Airbnb China closes domestic unit to cut costs as it bets on border reopening

Airbnb will terminate its domestic business in China, marking the partial retreat of another Western tech giant from the country.

Like most of its peers, the home sharing titan is shifting its focus to China’s outbound business. Google, Facebook, Twitter and the likes don’t offer services to Chinese consumers but they are important advertising channels for the country’s booming export-oriented e-commerce sellers.

Airbnb is closing down its domestic home and experiences segments in China this summer and pivoting to serve 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 in the country. But that population is in the minority after all. Over the years Airbnb has faced rising competition from domestic rivals like Tujia, backed by its own investor, and experienced several management shakeups at the top.

With China’s tourism disrupted by intermittent lockdowns since 2020 “with no end in sight,” Airbnb decided to it was time to end the business. “The domestic segment is costly and complex to operate, and COVID-19 worsened these issues and heightened their impact,” the person with knowledge said.

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

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

But it might still be a long time before Airbnb gets to experiment with this new endeavor. China is one of the last countries to have stuck to strict COVID-19 border rules, limiting outbound and inbound travel. The country’s economy is also projected to slow, which could continue to hurt consumer confidence even after the borders reopen.