Airbnb China bets on reopening borders as it shuts domestic operations to cut costs

Airbnb will end its domestic operations in China, marking the partial withdrawal of another Western tech giant from the country.

Like most of its peers, the home-sharing titan is focused on outbound business from China. Google, Facebook, Twitter and others do not offer services to Chinese consumers, but they are important advertising channels for the country’s burgeoning export-oriented e-commerce sellers.

Airbnb is closing its Home and Experiences segments in China this summer and is pivoting to meet the country’s growing appetite for outbound tourism, according to a person familiar with the matter.

The American company had high hopes when it entered China in 2016. It was once a popular choice for foreign tourists and Western-educated Chinese traveling to the country. But this population is a minority after all. Over the years, Airbnb has faced growing competition from domestic competitors like Tujia, backed by its own investorand experienced several management upheavals at the top.

With Chinese tourism disrupted by an intermittent lockdown since 2020 “with no end in sight”, Airbnb decided it was time to shut down the business. “The domestic segment is expensive and complex to operate, and COVID-19 has compounded these issues and increased their impact,” the knowledgeable person said.

Since 2016, Airbnb listings in China have seen 25 million guest arrivals, but stays in China have only accounted for about 1% of the company’s revenue in recent years. The company will remove about 150,000 listings in China as part of the shutdown, reported New York Times.

Airbnb is betting on whether to meet China’s pent-up demand for outbound tourism once the country eases travel restrictions. Nearly 155 million Chinese traveled abroad in 2019, up from just 48 million a decade ago, according to Data compiled by the World Bank.

But it may still be a long time before Airbnb experiments with this new venture. China is one of the last countries to complied with strict COVID-19 border rules, limiting outward and return journeys. The country’s economy is also should slow downwhich could continue to damage consumer confidence even after the borders reopen.

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