Summary of Airbnb's Exit from the Chinese Market

After more than six years of operation in China, Airbnb made a significant announcement to its Chinese users on the morning of May 24th. Airbnb China declared a major business adjustment, stating that it would focus on serving outbound travelers exclusively. Starting from July 30, 2022, Airbnb would suspend support for domestic listings, experiences, and related bookings, effectively discontinuing its presence in the Chinese domestic market, retaining only its outbound business.

Airbnb's Primary Challenge in China: Struggling to Adapt

In August 2015, Airbnb officially entered the Chinese market, and by the end of March 2017, it had settled on a Chinese name, "爱彼迎" (ài bǐ yíng), which signifies "let love mutually welcome." The decision to exit the market was attributed to the challenges posed by the COVID-19 pandemic, weakening the synergy between Airbnb's domestic and outbound travel businesses. The domestic travel business faced operational challenges such as high costs. However, Airbnb's struggles in the domestic market weren't solely due to the pandemic.

In recent years, Airbnb's revenue from domestic listings and experiences in China accounted for less than 1% of its global revenue. The main issue was a lack of localization and alignment with Chinese consumer preferences, evident in their operational approach and customer service.

• Foreign tourists shared their frustrations, recounting experiences where they booked accommodations in places like Huizhou, only to find that the host's phone was unreachable, and the provided address was incomplete. This lack of information left travelers in a frustrating situation, exacerbated by having to make multiple phone calls, often repeating their situation. While Airbnb's customer service representatives were polite and vowed to resolve the issue, refund objectives were often unmet, leading to frustration. Even when a Singapore-based customer service representative proactively called, they only reiterated the process and said, "it cannot be resolved on the same day."

This was not considered an isolated incident but rather a platform-wide issue. Airbnb faced over 8,700 complaints on Hei Mao Tou Su (黑猫投诉, a Chinese consumer complaint platform), with many centered around refund and cancellation problems. Examples included cases where guests had to cancel their reservations due to trip-related issues but didn't receive refunds as expected.

• Another case involved a customer whose Airbnb account was temporarily unusable due to prolonged inactivity or other reasons. They were told it would take one to two weeks to resolve, but due to the urgency of their upcoming stay, they had to make a reservation with a different account. A month later, they received an email confirming the account's restoration, but by then, they had stopped using it. This customer also found Airbnb's app less user-friendly, especially when it came to filtering by precise location compared to other platforms like Dianping, which allowed users to filter listings by distance in meters.

Additionally, there were instances of property damage in earlier years, such as the "Shanghai Drama Students Damage Property" incident and the case of 12 guests causing property damage. Investigative reports at the time revealed that Airbnb, as a rental platform, lacked strict management systems, didn't require real-name authentication, and had a deposit system that was often ineffective, relying more on individual trustworthiness.

What contributed to these recurrent problems?

Airbnb operates primarily on a C2C (Customer-to-Customer) model, where hosts and guests directly interact, and Airbnb serves as an intermediary. In contrast, domestic platforms like Tujia (途家) emphasize a B2C (Business-to-Customer) model, acting as "secondary landlords" by leasing properties from others and then subletting them to guests.

The drawback of the C2C model lies in the fact that Airbnb's profitability primarily relies on intermediary fees. The platform seldom intervenes significantly in various aspects before and after check-in, making it challenging to impose practical constraints on hosts and guests. This is why many Chinese C2C companies invest substantial manpower and financial resources in building their underlying service chains.

However, as mentioned earlier, the actual experiences indicate that Airbnb has not effectively established a robust underlying service chain in China. In comparison, platforms like Tujia (途家) and Xiaozhu (小猪) provide hosts with standardized services similar to apartments or hotels, such as room cleaning and linen laundering.

Airbnb faces fierce competition in a crowded market, making it challenging to showcase its advantage in the "experiences" segment

On the flip side, Airbnb's positioning in the short-term rental industry differs from platforms like Tujia and Xiaozhu, and this is reflected in its mission statement: "To create a world where anyone can belong anywhere, no matter where they travel, by connecting people to unique travel experiences that promote a sense of belonging within local cultures."

In November 2016, Airbnb announced an expansion of its sharing economy platform, introducing "Experiences" alongside its traditional accommodation listings. These "Experiences" were also hosted by local residents and aimed to provide travelers with unique and immersive activities, going beyond conventional sightseeing or classes.

Starting from the early days of renting out couches and spare beds, the ideals of experience, sharing, and interaction were central to the sharing economy's vision. However, in China, these concepts struggled to gain significant traction.

According to reports in the Financial Times, while Airbnb was well-received among Chinese travelers going abroad, it faced a preference among domestic travelers for local Chinese companies. As stated, "China did not embrace Airbnb."

OTA (Online Travel Agency) analyst Zhou Haitao expressed a similar opinion, noting that in the domestic short-term rental industry, platforms like Tujia associated with Ctrip (携程), Meituan (美团) associated with Meituan Dache (美团民宿), Alibaba's Xiaozhu and MuNiao (木鸟) were leading the pack. While Airbnb did have decent traffic and order volumes, its primary focus was on outbound travel, with a significant number of foreign visitors choosing Airbnb for their stays in China.

The scale and quantity of platforms can also indirectly indicate the situation.

Over the past decade, Chinese platforms adopting the shared accommodation model similar to Airbnb, such as Tujia, Xiaozhu, and MaYi (associated with Ant Group), have expanded significantly.

Among them, Tujia gained an absolute advantage in terms of property listings after acquiring short-term rental businesses from multiple platforms, including MaYi, Ctrip, and Qunar, in 2016. By December 2020, Tujia had more than 2.3 million online property listings in China.

In contrast, Airbnb had far fewer property listings in China. Airbnb had approximately 500,000 active listings in China, compared to over 6 million globally.

Moreover, Airbnb's penetration rate in China was lower than that of Meituan Dache, which is considered a "super app." The customer acquisition cost for Meituan Dache was often lower than that of Airbnb. According to The New York Times, "super apps" charged lower service fees and had lower average nightly room rates compared to Airbnb.

• Despite Airbnb's limited success in its local operations in China, it still represents our vision of unique lodging experiences, which is the flip side of the C2C model. While hotels offer consistent and predictable accommodations, Airbnb's short-term rentals can be more exciting and diverse. Some listings may include amenities like Zuma Lang toiletries, Dyson hairdryers, and projectors, while others may allow pets without exorbitant prices. Airbnb's "Superhosts" are often viewed as trustworthy and can provide personalized services, offering tips on the best local eateries, convenient garbage disposal locations, and places for recreation. For travelers, the difference between hotels and Airbnb accommodations lies in the fact that hotels are commercial enterprises, often located in busy commercial areas, while Airbnb allows travelers to feel like they're living in the city and experiencing local life without a filter.

Airbnb's focus on outbound travel and personalized storytelling

In summary, Airbnb is not a major player in China's short-term rental market, and there is limited room for its growth. Abandoning the domestic market was somewhat expected, considering the circumstances. Outbound travel presents a much larger opportunity for the company. CNBC reported that there isn't significant overlap between Airbnb's international and Chinese businesses.

The team that Airbnb plans to retain in China mainly consists of engineers involved in global product and technology projects, as well as a business and customer service team responsible for Chinese users traveling abroad. Airbnb's main advantage continues to be its worldwide portfolio of listings and experiences.

Airbnb introduced its "largest update in a decade," including the introduction of more than 50 property types, ranging from conventional options like rural homes and lakeside retreats to more unique choices such as vineyards and historical buildings. Airbnb emphasizes personalized accommodation experiences, highlighting qualities like quality, uniqueness, and experiences.

This approach is consistent with Airbnb's previous efforts in China. In November 2018, Airbnb strategically partnered with the Chengdu Research Base of Giant Panda Breeding, collaborating on initiatives like co-branding and promoting giant panda culture. In April 2021, Airbnb collaborated with the Huangshan Cultural and Tourism Bureau and stand-up comedian Li Xueqin to launch the "Experience Authentic Village Life" program.

However, Airbnb's intended brand image and its actual performance in China are not always aligned. Some Chinese customers have pointed out that "Airbnb still leans somewhat towards foreign thinking, targeting students and middle to upper-end users. What supports Meituan and Tujia are not only students and middle to upper-end users but also a large number of ordinary residents who book short-term rentals like they book hotels."

While we continue to anticipate authentic, off-the-beaten-path lodging and travel experiences, Airbnb's story in the Chinese domestic market will no longer be the author.

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