The San Francisco-based company will stop offering rental homes and experiences in the country this summer.
Through Bloomberg
Posted on May 24, 2022
Airbnb Inc. is closing its operations in China, opting instead to focus on outbound Chinese tourism as the country continues its aggressive approach to contain Covid-19.
The San Francisco-based company will stop offering rental homes and experiences in the country this summer, according to a person familiar with the matter. But it will still maintain a presence in China with an office in Beijing, as the company expects outbound tourism to improve when restrictions ease. Airbnb launched operations in China in 2016, and the pandemic has added to the difficulties and complexity of operations in the country, the person said.
Given that rentals in China represent just 1% of Airbnb’s revenue, the company sees greater opportunity in outbound tourism from China, particularly travel within the Asia-Pacific region.
“China is first and foremost an outbound business,” Airbnb chief executive Brian Chesky said during the company’s first-quarter earnings call earlier this month. “People go to China, but they mainly travel to China and they go to other communities, especially in Asia.”
At an event in New York earlier in May, Chesky said he expects the Asia region to recover in 2023.
zero-COVID approach
China took a Covid zero approach to containing the virus, with the government placing entire towns in quarantine for weeks at a time. Several economists have downgraded their forecasts for China’s economic growth in recent days as government restrictions continue, hampering growth. Data last week showed China’s industrial production and consumer spending in April hit the worst levels since the start of the pandemic, while the jobless rate climbed to 6.1% and the youth unemployment has reached a record high.
The zero-tolerance approach has drawn criticism from businesses, fueled public frustration and made Beijing’s ambitious annual growth target of around 5.5% out of reach.
During the early days of the pandemic in early 2020, Airbnb suspended registrations for its listings in Beijing to comply with local regulations. In a regulatory filing in February, the company said it would continue to incur “significant expense” to operate in China and may not be able to achieve profitability in the country.
“These factors, combined with labor sentiment in China and China’s policy on foreign direct investment, may have a particular impact on our operations in China,” according to the report. Airbnb cited other difficulties in doing business in China, including being forced to respond to requests from government agencies to share information about users of its platform.
The company also said that “any prolonged deterioration in U.S.-China bilateral relations or escalating geopolitical risks in China could harm” its business.
CNBC broke the news earlier.
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