Airbnb Inc. Shutting down its activities in China, instead choosing to focus on outbound Chinese tourism as the country continues its aggressive approach to contain the Covid-19.
The San Francisco-based company will stop offering rental homes and experiences in the country this summer, according to a person familiar with the matter. However, it will still maintain a presence in China with an office in Beijing, as the company hopes that easing restrictions will improve outbound tourism. Airbnb began its operations in China in 2016 and the epidemic added to the difficulties and complications of operating within the country, the individual said.
With rentals in China accounting for only 1% of Airbnb’s revenue, the company sees a huge opportunity for outbound tourism from China – especially in the Asia-Pacific region.
An empty road in Beijing due to the Covid-19 lockdown, 23 May.
“China is primarily an outsourced business,” Airbnb chief executive Brian Chesky told the company’s first-quarter earnings call earlier this month. “People go to China but initially they travel to China and they go to other communities, especially around Asia.”
At an event in New York in early May, Chesky said he hoped the Asia region would recover in 2023.
China has taken a zero-cue approach to contain the virus, with the government keeping entire cities locked down for weeks at a time. In recent days, a number of economists have lowered their forecasts for China’s economic growth as government restrictions continue, stifling growth. Last week’s data showed that China’s industrial production and consumer spending fell to its worst level since the epidemic began in April, when the unemployment rate rose to 6.1% and youth unemployment hit a record high.
The zero-tolerance approach has provoked criticism from business, heightened public frustration, and kept Beijing’s ambitious full-year growth target out of reach of about 5.5%.
In the early days of the epidemic in early 2020, Airbnb suspended check-ins on its lists in Beijing to comply with local regulations. In a regulatory filing in February, the company said it would continue to incur “significant costs” to operate in China and would not be able to make a profit in the country.
“These factors, coupled with the perception of China’s workforce and its policy towards foreign direct investment, could affect our operations, particularly in China,” the report said. Airbnb noted that it had encountered other difficulties in doing business in China, including forcing government agencies to respond to requests to share information about its platform users. The agency added that “the long-term deterioration of US-China bilateral relations or the increase in geopolitical risks in China could adversely affect its business.”
Earlier, CNBC reported.
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