Airbnb is shutting down its business in mainland China this summer due to mounting costs and domestic competition, reported CNBC. The online vacation rental platform first launched operations in China in 2016, spurred by enthusiasm from Chinese tourists who frequently use it while traveling abroad. But according to sources who spoke to CNBC, Airbnb’s China segment became too complex and expensive to operate, particularly in light of the pandemic. Similar to what happened with Uber in China, a bevy of local competitors made it tough for the American company to gain an edge. Stays in China only accounted for one percent of the platform’s revenue for the past few years.
While a growing number of cities have banned or passed restrictive laws on short-term rentals, Airbnb’s fallout in China was due to entrenched competition and regulatory issues. Airbnb China operated differently than other Airbnb operations in other countries due to constraints by the Chinese government. The company was forced to sign agreements with local city governments and store its data on government servers.
Another more recent obstacle for Airbnb was an inconsistent flow of international and domestic visitors due to the pandemic, given China’s significant restrictions on travel. While global tourism is on the mend, the number of international tourist arrivals still hasn’t returned to pre-pandemic levels according to figures by the UN World Tourism Organization. The Chinese government has also limited “unnecessary travel” for its citizens in light of a recent surge in COVID-19 numbers, scaling back the number of potential domestic users for Airbnb.