Airbnb Decides to Close Its Domestic Business in Mainland China

On 24 May 2022, Airbnb told its users in China that it would stop offering homes and Experiences in the mainland. In a letter posted to its official WeChat account, the company said its hosts' listings in China would be suspended from 30 July 2022 and that its China business would turn to outbound travel.

“We have made the difficult decision to refocus our efforts in China on outbound travel and suspend our homes and Experiences of Hosts in China, starting from July 30, 2022,” co-founder Nathan Blecharczyk wrote in the letter, as Reuters quoted it.

The New York Times reported on 23 May 2022 that roughly 150,000 listings in China would come down, out of six million Airbnb had worldwide, and Reuters repeated the figure. Chinese users would still be able to book listings and experiences abroad, the company said.

What Airbnb said and what it left out

The letter was addressed to Airbnb's Chinese users and, by Reuters' account, did not say why the company was leaving. Airbnb did not respond to the agency's request for comment. The trade paper Short Term Rentalz, writing two days later, reported that Blecharczyk had put the closure down to challenges from the pandemic.

Blecharczyk, whom Short Term Rentalz described as Airbnb's co-founder and China chair, kept the tone personal. “The decision was not easy for us and I know that it is even more difficult for you,” he wrote. He said Airbnb and its hosts had built a host community in China together and had welcomed more than 25 million guest arrivals since 2016, and Reuters reported that he said he was proud of what Airbnb had achieved in the country.

The practical terms were short. Short Term Rentalz reported that Airbnb would stop taking bookings for accommodation and experiences in China from 30 July onwards. A source told CNN that the company would not leave the country altogether: it would keep an office in Beijing with hundreds of employees, who would work on outbound travelers and global projects. CNBC had been first to report the decision, and Asia Financial's edition of the Reuters report said, citing CNBC, that the company planned to tell its employees in China on the morning of Tuesday 24 May in Beijing.

Why it happened, as reported then

The reasons came from people who were not named. On Monday 23 May 2022, a source familiar with the matter told CNN that Airbnb would shut its China listings after two years of lockdowns that showed no sign of ending. The source said business in China had declined and that operations there were costly and complex, a strain made worse by Covid-19.

TechCrunch published a matching account the same day. “The domestic segment is costly and complex to operate, and COVID-19 worsened these issues and heightened their impact,” a person familiar with the matter told the site. Reuters noted that the Global Times newspaper had carried the same explanation from a source close to the company.

The backdrop was China's effort to stop Covid-19, which Reuters said had locked down several cities, among them Shanghai, and disrupted business across the country. Reuters also set the move beside other departures. Airbnb, it wrote, joined Western internet companies such as LinkedIn and Yahoo that had retreated from China in the preceding months.

A small business in a large market

By every account, China was a small part of Airbnb. Reuters said the reports put stays in China at roughly 1 percent of the company's business over the previous few years. CNN's source said the domestic business had hosted some 25 million guests since 2016 and brought in only 1% of company revenue in the last few years.

Local competitors were far larger. Reuters named Airbnb's main Chinese rivals as Tujia, Xiaozhu and Meituan. Short Term Rentalz, citing a University of Queensland report, put Airbnb at close to 150,000 units in China in 2020, against 1.2 million on Tujia alone. It noted that Airbnb had rebranded as Aibiying in 2017 to appeal to Chinese customers and had still struggled to make headway. TechCrunch wrote that Airbnb had faced rising competition from domestic rivals such as Tujia and several management changes at the top.

Reuters said Airbnb had started providing services in mainland China in 2015 and had tried to localize, including by integrating with Tencent's WeChat. Airbnb's shares rose 0.7% on Nasdaq on Monday 23 May and slipped 1.6% after the market closed, Reuters reported.

The bet on outbound travel

What Airbnb kept was the Chinese traveler who went abroad. CNN reported that China had historically been the world's biggest market for outbound tourism, citing the World Tourism Organization, and that trips by Chinese customers to other destinations, largely around the Asia Pacific region, had been a major opportunity for the company. CNN's source expected that travel to rebound once China fully opened its borders.

TechCrunch gave the scale. Nearly 155 million people from China traveled abroad in 2019, against 48 million a decade earlier, according to World Bank data it cited. It also gave the warning. China was one of the last countries to keep strict Covid border rules, its economy was projected to slow, and it might be a long time before Airbnb could test the new plan.

Rivals moved for the hosts

Chinese platforms acted on the day of the letter. Meituan Minsu, the vacation rental business of Meituan, said on 24 May 2022 that it had formed a special team to help existing Airbnb hosts put their listings on its platform, Reuters reported. Tujia had made a similar announcement earlier that day.

What it meant for hosts

For a host in mainland China, the letter set one date. From 30 July 2022 Airbnb would no longer take bookings for homes or Experiences in the country, so the weeks from 24 May were the time to move a listing somewhere else. Meituan Minsu and Tujia had both said they would help Airbnb hosts list with them, and Xiaozhu was the third domestic rival Reuters named.

The May 2022 reports cited here left open questions that mattered to those hosts. They did not say what would happen to reservations already made for dates after the cut-off, or what support, if any, Airbnb would give the hosts it was leaving. Those answers were not in the letter as Reuters and the trade press quoted it.

For hosts outside China, little changed in May 2022. Chinese guests could still book stays abroad on Airbnb, and the company said that was where its China effort would go. In 2019, nearly 155 million Chinese people had traveled abroad, and CNN reported that Airbnb's Chinese customers had largely gone to other destinations around the Asia Pacific region. But China's border rules were still strict in May 2022, and TechCrunch judged that the payoff might be a long time coming. It was not yet demand a host could budget for.

The wider point applied to every host. Airbnb closed a market that the Times put at roughly 150,000 listings with a letter and a date. A host whose bookings all came through one platform had no fallback if that platform withdrew.

Sources

1. Reuters, as carried by NBC News, Airbnb to close its domestic business in mainland China (24 May 2022).
2. Reuters, as carried by Euronews, Airbnb to shut domestic business in China from July 30 (24 May 2022).
3. The New York Times (Wayback Machine capture of 24 May 2022), Airbnb shuts down its local business in China. (23 May 2022).
4. CNN Business, as carried by KVIA, Airbnb is closing its listings business in China (23 May 2022).
5. TechCrunch, Airbnb China closes domestic unit to cut costs as it bets on border reopening (23 May 2022).
6. Short Term Rentalz, Airbnb to check out of China on 30 July (26 May 2022).
7. Asia Financial, Airbnb Joins Exodus of Western Internet Firms Leaving China (24 May 2022).
8. Airbnb, shareholder letter filed with the US Securities and Exchange Commission, Airbnb Q2 2022 Shareholder Letter (Exhibit 99.1 to Form 8-K) (2 August 2022).