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Text / Lu Yi
Source: Yuanchuan Research Institute (ID:caijingyanjiu)
At the end of 2016, Peng Yuyan, as an Airbnb host, invited several guests to his home in Shanghai. Since then, Airbnb has made a big appearance in China for the first time. This global homestay giant, which started with three mattresses, pinned people’s imagination on the backpackers in “Lonely Planet”: traveling around the world with a backpack and living in the local area at a low price Resident’s home, experience the most authentic customs.
However, in the real world, the wine and tourism industry, which is closely related to travel, is full of grief: since 2020, the cumulative loss of domestic civil aviation has reached 165 billion yuan, the average hotel debt ratio has reached 75%, and more than 10,000 travel agencies have gone out of business [2]. Airbnb, which has been in China for eight years, announced that it will officially shut down its local business in China, which seems reasonable.
In the past few years, China, which accounts for 17% of the world’s population, has actually been very tasteless in Airbnb’s global map – the Chinese market only accounts for 1% of its revenue, and even before the epidemic, it was only 5%[3].
In March 2017, Brian Chesky, co-founder of Airbnb, came to China specially to announce the Chinese name of Airbnb, which has been complained about for many years, “Airbnb”. At that time, he was very ambitious, convinced that the Chinese market could grow into one of the largest markets in the world for Airbnb, and even planned to learn Chinese [4].
Why can Airbnb conquer overseas, but not the heart of China?
01
Competition: Unwinnable Involution
Time magazine once compared Airbnb to the “eBay of housing”. Among Airbnb’s 5.6 million active listings worldwide, there are 90,000 cabins, 40,000 farms, 5,600 boats, 3,500 castles, 2,600 tree houses, 1,600 private islands, 300 lighthouses and 140 igloos[5].
At the same time, Airbnb’s pricing is actually very low compared to hotels. According to Statista’s 2018 statistics, in large cities in Europe, North America and Japan, the average room rate of Airbnb is lower than that of hotels. For example, Tokyo and New York save an average of $127 and $119 per night.
Overseas, it competes with traditional online hotel booking (OTA) platforms Booking and EXpedia. Airbnb takes the non-standard homestay route. Compared with OTA’s 17% commission for hotels, Airbnb only charges 3%-5% for landlords, and the price is more friendly [15].
But in China, this market is not only OTA platforms and hotel chains, but also established homestays and rookie brands. In 2017, online homestays raised a total of 3.69 billion yuan, more than the sum of the previous three years. Both Tujia and Xiaozhu are valued at over US$1 billion[16].
Under the attack of domestic competitors, Airbnb’s expansion in China has repeatedly suffered setbacks. There are about 500,000 housing listings in China, less than 1/10 of the world’s. As of the end of 2021, the number of housing listings for Tujia, Wooden Bird and Meituan Homestay was 2.3 million, 1.35 million and 800,000 respectively.
Under such a huge gap, Airbnb’s “Buddhist” strategy has failed in China. On the contrary, he has contributed a lot of creative cases that are enough to be loaded into advertising textbooks: such as living in Peng Yuyan’s house, living with sharks, sleeping on the Great Wall…
The strategies of Chinese rivals are more old-fashioned, but very effective: bargaining red envelopes, group discounts, direct sales by landlords, investment and mergers and acquisitions. In October 2016, Tujia generously integrated the short-term rental businesses of Ant Short-Term Rental, Ctrip and Qunar. Due to the expansion of housing listings, Tujia’s transaction volume increased by 160% year-on-year in 2017 [6] .
At the same time, most of the top homestays in China rely on super apps. After Tujia cooperated with Ctrip, the increase in occupancy was more than 5 times [6]; 60-70% of the traffic of Meituan B&B came from Meituan Dianping [14]. However, Airbnb only relies on the word-of-mouth “Buddha” accumulated by outbound travel to acquire customers. It was not until 2018 that it launched a WeChat mini-program, and launched new methods such as group grouping and bargaining red envelopes.
More importantly, Airbnb is not considered a “replacement” for hotels in China, and there is no price advantage. One of the reasons for its withdrawal is that it is difficult to compete with the lower fees and room charges of super apps [9].
The main price band of Airbnb is between 200-500 yuan, and the main price of Meituan B&B is below 200 yuan [7]. In addition, there are budget hotels, such as the Huazhu Group behind Hanting, with an average nightly price of only 224 yuan[8].
In this competitive environment, Airbnb’s own business strategy is full of mistakes.
02
Localization: Difficult to adapt to the Chinese climate
Searching for Airbnb on social media, you can see a variety of complaints about the user experience: PayPal and international wire transfer are the only options for clearing the room fee;
This is the true picture of Airbnb’s poor localization.
Airbnb’s strategy of Chineseization has been in flux. On the one hand, the US headquarters requires its Chinese helmsman to have both business experience and understanding of the needs of Chinese users, and to be highly unified with the will of the headquarters [10]. Under such high expectations, the headquarters has always been reluctant to delegate power, and Chinese CEOs who are caught in the cracks are often difficult to exert.
For example, Ge Hong, the first CEO with a Chinese background, was not satisfied with the Chinese name set by the headquarters. He once launched a travel column called “Story”, but he left the company in just 4 months, leaving a sentence: “Airbnb China needs Chinese people to do it, not American remote control [11].”
At this time, Airbnb’s strategy in China is only to optimize the online experience. Just a week after the official announcement of the Chinese name of the former, Tujia cooperated with OTA platforms such as Ctrip and Qunar, so that the listings can be launched on 8 platforms simultaneously. Increase customer acquisition channels.
During the 8-month period when the CEO position in China was vacant, the San Francisco headquarters airborne co-founder Nathan Blecharczyk (Chinese name Bai Siqi) to sit in the office. He takes an international flight to and from China once a month. After repeated investigations, the headquarters finally let Airbnb set up a local customer service center, including Weibo and WeChat channels.
This is the beginning of Airbnb’s offline tentacles, and its peers have already penetrated into offline services – like Xiaozhu, which has a team of professional cleaning and listing photographers to help landlords optimize service quality.
When Airbnb executives come to China, they will be surprised that Chinese people do not carry wallets and can spend only by scanning QR codes. Although Bo Siqi is in charge of the business in China, due to the language barrier, he did not join any WeChat group of domestic landlords; even for inspection, the smallest city he has visited is a well-known scenic spot such as Mount Huangshan[12].
Even because he was too lazy to apply for a bank card, Bai Siqi didn’t even open WeChat payment, and always used cash to spend. It is no wonder that Airbnb has been in China for a long time before opening WeChat and Alipay settlement.
In September 2018, Airbnb finally welcomed Peng Tao, its second CEO who is well versed in the Chinese market. He once founded the tourism community “Bread Travel” and the homestay hosting platform “Chengsu”. The continuous entrepreneurial experience has made him realize that the domestic market must be regarded as an “independent operating system”.
Driven by Peng Tao, China has become the only market in Airbnb with independent operations and product teams. He also launched a listing search that is unique to China, based on specific information and time. Especially in terms of commissions, compared to the 15% overseas commission (the renter’s commission is 2-3 times that of the landlord), Airbnb considerately reduces the commission to 10% according to domestic consumption habits, all of which are borne by the landlord.
He led Airbnb’s localization on the right track. But Peng Tao left after three years, and the baton in the Chinese market changed hands again. Seven years in China, Airbnb China has changed at least four persons in charge, and has had two long-term vacancies. Frequent coaching changes make it difficult to consistently implement its strategy in China. As a result, Airbnb has always been lagging behind in the competition with its domestic peers.
When Airbnb was finally able to play games under Chinese rules, the question of the sharing economy model emerged.
03
Compliance: The Paradox of the Sharing Economy
In recent years, there has been a global rush to regulate Airbnb.
In June 2018, Japan required homestays to be strictly registered and open for a maximum of 180 days a year. As a result, Airbnb’s Japanese listings dropped by nearly 80%. France is even more strict, with a maximum of 120 days for B&Bs to operate. In February 2019, the Paris government even sued Airbnb for “illegal listing” and issued a fine of 12.5 million euros[13].
In China, Beijing banned short-term rentals in the core functional areas of the capital in 2020, and homestay practitioners in Beijing stayed up all night. Since then, Beijing has also required landlords to register “six certificates”. After several rounds of compliance and rectification, many landlords chose to go out of business or switch to long-term leases.
The spearheads of various countries’ supervision basically point to one point: Airbnb’s expansion has brought disorder and chaos to the short-term rental market. People have found pinhole cameras in Airbnb, and other listings have been destroyed by unscrupulous tenants. Europe, where the boycott was the most fierce, even claimed that the short-term rental income advertised by Airbnb had raised local rents and affected market competition.
European residents boycott AirbnbThere are two main ways to do homestays: C2C and B2C. The former only acts as a matching intermediary, such as Airbnb and Xiaozhu. The latter started with heavy assets and signed self-operated housing from real estate developers, which is equivalent to the second landlord, and the typical representative is Tujia.
When Airbnb was first established, it was committed to the rational allocation of idle properties, and the advantages of light assets were obvious: supply and demand were flexible, and it could be adjusted during off-peak and peak seasons. It could expand rapidly, and the platform did not need to bear its own costs. However, when an enterprise gradually forms scale advantages and competitiveness in the industrial chain, it cannot stay out of the way as an intermediary.
In the face of endless safety problems, and also to cultivate the stability of support, homestays on shared platforms are becoming more and more professional, just like car-hailing drivers. The platform model is getting heavier and heavier.
In the past 18 years, Xiaozhu Short-term Rental has launched the “Rent-Leasing Commune” to provide supporting services for landlords. From house design and soft decoration, cleaning and photography to smart door locks. Airbnb launches Airbnb Plus listings exclusively in China, which is equivalent to a luxury version of homestays. The platform will inspect the quality of the house with more than 100 details, and also improve the standard service ability of the landlord through the training of the “Landlord Academy”.
In 2019, Airbnb invested in the Indian hotel chain OYO, hoping to enter the wine travel market. It even considered offering OYO’s accommodation on the platform. Airbnb also bought Hotel Tonight, a US-based hotel booking startup, for $400 million. This marks that it is expanding from non-standard featured homestays to more standardized hotel accommodations.
As Airbnb becomes more and more like a traditional platform, it will face tougher competition. When users choose Airbnb again, they will feel that the service is becoming more and more standard and comfortable, or the experience of homestay is more and more like a hotel.
04
end
Airbnb’s exit did not mean giving up the Chinese market, but just returning to its comfort zone—making money for Chinese outbound travel.
When the old and fresh people who once refreshed the “Backpacking Around China” poor travel post on Douban lamented the shattering of their dream of homestays, most of the listings on Airbnb have long been occupied by the second landlords with flexible employment, using far more than chain hotels. At the price of , it sells a simple room with vsco filter bonus.
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