U.S. lodging booking service Airbnb is leaving the Chinese market, CNBC reported on May 23.
Company co-founder and China chair Nathan Blecharczyk said Airbnb would shut its business in China by the end of July amid "pandemic challenges".
"This decision was not easy for us, and I know it is even more difficult for you. Together, we've built and grown a thriving hospitality community in China and have hosted more than 25 million guests since 2016”,
Nathan Blecharczyk wrote to hosts partnering with the service in the company's WeChat account.
The decision is largely due to strict quarantine restrictions, confirms Maria Belyaeva, an expert at the BRICS Competition Centre.
"The authorities at least discourage, and often prohibit, travel between regions of the country in order to contain the spread of the virus. At the end of the first quarter of 2022, China's Ministry of Culture and Tourism reported a 19% drop in travel compared to the same period last year (also covid). Strict lockdowns during the current Omicron outbreak have dealt a heavy blow to business. For example, many factories in Shanghai have now stopped production, and since the city is one of the key ports - there is an unimaginable line of shipping containers lined up. No one knows when production and logistics processes will be restored”.
Airbnb launched its mainland China business in 2016 and has faced mounting competition from homegrown operators such as Tujia and Xiaozhu. The pandemic worsened the company's problems in the Chinese market. Stays in China have accounted for roughly 1% of Airbnb’s business in recent years.
The company will maintain its Beijing office and will refocus on providing listings for Chinese travelers going abroad.
Before the pandemic, Chinese tourists spent $255bn on international travel in 2019 compared with $135bn for Americans, according to the UN’s World Tourism Organization, says Financial Times.
However, by 2020, Airbnb had about 150,000 properties in China, compared with about 1.2mn from market leader Tujia, according to a University of Queensland report published last year.
“Unlike most other countries around the world, China has not embraced Airbnb,”
the report concluded.
According to Maria Belyaeva, the heavily predictable regulatory environment also influenced Airbnb's decision to leave China. China is one of the strictest economies in terms of data management, according to a survey by the U.S.-China Business Council (USCBC). However, it is worth noting that China's official policy is aimed at external openness — the state welcomes foreign investment, the expert reminds.
"Perhaps when the pool of new regulations is formed, the authorities will be able to offer certain support measures. Ultimately, the regulation is designed to ensure the development of all subjects of the market - provided that it is "healthy", without overkill and illegal actions,"
says Maria Belyaeva.
