Airbnb's six years in China, why did it suddenly leave?
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After years of heavy investment, Airbnb has finally pulled out of the Chinese market.
On the early morning of May 24, Airbnb officially announced the adjustment of its business in China: starting from July 30, 2022, support for domestic travel listings, experiences and related reservations will be suspended, and outbound travel business will not be affected. As soon as the news came out, the entry "Airbnb withdraws from mainland China" quickly became a hot search. Some expressed surprise and regret, others thought it was expected. Airbnb went with a high profile, just as it came with a high profile.
As a Chinese homestay giant, it began to test the waters in China in 2013, and set up a small-scale team in China in 2014. In 2015, it announced its entry into the Chinese market and in 2017, "Airbnb" was used as the brand's Chinese name. Why suddenly "leave"? Who will replace Airbnb to order Chinese homestays?
Airbnb's Six Years in China
In 2008, Airbnb was established, headquartered in San Francisco, California, USA. It is mainly engaged in homestays. Its business model is to build a platform to match housing sources to provide accommodation services to customers.
In 2014, Airbnb set up a small-scale team in China, and began to conduct business in the Chinese market in 2016. At the end of March 2017, Airbnb set "Airbnb" as the Chinese name of its brand and product, which is officially named as a company. The identity of a localized company that provides online short-term rental services in China.
Company founder Brian Chesky attended the company's 2017 conference in Beijing and expressed his expectations for Chinese "millennial" users: "Young Chinese travelers see the world from a completely different angle than before. We hope that Airbnb and Our new travel platform resonates with them and inspires them to travel in new ways."
Chesky's compliments to young Chinese users are based on expectations for the huge market in China. Since then, Airbnb's global and China divisions have been actively operating in the Chinese market, and have quickly made some good results:
For example, just two years after entering China and one year after being officially named, China has become the most popular destination country for Airbnb users around the world to travel in the New Year. Among the top 10 most popular travel destinations, China accounted for 6, and the urban agglomeration around Shanghai and Wuhan became the most popular New Year's Eve destination cities. At the same time, the growth rate of Airbnb's listings in China has reached an astonishing 100%, and the listings have also achieved sinking and diversification.
Of course, the middle is not without difficulties. In fact, localization has always been a pain point for Airbnb. Airbnb has been criticized by users and the industry for the problem of difficult customer service feedback in the early stage of localization in China; while competitors such as Tujia and Xiaozhu, which are truly local companies, have achieved significant success by integrating WeChat mini-programs/payment and other means. The cost of customer acquisition has been reduced, and Airbnb has brought great market share suppression.
As a result, for a long time, Airbnb's China business was a well-received but not well-received existence, and was criticized for being "unacceptable." Airbnb even changed the head of its China business for 6 consecutive times until September 2018, when Peng Tao, the former CEO of Bread Travel, became the president of Airbnb China.
Peng Tao, the then president of China, once told a reporter from 21CBR that Airbnb China's product strategy, brand marketing plan, etc., are formulated and implemented by local teams with independent budgets. Bai Siqi will come every month. Once in China, meet and hold a meeting with the team. After Peng Tao became president of Airbnb China, Airbnb's local team in mainland China expanded rapidly and its business grew significantly.
According to the data released by Airbnb, in the second half of 2018, Airbnb's mainland business in China is expected to nearly triple; From January to 8, 2019, the average monthly active users of the Airbnb app ranked first among short-term rental platforms in mainland China. The number of new tenants once ranked second in the world, and it has 150,000 homes in China.
In June 2020, in order to continue to deepen the business in mainland China and improve the operational efficiency in China, Airbnb also established a new position of Chief Operating Officer in China. Reports directly to Nathan Blecharczyk, co-founder, chief strategy officer and chairman of China, Airbnb.
On December 10, 2020 Eastern Time, Airbnb went public amid the pandemic. Although it has been in a state of net losses for three consecutive years, Airbnb, which was listed on the first day of listing, still opened sharply higher at $146 per share, up 114.71% from the issue price . As of the close of the day, Airbnb’s market value reached US$86.305 billion, surpassing Marriott International Group, the world’s largest hotel group by market value, and Booking.com, the international travel company giant.
sudden departure
Clearly, Airbnb has also had a real opportunity to make a big difference. After all, its domestic Chinese sales tripled in early 2019 before the COVID-19 outbreak. The Airbnb app was ahead of its competitors in monthly active users. Remote work, local travel, and longer-term bookings are all on the rise, and these trends should continue after the current lockdown ends.
In China, however, Airbnb has failed to survive repeated outbreaks. The news released by Airbnb China pointed out: "The continuous recurrence of the COVID-19 epidemic has disrupted the original development pace of the tourism industry, and also weakened the synergy between our (mainland China) domestic travel business and outbound travel business. There are corresponding operational challenges such as high costs.”
On May 5, Airbnb disclosed its financial report for the first quarter of 2022. The data shows that with the gradual recovery of the global tourism industry, Airbnb exceeded the 100 million bookings mark in a single quarter for the first time, and the first quarter accommodation (room nights) ) and experience bookings reached 102 million (times), a year-on-year increase of 59% and an increase of 26% from the same period in 2019. However, the dazzling data performance does not include China.
Looking at data from various regions around the world, Airbnb's North American market's accommodation and experience bookings in the first quarter increased by nearly 55% compared to the same period in 2019; EMEA accommodation and experience bookings exceeded January 2019 for the first time since the beginning of the epidemic. Quarter-on-quarter, growth was about 20%; bookings in Latin America were up about 65% from the first quarter of 2019. For the Asia-Pacific region, Airbnb said "bookings for accommodation and experiences remain subdued."
Airbnb noted that the first quarter of 2022 did see a sequential recovery in Asia Pacific relative to the fourth quarter of 2021, excluding China. The Wall Street Journal, citing people familiar with the matter, pointed out that China (mainland) accommodation and experience bookings typically account for only about 1% of Airbnb’s overall revenue.
In fact, Airbnb's management has given up in its 2021 annual report, predicting that operating in China will continue to incur significant expenses and "may not be profitable in that market," citing employee morale and oversight. Changes in policy, challenges to its operations.
In the final analysis, Airbnb’s closure of its short-term rental business in China is just a business decision with limited real impact. After all, if the revenue is hit for a short time, it can be dealt with, but if the time is uncertain, then there will be continuous losses, and this loss-making business will be difficult to sustain no matter how sentimental it is.
Of course, this is mainly related to Airbnb's business positioning itself. Airbnb's business is very simple. It is a platform that provides accommodation information for international tourists visiting China and Chinese outbound tourists. However, since the beginning of the epidemic, it has entered the In the third year, the disruption to international travel was fundamental for Airbnb.
Under the influence of multiple factors, and the domestic tourism industry will still strictly implement the "circuit breaker" mechanism for cross-provincial tourism operations, plus this year, Airbnb's share price has fallen by 30%, and the first quarter is still a loss, superimposed on the financial impact of the epidemic. Stress may ultimately drive Airbnb's decision to leave.
The pattern of the homestay industry is undecided
While Airbnb is withdrawing from China, the Chinese homestay market is facing a new round of competition.
On the one hand, affected by the epidemic, the domestic homestay industry has experienced a sharp decline . The rise of domestic homestays started in 2012, and entered a blowout period from 2017 to 2019. According to data from the mobile big data monitoring platform Trustdata, in the past three years, the number of online homestays in China has increased from 592,000 to 1.341 million, and the online transaction volume of homestays has increased from 4.32 billion yuan. increased to 20.94 billion yuan. The arrival of the epidemic has caused the growth of domestic homestays to plummet, and the entire homestay industry has been hit hard.
Taking Lijiang, a tourist destination, as an example, starting from 2021, the low-cost transfer of Lijiang B&Bs will become more and more frequent. A number of Lijiang B&B operators revealed that, affected by the epidemic, the passenger flow in Lijiang Old Town has been at the lowest level in recent years, with few guests, and the rental and sales prices have reached a low point. Lijiang B&Bs are undergoing a major change.
Entering 2022, the situation of the tourism industry is still not improving. In the first quarter, although consumption picked up in January-February, with signs of gradual recovery, in March, the domestic epidemic appeared to be scattered and localized, especially in megacities such as Shanghai and Shenzhen, which restricted the flow of major consumer groups.
But even so, homestays are still a promising business. Meituan launched its own homestay short-term rental platform in 2017. Although most of Meituan's current sales still come from food delivery, the food delivery revenue is three times that of the homestay business. However, despite the downturn in the tourism industry, Meituan’s revenue growth in the homestay and tourism sector exceeded 50% last year, and the operating profit margin of the homestay business has exceeded 43%, which is much higher than the 6% of food delivery. Predictably, Meituan will devote more resources to this lucrative business — one that could well benefit from the surge in demand after lockdown measures are eased.
On the other hand, the withdrawal of Airbnb will also bring new changes to the homestay market. In fact, in the domestic market, Airbnb has been invisibly attacked by the “Big Four” of Tujia, Muniao, Xiaozhu, and Meituan. As of June 2021, the number of homestays in Xiaozhu and Meituan is about 800,000. At the end of the same year, the number of homestays in Tujia and Muniao reached 2.3 million and 1.35 million respectively. In contrast, Audemars Piguet There are only about 150,000 housing units in Ying China.
And just when Airbnb announced that it would close its business in mainland China, members of the first-tier echelon of domestic homestay platforms such as Tujia, Meituan, Xiaozhu, etc., began to "snatch" housing listings. For example, Fliggy B&B and Xiaozhu B&B announced the launch of a series of measures such as the exclusive green service channel for landlords, the simultaneous release of housing listings, and the support plan for new landlords to settle in; Tujia announced the opening of a "green audit channel" and will soon launch "one-click online" and many other services; Meituan B&B stated that it will help landlords in five aspects, including the establishment of an exclusive landlord service team, a new landlord assistance plan, product design upgrades, incentive policy optimization, and landlord community online.
However, at present, although some giant players have entered the game, the current pattern of China's homestay industry has not been solidified and is still in the process of construction. At the same time, the development of the homestay industry will also face a series of impacts brought by tent camping and RV camping . Obviously, Chinese homestays after Airbnb's departure may face more uncertain factors - Airbnb's departure will release more supply chain resources and bring greater market opportunities to local brands. However, there are also unforeseen challenges. For example, with the influx of users, the refinement of platform operations needs to be further improved, and the homestay market cake will usher in a new round of distribution. Now, it's just the eve of the market reshuffle.