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Tour operator license and tourism activity in Georgia

Mariam

RegHub Georgia Specialist

Tourism activity in Georgia, tour operators included, comes under a complex body of legal regulation. Georgian law provides tour operators with no separate license and relies on registration instead. An entrepreneur entering this sector has to account for the statutory requirements and the legal status of market participants, along with enterprise registration and any permit procedures required.

Four matters need deciding in advance:

• the legal form of the business;

• which services it will offer;

• the nature of its relationship with tourists and counterparties;

• the statutory requirements that govern its particular business model.

Tourism activity covers a broad range of operations involved in creating travel products and individual services, and in promoting and selling them. Among market participants, the tour operator holds a distinct place, because its activity involves building a composite product by combining several services from different suppliers. Registering the business as such is one procedure; another is recording it among entities engaged in tourism activity in Georgia. An enterprise that structures its corporate and contractual arrangements correctly from the start is less exposed to legal and administrative problems later.

Statutory sources of regulation

Chief among the sources is the Law of Georgia on Tourism. Besides setting state policy in the area, it regulates the matters listed below, along with other relations within the sector:

• the subjects and forms of tourism activity;

• tourists' rights and guarantees;

• contractual relations in the travel services sector;

• the functions of state authorities;

• the safety of tourists.

The Law designates as authorized bodies the Government of Georgia and the Ministry of Economy and Sustainable Development of Georgia, together with the Georgian National Tourism Administration (GNTA). The GNTA is constituted as a legal entity under public law.

On the corporate side, the Law of Georgia on Entrepreneurs is relevant too. This statute governs the legal forms available to entrepreneurs and the procedure for establishing and registering them, as well as the conduct of entrepreneurial activity. The Tax Code of Georgia applies in its own right. It regulates entrepreneurs' tax status and how tax obligations are met, and it also extends to record-keeping and other questions arising in the course of tourism activity in Georgia.

The tour operator as a distinct market participant

The tour operator's statutory definition has practical consequences for the choice of an operating model. An entrepreneur planning to work as a tour operator in Georgia must first establish whether the activity actually conducted meets the criteria laid down by law. On that basis the entrepreneur can correctly identify the applicable obligations and the requirements for contracts with tourists. The same assessment settles the procedure for dealing with suppliers.

A tour operator assembles a package and organizes its sale. It determines the composition of the product on its own and manages relations with the suppliers of its components. In the course of its work it contracts with hotels and carriers, with excursion companies and guides, and with other suppliers. An entrepreneur that assembles the package itself qualifies as a tour operator whether it sells the product to the client directly or through a network.

For this reason, a company that plans to register a tour operator in Georgia has to analyze its legal and organizational standing and what its services in fact comprise. The character of the travel product it assembles calls for the same analysis. An entrepreneur that misjudges its status will organize its business around requirements the law lays down for a different category of market participant.

State registration of tourism activity in Georgia

Launching the business involves several distinct registrations, and planning must distinguish between them. One is registration as the relevant type of business entity. Entities engaged in tourism activities additionally register in the GNTA's database under a dedicated mechanism.

Each activity requires the correct code and description under the national classifier of economic activities (NACE Rev. 2). An entrepreneur carrying on several types of tourism activity in Georgia at different addresses states the information for each separately. Where no place is stated for a particular activity, the regulator relies on the entity's registered legal address.

Before registering, the entrepreneur also has to determine whether it is genuinely a tour operator assembling packages or in fact an agent, intermediary or other type of market participant. Distinct from the GNTA's database, the Registry of Economic Activities holds an entry for each economic activity, valid for one year. Once that period expires, the entry lapses unless the person concerned has applied for an extension. According to current data, registering the activity takes 2 working days against a state fee of GEL 39 (approximately EUR 12.87). Same-day processing costs GEL 78 (approximately EUR 25.73).

Founding requirements for a tour operator in Georgia

The choice of legal form rests with the entrepreneur. Relevant considerations are the business's scale and the size of its membership. Its management arrangements and the kind of work planned also bear on the choice. Tourism businesses most often opt for a limited liability company (LLC). Small tour operators serving individual clients use this form, as do companies that assemble composite products and work with foreign partners.

Establishing a company for tourism activity in Georgia involves drawing up founding documents, including the foundation agreement and the charter. Founders also need to settle the company's membership and management bodies, as its structure requires, and to name the persons authorized to represent it before third parties. The registration filing sets out the company's official details. These include its name and legal address, together with information on the persons entitled to manage and represent it. A representative who files the documents must evidence the authority to file them.

Founding documents should define with precision:

• the decision-making procedure;

• the functions of the director;

• the distribution of the members' shares;

• the procedure for managing the company;

• other corporate matters provided for by law.

Where the members are foreign citizens or legal entities, the requirements for identity documents call for a separate check. The same check extends to the materials evidencing that a corporate member of this kind exists and has authority to act.

Any decision to establish a tour operator in Georgia ought to come after the founders have settled the whole business structure:

• who will assemble the product;

• who will sell it to the tourist;

• which services the package will include;

• which suppliers will take part in performing it.

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The tour operator's liability to the tourist

The Law on Tourism's package travel provisions (Articles 13 to 26) apply from June 1, 2027. Under them, the business that creates a product is responsible for its proper performance. That performance must match the contract terms and the information given to the tourist. Liability arises where the services actually provided do not conform to the stated terms. The tourist may claim a price reduction covering the time over which the lack of conformity persisted. No such right exists for a lack of conformity that the tourist caused.

Georgian law also sets out certain grounds on which the operator is released from paying compensation. In particular, no compensation is due where the operator proves the lack of conformity to have resulted from the tourist's own fault or from the acts of a third party that is unrelated to the provision of the package services and whose conduct the operator could not foresee or could not prevent. At the planning stage, the entrepreneur therefore needs to build a system for controlling service quality and for keeping documentary evidence of contractual performance. Such a system is of particular importance where a company working as a tour operator in Georgia offers clients composite products.

Tour operations draw on a large number of independent suppliers. They include hotels and carriers, excursion companies and guides, entertainment organizers and other entities. The tour operator is not released from liability to the tourist merely because these suppliers are involved. It answers for the proper performance of every service covered by the contract.

Counterparties therefore need to be selected with care, and the operator's contracts with them should set out:

• service standards;

• performance deadlines;

• the procedure for exchanging information;

• liability for breaches;

• the mechanism for handling client claims.

Under the same provisions, the tourist may claim appropriate compensation for any damage resulting from a lack of conformity with the contract terms.

The Law further obliges the operator to give the tourist appropriate assistance if difficulties arise during the trip. In practice, the duty involves:

• providing information on local medical facilities and public authorities, and on consular assistance;

• helping the tourist establish contact and find alternative transport;

• taking other measures that the particular situation requires.

Conclusion

An entrepreneur intending to launch a tour operator in Georgia needs a comprehensive approach to the legal structuring of its business. Registering a company and starting to sell services is not enough.

Before operations begin, the entrepreneur must:

• determine what legal status its business will have;

• establish what kind of activity is planned;

• choose a suitable legal form;

• register the necessary information;

• secure compliance with the law.

Professional support is especially important in this field. RegHub Georgia's specialists provide comprehensive support for launching a tourism venture. Their work extends to:

• drafting contracts;

• developing documents for handling claims;

• reviewing contracts with hotels and carriers;

• checking insurance requirements;

• helping to organize dealings with state authorities.

With specialists engaged, a tour operator in Georgia can concentrate on developing the tourism product and attracting clients.