Inflation at 4%: What Hotels in Georgia Should Do

Georgia ended 2025 with annual inflation at 4% (December), while prices fell 0.2% month-on-month, according to Geostat data released on January 5, 2026. That mix—cooling monthly pressure but still-elevated yearly costs—is exactly the kind of environment where tourism and hospitality businesses get squeezed from both sides: guests become more price-sensitive, while your food, supplies, and staffing bills keep creeping up.

Here’s the part most operators miss: inflation isn’t just a finance headline. It changes booking behavior, cancellation patterns, menu engineering, and even review sentiment. And in 2026, you don’t need a bigger back office to respond faster—you need better signals and tighter execution.

This article is part of our series „როგორ ცვლის ხელოვნური ინტელექტი ტურიზმსა და სასტუმრო ბიზნესს საქართველოში“. The goal is practical: connect what’s happening in Georgia’s economy to concrete ways AI in tourism and hospitality can protect margins, improve guest experience, and generate more direct bookings.

What Georgia’s 4% inflation really means for tourism businesses

Answer first: A 4% inflation rate with food inflation at 8.8% means your cost base rises unevenly, and the fastest-rising categories hit hotels and tour operators disproportionately.

Geostat’s December 2025 snapshot shows the pressure points clearly:

• Food and non-alcoholic beverages: +8.8% (annual)
• Health: +7% (annual)
• Alcohol and tobacco: +4.4% (annual)
• Some relief in communication (-4.7%), and declines in furnishings/household equipment and recreation/culture (both -1.6%).

For hospitality, the biggest operational truth is simple: your guest can downgrade instantly; your supplier can’t. Guests switch from a 4-star to a 3-star hotel, or from a multi-day tour to a day trip, with two taps. But your contracted food costs, laundry rates, and staffing model don’t adjust that quickly.

The “hotel inflation basket” is different from the CPI basket

Answer first: Hotels feel inflation more sharply because their cost mix is heavier on food, labor, utilities, and imported consumables.

Even if overall CPI cools, hotels may still face “felt inflation” via:

• Breakfast ingredients, produce, coffee/tea, and meat
• Housekeeping supplies and imported amenities
• Energy and maintenance contracts
• Wage expectations (even when CPI moderates, employees remember the peak)

Geostat’s breakdown within food is especially relevant for F&B-heavy properties:

• Fish: +18.4%
• Fruit and grapes: +15%
• Bread and cereals: +14.3%
• Coffee/tea/cocoa: +10.1%
• Oils and fats: +10.1%
• Meat: +7.6%
• Milk/cheese/eggs: +7%

If you run breakfast, half-board, a wine bar, or tours that include meals, those numbers aren’t abstract—they’re your margin.

The 2026 guest: more price-aware, less forgiving

Answer first: In moderate inflation periods, demand doesn’t disappear—it becomes more tactical: shorter lead times, higher deal sensitivity, and harsher reactions to “value gaps.”

When prices rise unevenly, travelers adjust in predictable ways:

1. They compare harder (OTAs, Google, social proof, “what’s included?”).
2. They punish surprises (fees, paid parking, “breakfast not included”).
3. They trade down selectively (room category, length of stay, add-ons).

Here’s what I’ve found when auditing booking funnels: many Georgian hotels lose conversions not because they’re expensive, but because they’re unclear. Inflation amplifies that. If a guest can’t quickly tell what they’re getting for the price, they assume the worst and bounce.

Why “discount more” is the wrong reflex

Answer first: Broad discounting trains guests to wait, hurts brand positioning, and rarely fixes the real problem—misaligned offers.

A better play is precision:

• Discount only where demand is elastic (certain weekdays, certain markets)
• Bundle value where costs are controllable (e.g., late checkout vs expensive food items)
• Use AI-driven forecasting to avoid panic pricing changes

Where AI actually helps when inflation is at 4%

Answer first: AI helps by turning messy signals (costs, demand, competitor rates, reviews) into decisions: what to price, what to buy, what to staff, and what to say to guests.

This isn’t about flashy “future hotel” tech. It’s about building a daily operating system that reacts faster than inflation does.

1) Demand and pricing: stop guessing, start forecasting

Answer first: AI-assisted forecasting reduces overreaction—especially in shoulder season and winter, when Georgia’s demand can swing quickly.

January in Georgia is a perfect example: post-holiday cooldown, weather variability, and uneven regional demand. If you’re adjusting prices manually, you’ll either move too late or move too much.

Practical AI inputs for hotels and tour operators:

• Historical occupancy and pickup curves
• Web traffic + search volume trends (your site, not just OTAs)
• Competitor pricing snapshots
• Event calendars (conferences, sports, cultural events)
• Flight capacity changes and route schedules

Practical outputs that matter:

• Rate recommendations by room type and date
• Length-of-stay controls (minimum stay on peak dates)
• “Fence” strategies (non-refundable vs flexible pricing)

Snippet-worthy rule: Inflation is a margin problem. Forecasting is a margin solution.

2) Cost control: use AI for purchasing, not only marketing

Answer first: With food inflation at 8.8%, AI-supported procurement and menu engineering can protect profit without lowering quality.

Hotels often attack costs in the most visible place—service. That backfires in reviews.

Better approach:

• Track ingredient-level inflation (coffee, bread, oils) against menu profitability
• Identify “high love, high cost” items (guests like them but they’re expensive) and redesign portions/recipes rather than removing them
• Predict demand for breakfast covers to reduce waste

Even a simple model that forecasts breakfast attendance based on occupancy, nationality mix, and day of week can cut waste meaningfully.

3) Personalization: defend your price by increasing perceived value

Answer first: Personalization is how you sell the same room rate with fewer objections.

AI can segment guests based on behavior and intent:

• Business vs leisure
• Family vs couples
• Wine/food-focused vs adventure-focused
• Domestic vs international patterns

Then you tailor:

• Pre-arrival messages (clear inclusions, upsells that fit)
• Add-ons (airport transfer, late checkout, wine tasting)
• Itinerary suggestions for tours and experiences

In inflation periods, guests don’t hate paying—they hate feeling like they overpaid. Personalization prevents that.

4) Guest communication: AI that reduces workload and improves reviews

Answer first: AI chat and email assistants handle repetitive questions instantly, which reduces abandonment and increases direct bookings.

When prices are sensitive, response time becomes a sales lever. If a guest asks, “Is breakfast included?” and you reply 6 hours later, you’ve already lost them to a faster competitor.

Use AI for:

• Instant FAQ responses in Georgian and English (and ideally Russian, Turkish, Arabic depending on your market mix)
• Policy explanations (cancellation, parking, pet rules)
• Pre-arrival checklists that reduce operational friction

And yes—this supports lead generation. Every answered question is a chance to move the guest to a direct booking or a call.

A practical 30-day AI action plan for Georgian hotels and tour operators

Answer first: Start with the operational pain points inflation amplifies: pricing volatility, food cost creep, and conversion drop-offs.

Here’s a realistic sequence that doesn’t require a massive IT project.

Week 1: Get your “single view” of demand and costs

• Export occupancy, ADR, RevPAR, pickup data (even from spreadsheets)
• List top 30 cost items (breakfast ingredients, supplies, utilities)
• Identify the 10 most common guest questions across email/WhatsApp/OTA messages

Week 2: Implement forecasting + rate guardrails

• Build a simple forecast (or use a tool) to predict occupancy 30–90 days out
• Set guardrails:
  • Minimum acceptable rate by room type
  • Maximum discount limits
  • Promotion rules by day-of-week

Week 3: Menu engineering + waste reduction

• Identify items hit hardest by inflation (coffee/tea, bread/cereals, oils)
• Adjust recipes/portions and bundle smartly (value without cost explosion)
• Forecast breakfast covers and track waste daily

Week 4: Upgrade conversion with AI-assisted messaging

• Deploy an AI response system for FAQs and inquiry handling
• Update your direct booking pages with clear inclusions and fee transparency
• Create 3 segmented offer templates (business, couples, families)

One-liner to keep your team aligned: Don’t cut experience to save money—cut uncertainty to sell value.

People also ask: inflation, the NBG target, and what to expect in 2026

Is 4% inflation “high” for Georgia?

Answer first: It’s above the National Bank of Georgia’s target of 3%, but it’s not a crisis level—especially with monthly prices falling 0.2% in December 2025.

According to commentary cited with the release, the NBG pointed to inflation normalizing: core inflation around 1.6% in December and services inflation at 2.5%, both below 3%. The NBG expects average inflation to reach 3.5% in 2026.

If inflation is normalizing, why should hospitality care?

Answer first: Because the categories that matter to hospitality—food and day-to-day inputs—can stay elevated even when headline inflation cools.

That mismatch is where profits quietly disappear.

What this means for AI in tourism and hospitality in Georgia

Answer first: In 2026, the winners won’t be the businesses with the fanciest tech—they’ll be the ones using AI to make faster, calmer decisions under cost pressure.

Inflation at 4% is a reminder that macro trends show up in micro moments: a guest hesitating at checkout, a supplier raising prices, a tour operator recalculating margins on a package.

If you’re part of the tourism or hotel industry in Georgia, the most practical next step is to pick one workflow—pricing, procurement, or guest messaging—and make it measurably better with AI in the next 30 days.

Where do you feel inflation most right now: breakfast costs, staffing, or weaker conversion on direct bookings? Your answer should decide your first AI project.