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Airbnb gives up on China as zero-Covid crushes tourism

Airbnb will shut down its China operation this summer after a year-long attempt to break into the market was throttled by the impact of Beijing’s tough zero-Covid policy on domestic and international tourism.

Nathan Blecharczyk, the company’s co-founder and China chairman, told hosts in the country that Airbnb will close its domestic travel and experiences offerings amid the “pandemic challenges” by the end of July.

“Airbnb China will consolidate and focus on outbound tourism business,” he wrote in an open letter sent to the company’s WeChat account.

Airbnb has registered about 25 million visits to the country since its launch in mainland China in 2016. Bookings — including foreigners traveling to China — have accounted for about 1 percent of Airbnb’s total revenue, said a person close to the company.

The company had made a concerted push to expand in the country, renaming itself China in 2017 as “Aibiying in an effort to compete with domestic operators like Tujia and Xiaozhu.

Airbnb also held talks to acquire Xiaozhu in 2016, but a deal never materialized.

Before the coronavirus pandemic, Chinese tourists spent $255 billion, according to the United Nations World Tourism Organization.

But Beijing’s strict zero covid policy have severely curtailed cross-border tourism, and anyone entering the country must quarantine in special hotels for up to four weeks.

Chinese authorities have also made it difficult for citizens to obtain or renew passports, saying so this month they would “strictly restrict” foreign travel..

While Airbnb was popular with Chinese tourists heading abroad, domestic travelers were more likely to turn to local operators, who were generally more trusted, according to a University of Queensland report released last year.

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

Airbnb had about 150,000 properties for sale in China in 2020, compared to about 1.2 million for market leader Tujia, the report said. But Airbnb faced “unsteady loyalty from hosts and guests and a crisis of confidence among hosts in the future of Airbnb China,” the report added.

Airbnb’s presence in China also caused controversy. In 2020, the company’s then-Chief Trust Officer, Sean Joyce, a former deputy director of the FBI, resigned from the role after six months, reportedly over data-sharing concerns. Airbnb said it has been open with users about what data was shared with Chinese authorities.

Airbnb has completed the largest U.S. IPO of 2020, completing a remarkable turnaround after the pandemic put its financial health on the line before embarking on a series of cuts, including cutting spending on marketing and headcount.

The company has benefited from the worldwide reopening and a shift to remote work, with longer-term bookings — those lasting more than a month — occurring more frequently than before the pandemic.

Airbnb is the latest major Silicon Valley group to pull out of China.

Last October, Microsoft’s LinkedIn quit, citing a challenging operating environment. In 2016, ride-hailing group Uber exited the country and sold its Chinese operations to rival Didi Chuxing after failing to dominate the market like in Western economies.

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

Airbnb gives up on China as zero-Covid crushes tourism Source link Airbnb gives up on China as zero-Covid crushes tourism

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