Airbnb will close its China business this summer after a years-long push to break up the market was held back by the impact of Beijing’s tough zero-Covid strategy on domestic and international tourism.
Company co-founder and China president Nathan Blecharczyk told hosts in the country that Airbnb would close its domestic travel and experience listings at the end of July amid “pandemic challenges.”
“Airbnb China will consolidate and focus on outbound tourism business,” he wrote in an open letter posted on the company’s WeChat account.
Airbnb has recorded about 25 million stays in the country since it launched in mainland China in 2016. Bookings, including those from foreigners traveling to China, have accounted for about 1 percent of Airbnb’s total revenue, said a person close to the company.
The company had made a concerted effort to expand in the country, renaming itself in China in 2017 as “Aibiying” in an effort to compete with local carriers such as Tujia and Xiaozhu.
Airbnb also held talks to acquire Xiaozhu in 2016, but no deal was reached.
Before the coronavirus pandemic, Chinese tourists spent far more money on international travel than those from any other country, according to the UN World Tourism Organization, accounting for $255 billion in 2019 compared to $135 billion. US dollars.
But Beijing’s strict zero-Covid policies have curbed cross-border tourism sharply, with anyone entering the country required to quarantine in special hotels for up to four weeks.
Chinese authorities have also made it more difficult for citizens to obtain or renew passports and said this month they would “strictly limit” foreign travel.
While Airbnb has been popular with Chinese tourists traveling abroad, domestic travelers more often turned to local operators who were generally more trustworthy, according to a University of Queensland report published last year.
“Unlike most other countries in the world, China has not embraced Airbnb,” the report concluded.
Airbnb had around 150,000 properties listed in China in 2020, compared to around 1.2 million for market leader Tujia, according to the report. But Airbnb faced “uncertain loyalty from hosts and guests, and a crisis of confidence among hosts in the future of Airbnb China,” the report added.
Airbnb’s presence in China had also been a source of controversy. In 2020, the company’s then trusted director, Sean Joyce, a former deputy director of the FBI, resigned six months into his role, reportedly over data-sharing concerns. Airbnb said he had been upfront with users about what data was being shared with Chinese authorities.
Airbnb pulled off the largest U.S. initial public offering of 2020, capping a remarkable turnaround after the pandemic put its financial health at risk until it instituted a series of cuts, including reducing marketing spending and the number of employees.
The company has benefited from the global reopening and the shift to remote work, with longer-term bookings — those lasting more than a month — more common than before the pandemic.
Airbnb is the latest major Silicon Valley group to pull out of China.
Last October, Microsoft’s LinkedIn gave up, citing a challenging operating environment. In 2016, ride-sharing group Uber left the country and sold its China operations to rival Didi Chuxing after failing to dominate the market as it had in Western economies.
Airbnb’s decision was first reported by CNBC. An Airbnb spokesman declined to comment.
Reference-www.ft.com