2023 October-November Analysis

Return to Rooms – a sit down with hospitality duo behind Georgia’s first lifestyle brand

Georgia’s tourism sector has had its fair share of shake-ups over the last few years. From a pandemic-induced shut down to a surge in post-pandemic travel, to the Russian invasion of Ukraine and the resulting regional repercussions – it’s hard to remember a time when the sector last experienced business-as-usual. Investor.ge recently sat down with Rooms Hotels’ CEO Valeri Chekheria and Managing Director Levan Berulava to get their take on the current state of Georgia’s hospitality industry and talk about their return to the company, as well as the highly anticipated opening of their new hotel in Batumi.

Investor.ge: Welcome back to Georgia and Rooms Hotels. You’ve recently stepped back into the company as the CEO and Managing Director, but you were both an integral part of the conceptualization and founding of the Rooms brand back in 2012. Can you tell me a little bit about how the brand first came about?

Rooms Kazbegi. Photo by Rooms Hotels

Chekheria: We’re happy to be here. Our background in the hospitality industry started in 2010 when we were brought on by Temuri Ugulava to lead Adjara Group and run the international franchise hotel Holiday Inn Tbilisi. We learned a lot there about hospitality and international hotel standards, but also knew we wanted to create a brand that was unique to Georgia. At the time, there was a lot of interest in reviving regional tourism, so we started touring the country with Temuri to choose the right destination for our brand. When we visited Kazbegi, we knew it was the perfect place to put Georgia on the map as a destination. That’s how the idea for Rooms Kazbegi was born and the first Georgian lifestyle brand was created.

Investor.ge: Can you describe your initial vision behind the Rooms brand?

Berulava: We both studied at Columbia University and had fallen in love with New York service, which is friendly and cool but still professional. Our vision was to combine that with Georgian hospitality to create, as we would describe it, modern Georgian hospitality. It was about creating a place that felt local and offered a local experience, incorporating design elements and a menu that reflected the best of Georgia.

Rooms Hotels CEO Valeri Chekheria

Chekheria: This also meant that it needed to be a place where locals wanted to be. When guests stay at our hotels and come into the restaurants or bars, we want them to see a crowd that is local – be it artists, businessmen, students, or politicians. To do that, we used a slightly unorthodox approach in hiring our staff. We recruited students from the local arts and film schools with no hospitality experience – they brought great creative energy to the place, and we were able to train them to provide the type of service we wanted our guests to experience. And I’m proud to say that I think we’ve created that. If you look at Rooms Kazbegi, for instance, Georgians are the most frequent guests that we host there. That is a big part of offering a local experience.

Rooms Hotels Managing Director Levan Berulava

Berulava: But beyond just the guest experience, we also focused on local development and incorporating local businesses into our brand to help generate growth around our hotels. We were one of the first to bring the farm-to-table concept to Georgia. Local farmers were struggling to find a consistent market to sell their produce in, and as a result, banks were unwilling to issue loans to them. We were the first to offer guaranteed contracts so that farmers could get loans and develop their farms. This dedication to supporting the local economy is also the reason we haven’t served khinkali in our restaurant at Rooms Kazbegi since the beginning. We want our visitors to go out and visit local restaurants and use other local services.

Investor.ge: Rooms Tbilisi opened in 2014, followed by Fabrika in 2016, Stamba in 2018, and Rooms Kokhta in the winter of 2019, but the Covid-19 pandemic came just a few months later, turning the hospitality industry on its head. As we’ve come out of the pandemic, there seems to be a huge appetite for travel but also some shifting trends. What has been your experience in the post-pandemic period?

Chekheria: Post-pandemic, there has been a massive surge in travel demand. People are hungry to travel, and we see the figures reflecting that. On a global scale, there has definitely been a particular rise in high-value tourists – those who are willing to spend more and are looking to enjoy local gastronomy and luxury amenities. This is a trend we see happening more so in Europe right now though; it’s not really carried over into Georgia as much as we would have liked.

For us to talk about trends, we need to differentiate between our locations. In Tbilisi, we’ve seen a great return of MICE [meetings, incentives, conferences, and exhibitions] travelers – I would say that’s about 60% – 65% of our business here. Our largest portions of guests in Tbilisi are generally from Europe, followed by the U.S. In Rooms Kazbegi, however, we see less international MICE travel – most likely because of its location.

Rooms Batumi. Photo by Rooms Hotels

Investor.ge: What about this summer? What kind of trends have you seen?

Chekheria: This summer, we’ve seen a decline in visitors from Europe – we’ve had several European groups cancel. There is still a lot of concern over the war in Ukraine and related concerns around water quality in the Black Sea as well, which impacts overall travel to the country – not just Batumi. In Europe, travel demand was so great this summer that many places saw occupancy levels and average daily rates (ADRs) double. That’s not the case for Georgia. We have seen occupancy reach pre-pandemic 2019 levels – around 72% for Tbilisi and 78% for Kazbegi currently – but ADRs have largely remained the same, if not falling slightly. In Berlin, for example, before the pandemic the average ADR was around 80 euros – now it’s around 150 to 160 euros. Pre-pandemic, our ADR for Rooms was around 145-165 euros, and it’s still that rate. This is a real problem for Georgian hotels because operating costs are increasing and ADRs are not keeping up.

Rooms Batumi. Photo by Rooms Hotels

Berulava: This is part of the reason that we are proactively working to attract more high-value tourists. We want to make it clear that Georgia is a safe country. We’ve introduced the Supra concept in several cities already – including Berlin and Paris – and we are planning to host one in Tel Aviv soon, as well as other cities that offer direct flights to Tbilisi. It’s an event that brings the best of Georgian food, wine, and culture to a group of about 60-70 locals like journalists, businessmen, and influencers to increase interest in Georgia as a must-visit destination.

Investor.ge: There’s been a lot of buzz around the opening of Rooms Hotel Batumi at the end of September. Can you tell me about the new hotel and what other upcoming plans you have for the Rooms brand?

Rooms Batumi. Photo by Rooms Hotels

Chekheria: We’re very excited to open the doors of Rooms Hotel Batumi, which was curated and designed by Temur Ugulava and in-house group Collective Development in collaboration with Rooms Studio. Just like the other Rooms hotels, Temur created it to integrate organically into the surroundings. It’s still the quintessential Rooms aesthetic, but with a seaside twist that makes it unique compared to our other locations. We think it is going to be a top destination – particularly for Georgian tourists. We are also actively working on another Rooms location in Abastumani. The city was historically home to balneological resorts and known for its great air quality, so Rooms Abastumani will be focused on holistic care and wellness.

Berulava: We’ve got plans to issue a bond in Georgia soon as well, and then will be looking to expand the Rooms brand internationally in the near future. Beyond that, we’re always looking for new locations in Georgia that would be a good home for the next Rooms Hotel – lucky for us, there’s really no shortage of beautiful places for us to choose from.