level of economic development, the development of internal and/or external communications, the improvement of vehicles. One of the important economic-geographical factors is the transit capabilities of the host country [Gorgiladze, 2012:11-12]. In this regard, the geoeconomic advantages of the country (a wide range of regional features of Georgia and the unique transit opportunities of the country) provide a unique opportunity to launch the tourism industry and offer new opportunities to visitors.

Conclusion

At the beginning of the XXI century, tourism plays an important role in the economic development of various countries around the world, including Georgia. Promotes activities such as: supply and demand, marketing, transportation and housing. In this way, tourism is a powerful contributor to both social and economic development.

The geoeconomic approach allows us to look at the tourism market as a spatially hierarchical system in which each country has a definite place. Consideration of the country's geoeconomic potential, in assessing the tourism sector, is one of the important preconditions to make a comprehensive and complex analysis of the sector, which in turn has a positive impact on the right policy implementation in this sphere. In this regard, Georgia has a unique geoeconomic potential, the use of which requires appropriate measures to be taken and to make proper use of available resources.

Given the impact of the pandemic 2020, to analyze Georgia's potential and guide the economy in the right direction, along with tourism it is important to promote new directions such as: agriculture, advancing and restoring traditional fields, which, in turn, will help to capture new industrial niches in the world geoeconomy. However, at the same time, the geoeconomic potential of the country, its right assessment/use for the tourism sector is an additional opportunity and a real contributing factor to the launch of tourism. Thus, it is important for the state to plan and implement the anti-crisis plan properly. The steps that the government must take should be aimed at overcoming the negative consequences of the crisis and accelerating economic growth.

Reference

1. Bieger, T. 2000. Destinations management. In Gewalt, Stefan (ed.): Handbuch des Touristik-und Hotelmanagement. München, 5th edition. Volume2, pg. 56-59.https://www.alexandria.unisg.ch/14157/
2. Chikhladze N., 2020, Urban Economics and Pandemic Challenges. http://unik.edu.ge/News/1040
3. Galt & Taggart, 2020, GEORGIAN ECONOMY – NEED FOR A NEW ECONOMIC MODEL IN THE CONTEXT OF GLOBAL CHANGE, pg. 2. https://galtandtaggart.com/upload/reports/ 26953.pdf?fbclid=IwAR0oS9naya G0pRR4TUStpS LLkYMfHFWx9LIH- tid7fvAA9KUFaFOEzgyPE8
4. Gorgiladze I., 2012, Geography of tourism, Lecture course, pg.11-12. https://www.yumpu.com/it/document/read/34548897/-
5. Government of Georgia, Anti-crisis plan for tourism, 2020. http://www.economy.ge/uploads/files/2017/news/2020/final_tourism_presentation.pdf
6. Ignatyeva I, Isaev B., 2018, Modern Trends in Geo-Economics and Geopolitics. Advances in Social Science, Education and Humanities Research, volume 273. pg. 515-517.  https://doi.org/10.2991/csis-18.2019.104
7. Nadaraia A., et al., 2020, Impact of COVID-19 on the Georgian economy. TBC Capital. https://tbccapital.ge/publications/COVID-19-is-gavlena-saqarTvelos-ekonomikaze--ivnisis-ganaxleba
8. National Statistics Office of Georgia, Preliminary Assessment of Economic Growth June 2020. https://www.geostat.ge/ka/single-news/1902/ekonomikuri-zrdis-tsinastsari-shefaseba-ivnisi-2020
9. National Statistics Office of Georgia. Foreign Visitor Statistics (I quarter, 2020). https://www.geostat.ge/ka/single-news/1843/utskhoel-vizitorta-statistika-i-kvartali-2020-tseli
10. National Statistics Office of Georgia. Local Tourism Statistics (I quarter, 2020). https://www.geostat.ge/ka/single-news/1869/adgilobrivi-turizmis-statistika-i-kvartali-2020-tseli
11. OECD Policy Responses to Coronavirus (COVID-19), Tourism Policy Responses to the coronavirus (COVID-19), 2020. https://www.oecd.org/coronavirus/policy-responses/ tourism-policy-responses-to-the-coronavirus- covid-19-6466aa20/
12. Papava V., Charaia V., 2020, The Coronary Crisis and Some Challenges of the Georgian Economy. https://www.researchgate.net/publication/340209256_koronomikuri_krizisi_da_sakartvelos _ekonomikis_zogierti_gamotsveva;
13. Tarasionak A., 2016, Geo-economic Positioon of Belarus as a Tourist Destination. Journal of Geography, Politics and Society, volume 6, N 4, pg. 17.