Aparthotels in Batumi: how guaranteed yield programmes are built

The Batumi market rests to a significant degree on one product: a small studio in a high-rise aparthotel by the sea, sold together with a promise of fixed income. The structure looks simple, and that is exactly why it is rarely taken apart.

How it works

The buyer acquires a unit in a complex run as a hotel. At the same time an agreement is signed with a management company: it lets the room, services it and pays the owner either a fixed percentage of the price or a share of revenue. The guaranteed period is usually limited — a few years from completion.

• The guarantee is an obligation of the management company, not a property of the asset. It is worth exactly what the company is worth.
• The source of payments in the early years is not always operating revenue: on a rising market a guarantee is often funded from sales of later phases.
• After the guaranteed period the owner moves to a share of actual revenue — and that is when the complex's real occupancy becomes visible.

What to read in the management agreement

• Who the counterparty is — the developer, a separate management company, an international operator. Those are different levels of reliability.
• The calculation base — a percentage of the purchase price or a share of revenue, and what is deducted before the share is computed.
• The length of the guarantee and what happens after it.
• Your right to use your own unit: how many nights a year, and in which months.
• Your right to leave the programme and let independently — and whether it exists at all.
• An obligation to contribute to refurbishing the room stock — a cost that recurs.

What is happening to the market

Batumi has built a great many rooms of this type. The season on the Georgian coast is short: occupancy concentrates in the summer months, and in winter the city lives its ordinary life. When identical studios in identical towers become numerous, competition for the same guest rises and the nightly rate falls. That pressure is felt precisely after the guarantee periods end.

How to calculate honestly

• Do not treat a guarantee as the property's yield. It is a price included in the purchase, and it is not infinite.
• Ask for actual occupancy of the same operator's already-running phases, not a forecast.
• Model the post-guarantee scenario: a share of revenue less management, utilities and furniture renewal.
• Assess the exit. There are thousands of identical studios; you will be selling in competition with your neighbours and with a developer still selling new phases.

Where Georgia remains strong

A low entry threshold, a simple transaction and no restrictions on a foreigner buying an apartment are real advantages of the country, and they are not going anywhere. It is simply that an aparthotel should be treated as a share in a seasonal hotel business, not as a bond with a coupon.