Wall Street Journal reported on Monday, citing people familiar with the matter, that Airbnb is shutting down its domestic business in China and plans to focus on outbound travel.
All mainland Chinese listings, homes and experiences, will be taken down by this summer, said the report, adding that bookings of stays and experiences in China typically account for about 1% of Airbnb’s overall revenue.
As the cost of operating a travel business in China is becoming increasingly costlier, the company decided it wasn’t worth the payout, said the report. The company plans to announce the decision later this week.
The harsh and ongoing Covid-19 lockdown has left China's tourism industry struggling. According to the data of the Ministry of Culture and Tourism in the first quarter of 2022, the total number of domestic tourists in China was 830 million, a decrease of 194 million or 19.0% during the same period.
A continued tourism freeze may remove at least 0.5 percentage points from China's 2022 GDP growth, Tian Yun, a former economist at the state economic planning agency, said. The government has set a growth target of about 5.5% this year.
In addition, citing people familiar with the matter, the report said that Airbnb is finding it difficult to compete with Chinese rivals such as Meituan because they dominate the market and can acquire new customers with less spending.
Chinese outbound travel has long been a bigger opportunity for Airbnb, and the company will continue to let Chinese travelers book hotels overseas, according to the report. But given the country's restrictions on international travel, that demand isn't expected to get a boost anytime soon.
Shares of the company have fallen more than 30% this year amid a broad tech sell-off, but are still well above their 2020 IPO price of $68.