Airbnb gives up on China as it shifts focus to outbound travel

Airbnb will close its domestic business in China this year, removing all listings by the summer and retreating after a years-long push to crack the difficult market.

A source familiar with the company’s plans confirmed Airbnb would continue to run a large office in Beijing, but that it would now deal exclusively with outbound travel — the lucrative business of facilitating trips overseas.

Chinese tourists spend vastly more money on international travel than from any other country, according to statistics from the UN’s World Tourism Organization, which said its tourists accounted for $255bn in 2019, compared to $135bn for those from the US.

Since launching its business on the Chinese mainland in 2016, Airbnb has registered about 25mn stays in the country. Bookings within the country — including foreigners travelling into China — have generally accounted for about 1 per cent of Airbnb’s overall revenue, the person said.

Airbnb employees in the country, which total several hundred, would be told about the move shortly, the source said.

The decision was first reported by CNBC. An Airbnb spokesperson declined to comment.

Airbnb’s retreat comes despite a years-long push to build its business in the country. In 2017, it rebranded itself in China as “Aibiying” in an ill-fated effort to compete with homegrown players Tujia and Xiaozhu.

Airbnb had previously held talks to acquire Xiaozhu in 2016 but a deal did not materialise.

The move marks yet another case of a big Silicon Valley group failing to succeed in China, which is seen as a big growth opportunity despite operational complications and a tough competitive landscape.

Last October, Microsoft’s LinkedIn gave up on the market, citing a challenging operating environment. In 2016, Uber staged a humbling retreat, selling its Chinese operations to rival Didi-Chuxing after failing to blitz the market in the same way it did in western economies.

While Airbnb has been popular with Chinese travellers heading overseas, domestic travellers more often turned to local players. The Chinese companies were generally more trusted, according to a University of Queensland report published last year.

“Unlike most other countries around the world, China has not embraced Airbnb,” the report concluded.

Citing market data from 2020, the report said Airbnb had about 150,000 properties on offer in China, compared to about 1.2mn from market leader Tujia. Looking ahead, the report said Airbnb faced “uncertain loyalty of hosts and guests, and a crisis of confidence among hosts in the future of Airbnb China”.

Airbnb’s presence in China had also been the source of some controversy. In 2020, the company’s then “chief trust officer” Sean Joyce, a former FBI deputy director, resigned six months into his role, reportedly over concerns about data-sharing within China. Airbnb said it had been upfront with users regarding what data was shared with authorities.

Airbnb pulled off the largest US initial public offering of 2020, capping a remarkable turnround after the coronavirus pandemic travel slump put its financial health at risk until it instituted a range of cuts, including reducing spending on marketing and employee headcount.

Since then the company has benefited from the global reopening, and a shift to remote working, with longer-term bookings — lasting more than a month — now more common than before the pandemic.

However, travel in the Asia-Pacific region has not rebounded with the same gusto as other markets. In the first quarter of 2022, record Covid-19 cases and severe lockdowns in China exacerbated the regional slowdown, Airbnb said in a recent filing.