Winter Tourism Development Trends in Georgia

Abstract

One of the new tools that can be effectively used to hedge weather risks are derivatives of the weather (forwards, futures, options and swaps on selected weather variables - temperature, rain, snow, wind, etc.) .In this article, we will introduce the possibility of using weather derivatives in winter tourism - snowfall ahead - to insure the tourism business. Our research is based on snowfall data from a ski resort in Georgia. We show that weather derivatives can be an effective tool for hedging weather risks and reducing income volatility in the winter ski tourism business.