An Examination of Investment Potential in Georgia’s Hotel Industry: The Role of EVA and Tourism
Keywords:
Hotel business, tourism sector, Economic Value Added (EVA), financial indicators, investment potential
Abstract
The tourism sector plays a significant role in the economic advancement of both developing and developed countries. The present study examines the economic potential and investment opportunities in Georgia's hotel industry, utilizing the Economic Value Added (EVA) coefficient as the primary indicator. The objective of the research was to evaluate the EVA coefficient for hotels across various regions of Georgia and to analyze its impact on the number of foreign tourists and hotel revenues. A mixed-methods approach was employed in the study, incorporating both quantitative and qualitative analyses. The dynamics of financial data were examined, and regression analysis was applied to calculate the EVA coefficient and to determine the relationship between the growth of tourist flows and financial performance metrics. The key findings indicated that Georgia’s hotel sector was attractive to investors and contributed significantly to economic growth. The results demonstrated an increase in the EVA coefficient and its positive impact on economic sustainability, as well as a correlation between the growth of tourist flows and financial success. The research also provides recommendations that include enhancing transparency in financial data, improving the accessibility of information for investors, and adopting technological innovations to strengthen the sustainability of the tourism sector and foster economic development.
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References
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43. National Statistics Office of Georgia. (2023). Media. News. Statistics of foreign visitors in Georgia, third quarter of 2023. https://www.geostat.ge/media/23558/ucxoel-vizitorta-statistika_15.05.2019-%28geo%29.pdf
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2. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Dabi Group Georgia" 2020 Financial Statements. https://reportal.ge/ka/Reports/GetFile/25243
3. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Dabi Group Georgia" 2018 Financial Statements. https://reportal.ge/ka/Reports/GetFile/8362
4. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Paragraph Shekvetili" 2022 Financial Statements in Accordance with International Financial Reporting Standards and Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/51978
5. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Paragraph Shekvetili" 2020 Financial Statements in Accordance with International Financial Reporting Standards and Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/30941
6. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Turinvest" 2022 Financial and Management Reporting Completed on December 31, 2022, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/55853
7. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Turinvest" 2020 Financial and Management Reporting Completed on December 31, 2020, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/32302
8. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Turinvest" 2018 Financial and Management Reporting Completed on December 31, 2018, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/6602
9. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Lopota" and Subsidiary Consolidated Financial and Management Reporting Completed on December 31, 2022, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/47816
10. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Lopota" and Subsidiary Consolidated Financial and Management Reporting Completed on December 31, 2020, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/25939
11. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Lopota" Financial Reporting Completed on December 31, 2018, along with Independent Auditor's Report. https://reportal.ge/ka/Reports/GetFile/4143
12. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. Gudauri Ski Resort Group Consolidated Financial Statements, Consolidated Management Reports, and Independent Auditor's Report for the Year Ending December 31, 2022. https://reportal.ge/ka/Reports/GetFile/54014
13. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Gudauri Ski Resort" Consolidated Financial Statements, Management Reports, and Independent Auditor's Report for the Year Ending December 31, 2020. https://reportal.ge/ka/Reports/GetFile/29587
14. Accounting, Reporting, and Auditing Supervision Service. (2023, December 15). Reporting portal: Subject search. LLC "Gudauri Ski Resort" Consolidated Financial Statements with Independent Auditor's Report for the Reporting Period Ending December 31, 2018. https://reportal.ge/ka/Reports/GetFile/8547
15. Blake, A., Sinclair, M. T., & Soria, J. A. C. (2006). Tourism productivity: evidence from the United Kingdom. Annals of Tourism Research, 33(4), 1099-1120.
16. Chen, J. (2022). Economic value added (EVA) definition: Pros and cons, with formula. Investopedia. https://www.investopedia.com/terms/e/eva.asp
17. Chen, M.-H., & Kim, H.-H. (2020). Tourism, tourism revenue, and hotel development in emerging economies: Evidence from international data. Journal of Hospitality & Tourism Research.
18. Damodaran, A. (2002). Investment valuation: Tools and techniques for determining the value of any asset. Wiley Finance.
19. Damodaran, A. (2011). Damodaran on valuation: security analysis for investment and corporate finance. John Wiley & Sons.
20. Demuth, Z., Jahns, J., Bracciani, M., & Makis, O. (2024, January 23). Global hotel investment outlook 2024: Hotel industry defies broader economy, soars to a full recovery. https://www.us.jll.com/en/trends-and-insights/research/global-hotel-investment-outlook-2024
21. Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management science, 60(11), 2835-2857.
22. Friede, G., Busch, T., & Bassen, A. (2015). ESG and financial performance: aggregated evidence from more than 2000 empirical studies. Journal of sustainable finance & investment, 5(4), 210-233.
23. Gamsakhurdia, T., & Fetelava, S. (2023). Financing of the Sustainable Tourism Industry in Georgia. Deutsche Internationale Zeitschrift für Zeitgenössische Wissenschaft, 5(2).
24. Grant, J. L. (2003). Foundations of economic value added (Vol. 99). John Wiley & Sons.
25. Guttentag, D. (2015). Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector. Current issues in Tourism, 18(12), 1192-1217.
26. Isakadze, I., & Mekhrishvili, J. (2022). Research on the tourism and hotel sector of Georgia. Retrieved December 23, 2023, from https://tinyurl.com/26ac82py.
27. Ivanov, S. H., & Webster, C. (2017). Adoption of robots, artificial intelligence and service automation by travel, tourism and hospitality companies–a cost-benefit analysis. Artificial Intelligence and Service Automation by Travel, Tourism and Hospitality Companies–A Cost-Benefit Analysis.
28. Jones, C. D., Ciais, P., Davis, S. J., Friedlingstein, P., Gasser, T., Peters, G. P., & Wiltshire, A. (2016). Simulating the Earth system response to negative emissions. Environmental Research Letters, 11(9), 095012.
29. Katiya, I., Kvakhadze, I., & Tsintsabadze, M. (n.d.). TBC Capital. Tourism 6M, Overview. Retrieved December 15, 2023, from https://tbccapital.ge/static/file/202307315025-tourism-update-6m-2023.pdf.
30. Kruschwitz, L., & Löffler, A. (2006). Discounted cash flow: a theory of the valuation of firms. John Wiley & Sons.
31. Kumar, C., & Gautam, A. (2020). Correlation. In Encyclopedia of Animal Cognition and Behavior. https://doi.org/10.1007/978-3-319-47829-6_214-1
32. Mayer, V. (2020). Enabling Sustainable Economic Growth in Developing Countries: Targeted Tourism Management in the Caucasus Region.
33. Milunovich, S., & Tsuei, A. (1996). EVA in the Computer Technology Industry. Journal of Applied Corporate Finance, 9(1), 104-116.
34. Ministry of Economy and Sustainable Development of Georgia. Economic Review: Tourism. https://www.economy.ge/?page=ecoreview&s=22.
35. National Statistics Office of Georgia. (2019). Media. News. Statistics of foreign visitors in Georgia, third quarter of 2019. https://www.geostat.ge/media/27704/ucxoel-vizitorta-statistika-14.11.2019-%28geo%29.pdf
36. National Statistics Office of Georgia. (2019). Media. News. Statistics of foreign visitors in Georgia, second quarter of 2019. https://www.geostat.ge/media/25473/ucxoel-vizitorta-statistika-14.08.2019-%28geo%29.pdf
37. National Statistics Office of Georgia. (2019). Media. News. Statistics of foreign visitors in Georgia, first quarter of 2019. https://www.geostat.ge/media/23558/ucxoel-vizitorta-statistika_15.05.2019-%28geo%29.pdf
38. National Statistics Office of Georgia. (2022). Media. News. Statistics of foreign visitors in Georgia, third quarter of 2022. https://www.geostat.ge/ka/modules/categories/39/khelfasebi
39. National Statistics Office of Georgia. (2022). Media. News. Statistics of foreign visitors in Georgia, the second quarter of 2022. https://tinyurl.com/2rzwb4cn
40. National Statistics Office of Georgia. (2022). Media. News. Statistics of foreign visitors in Georgia, the first quarter of 2022. https://tinyurl.com/2rzwb4cn
41. National Statistics Office of Georgia. (2023). Media. News. Statistics of foreign visitors in Georgia, the first quarter of 2023. https://www.geostat.ge/media/27704/ucxoel-vizitorta-statistika-14.11.2019-%28geo%29.pdf
42. National Statistics Office of Georgia. (2023). Media. News. Statistics of foreign visitors in Georgia, the second quarter of 2023. https://www.geostat.ge/media/25473/ucxoel-vizitorta-statistika-14.08.2019-%28geo%29.pdf
43. National Statistics Office of Georgia. (2023). Media. News. Statistics of foreign visitors in Georgia, third quarter of 2023. https://www.geostat.ge/media/23558/ucxoel-vizitorta-statistika_15.05.2019-%28geo%29.pdf
44. National Statistics Office of Georgia. Information on the activities of hotels and hotel-type establishments: Key indicators. https://www.geostat.ge/ka/modules/categories/394/informatsia-sastumroebisa-da-sastumros-tipis-datsesebulebebis-sakmianobis-shesakheb.
45. O’Byrne, S. F. (1996). EVA and Market Value. Journal of Applied Corporate Finance, 9(1), 116-125.
46. Stewart III, G. B. (1991). The Quest for Value: Harper Business. New York: HarperBusiness..
47. Subedi, M., & Farazmand, A. (2020). Economic value added (EVA) for performance evaluation of public organizations. Springer Science+Business Media, LLC, part of Springer Nature, 20(20), 613–630. https://doi.org/10.1007/s11115-020-00493-2
48. Wang, Y. (2019). Collaborative Destination Marketing. In P. M. Harris, Tourism, Hospitality and Events (pp. 83-101). CABI.
49. Young, S. D., & O'Byrne, S. F. (2000). EVA and Value-Based Management: A Practical Guide to Implementation. McGraw-Hill.
Published
2025-03-15
How to Cite
Gamsakhurdia, T., Kadagidze, L., & Ioseliani, S. (2025). An Examination of Investment Potential in Georgia’s Hotel Industry: The Role of EVA and Tourism. European Scientific Journal, ESJ, 21(39), 226. https://doi.org/10.19044/esj.2025.v21n39p226
Section
Special Editions
Copyright (c) 2025 Tamar Gamsakhurdia, Lamara Kadagidze, Salome Ioseliani
This work is licensed under a Creative Commons Attribution 4.0 International License.
