Airbnb wants to find a home in China
Airbnb’s listings in China have surged this year, increasing 133 percent year over year.
At the start of August, Airbnb announced an essay contest: Four winners would fly to China to stay in a watchtower on the Great Wall. They’d be treated to a gourmet dinner at sunset, a traditional Chinese music experience, and a sunrise historical hike through the countryside. Six days later, the company called the contest off abruptly.
This latest debacle illustrates the challenges Airbnb faces as it attempts to grow its business in China.
China is littered with the virtual carcasses of startups that attempted to do business in the country and then gave up or were shut out. These companies often discover the Chinese market is hard to understand. A few entrenched technology players dominate nearly every business. The government tends to create a regulatory environment that favors domestic companies. And the rules change arbitrarily with little warning.
The revenue from Airbnb’s China division is expected to climb by more than half, to roughly USD 130 million this year, which is as much as 4 to 5% of the company’s overall revenue, according to The Information. Co-founder Nathan Blecharczyk, who is chairman of the company’s China business, has said Chinese tourism will be Airbnb Inc.’s largest source of business by 2020.
In an already crowded travel market, Airbnb has attempted to define its niche as “quality” listings. In a blog post, Blecharczyk wrote that the company would improve its customer service in China, hire staffers to communicate with customers on a variety of services, including WeChat and Weibo, and open offices in more Chinese cities. Earlier this year, the company launched a “Host Academy,” which offers workshops, live chats on WeChat, and educational videos for hosts.
But figuring out how to build the Airbnb brand in China will be hard. For one, it’s harder to figure out how to reach new customers on the web in china, according to Maggie Rauch, senior research director at the travel research firm Phocuswright. Unlike in the United States, where search is ubiquitous and travel companies can buy search ads, most people are surfing the web from inside mobile apps like WeChat. “Without search being this great way in as a travel provider, you have to become who travelers think of.”
In addition to trouncing its competitors, Airbnb will need to stay in the good graces of the Chinese government.
Despite all of this, Airbnb’s listings in China have surged this year. The number of active listings is up 133% year over year, according to AirDNA, a service that analyzes Airbnb data. As the company looks for new growth opportunities in the run-up to an initial public offering, which could come as early as mid-2019, the data suggests that Airbnb’s China business is worth the fight—for now.
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