Airbnb leaves China. Rival applications are very popular.

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Americans may have trouble understanding the maze of competition in China that is facing companies as a home-sharing app

Airbnb
,

which said it would close its domestic business in the country.

But the landscape he has faced in China has presented similar challenges that have pushed other foreign brands into various sectors and made survival difficult even for local players. Airbnb’s internal business is expensive and complicated to operate, said someone familiar with the solution of Barron on May 24. Heavy blockades of Covid-19 in China have exacerbated the problems, the man added.

According to interviews of Barron conducted with users and hosts of Airbnb and its competitors in China, the main reasons come down to a few simple factors: lower prices can be found elsewhere and there are many competing apps that consumers are familiar with due to other services provided by these apps. .

Mega application

Maytown

(3690.Hong Kong) offers an excellent example of how users can become tied to a single platform, as it has multiple on-demand services. For

Maytown
‘s

700 million active consumers, its main activity being food delivery, where it is a leader in the sector, but also competes heavily in bicycle sharing, car rental, ticket sales for movies, planes and trains – and of course accommodation.

It is difficult to assess the housing market in China. Most studies ask for accommodation in general, which may include hostels, hotels and private rooms.

“Which of these online providers have you booked accommodation – hotel or private accommodation – in the last 12 months (website or app)?” A recent Statista Global Consumer survey asked.

Airbnb was fifth, with 19% of respondents in China saying they had used the app in the past year.

Trip.com Group

(TCOM) and Meituan were 75% and 50% respectively. Other players include

Booking.com

(BKNG) and the Chinese platforms Tujia, Xiaozhu and Feizhu, known in English as Fliggy and owned by

Alibaba Group Holding

(GRANDMA).

“Accommodation in China is highly fragmented, with the top five players representing a quarter of the accommodation industry in 2021,” Euromonitor International recently wrote.

China is full of specialized short-term rental facilities, serving as a kind of mini-hotel offering public and private rooms. Unlike Airbnb, which is rented only through the app, and many of these are buildings visible from the street with signs advertising their units.

of Barron spoke to a couple coming out of one such facility in the Chengdu metropolis, who said they had checked out Maytoon for their week-long stay, but chose this particular accommodation on the recommendation of a friend.

“It’s cheap and right in the city center,” the man said.

In this reporter’s apartment complex in Beijing, phone numbers are written on the walls of the elevator under the words “Accommodation at home.” When of Barron call one of the rooms, a person who owns a home in the same complex, offered to rent it for a day, week or month, fully furnished and at a price competitive with nearby units found through applications.

The decline of Airbnb also stems from the failures that have overtaken many American companies eager to jump into China’s vast market – knowing the country.

“Local rivals Tujia and Xiaozhu managed to get many more ads in many more places in China than Airbnb, illustrating the importance of having a strong ground presence that can connect with Chinese in remote places, which cumulatively represents a much larger share of the population than higher-end cities, ”said Mark Tanner, managing director of marketing research firm China Skinny.

“Local players have also recognized the unique traits and engines of Chinese consumers that may not be associated with travelers elsewhere,” he said. of Barron. An example of this is Xiaozhu’s intelligent face recognition locks for guests, which touch the embrace of Chinese consumers’ face recognition, he said.

In the 2020 SEC documentation, the company said: “We will continue to incur significant costs to operate our business in China, and we may never achieve profitability or significant supply penetration in this market.

China is not mentioned at all in a recent submission. In a cover letter to shareholders, he mentioned the country only once, saying he sees a recovery in the Asia-Pacific market, with the exception of China. Airbnb opened its business in mainland China in 2016 and the business accounts for about 1% of the company’s total revenue for the past few years, Barron’s said earlier.

In a profit call on May 3, the only mention of China came from Chairman and CEO Brian Cesky, who said: “China is mostly an outbound business. People go to China, but mostly travel and leave China and go to other communities. “

Airbnb said it would still allow Chinese people going abroad to use their app to book accommodation.