Continuing on his global tour of six cities, including Beijing and Shanghai, Airbnb co-founder and CEO Brian Chesky today announced a set of plans for conquering one of the world’s largest travel markets: China.
Airbnb’s game plan for growing its business in China involves rebranding from Airbnb China to a new Chinese name, “Aibiying” (爱彼迎), which translates to “welcome each other with love” and the debut of the company’s newest product, Airbnb Trips, in Shanghai, which features peer-to-peer led tours and activities.
Additionally, Airbnb is investing in its talent and infrastructure in China, saying it will triple the size of its local workforce and double its investment in the market. China will be the only destination outside of the U.S. with its own dedicated engineering center. Airbnb has also focused on building relationships with Chinese industry and government officials, integrating local payment methods like Alipay, offering sign-up options using WeChat, and providing 24/7 customer support in Mandarin. There were also rumors that Airbnb was planning to acquire another local homesharing platform, Xiaozhu.
Airbnb stated it will “rethink the core booking experience to go even further in meeting the needs of Chinese users” by “providing them with more information to help pick the right neighborhoods to stay in,” most likely similar to how it already does in the U.S.
In a press statement, Chesky said, “There’s a whole new generation of Chinese travelers who want to see the world in a different way. We hope that Aibiying and our Trips product strike a chord with them and inspire them to want to travel in a way that opens doors to new people, communities and neighborhoods across the world. I’m really excited about our future here.”
According to IResearch, China’s online vacation rental market could reach an estimated $1.5 billion in transactions this year. But China’s homesharing market as it is now is dominated by one major player in particular: the powerful Ctrip- and Expedia-backed Tujia.
Tujia, by contrast, has a much smaller market cap than Airbnb ($1 billion compared to $31 billion) but it does have a home-field advantage, and a lot more listings in China than Airbnb currently does — it offers more than 430,000 listings. Currently, Airbnb has 80,000 listings in China and has seen a total of 1.6 million guest arrivals to those properties, but it did not specify whether those arrivals were from international travelers to China, or domestic guests. To date, Chinese travelers have accounted for more than 5.3 million guest arrivals at Airbnb listings worldwide, and Airbnb said outbound travel from China grew 142 percent in 2016.
“I think Airbnb is clearly coming into this market pretty late and they are coming in with a fairly big competitive disadvantage, which is Tujia,” said Travis Katz, founder and CEO of U.S.-headquartered Trip.com. “They have more than 400,000 properties and Airbnb has 80,000 there. Tujia has the backing of Ctrip, which is a near monopoly in China in the travel space. The big challenge that Airbnb is going to have is, one, if they have radically less supply than the biggest player and radically less brand recognition, how are they going to compete?”
A big reason why China is a challenging market for Western companies, regardless of industry, to break into, can often be traced back to the fact that the Chinese government tends to favor Chinese companies. But another, perhaps even more difficult challenge for Airbnb in China relates to its grasp of understanding the Chinese traveler.
Growing its business in China will also require Airbnb to think closely about how it approaches different types of travelers, whether they are domestic Chinese travelers staying in China, or those heading abroad, or non-Chinese international travelers coming to China.
And that’s a major point of difference between Tujia and Airbnb, Yang noted. “Tujia actually focuses on the China market, meaning we are focusing on Chinese travelers whether they travel domestically or overseas so Airbnb actually is a broader focus. Our focus is different and as you know, China is becoming the largest consumer market right now,” she said.
But if there’s a silver lining for Airbnb, Katz said, it’s in bringing more international travelers to China. “Where they have the advantage is with international travelers coming to China who are already familiar with Airbnb. That’s a pretty significant opportunity. Those travelers will trust Airbnb more than they trust a Chinese company.”
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