Airbnb set to raise investment in China to cater to domestic travelers

"China is now the fastest-growing domestic market for Airbnb and the second-fastest growing outbound travel market after the US," Airbnb said in an exclusive interview.
Courtesy of Airbnb China

Nathan Blecharczyk, chief technology officer of Airbnb and chairman of its China business

San Francisco-based Airbnb is celebrating its 10th anniversary as a global pioneer in the home-sharing concept. Its first decade has seen rapid growth, redefining the hospitality industry by allowing locals to open their homes to visitors via online accommodation listings.

China is a star in the company’s portfolio.

“China is now the fastest-growing domestic market for Airbnb and the second-fastest growing outbound travel market after the US,” Nathan Blecharczyk, chief technology officer of Airbnb and chairman of its China business, told Shanghai Daily in an exclusive interview.

In 2017, Airbnb’s domestic listings in China nearly doubled. There have been more than 3.3 million guest arrivals in Airbnb listings in China by domestic travelers in the past year.

Guest arrivals by Chinese travelers on Airbnb over the past decade have exceeded 10 million, with half occurring within the past year, said Blecharczyk.

Building on that momentum, Airbnb plans to increase its investment in products and services available to domestic travelers.

At a media conference called to mark the 10th anniversary, Blecharczyk unveiled the Airbnb Plus. This is a new category of listings intended for guests who are looking for “beautiful homes, exceptional hosts and added peace of mind.”

“We created the new category to broaden our appeal and to recognize hosts who go above and beyond in providing outstanding hospitality,” said Blecharczyk.

Shanghai is one of the first 13 cities worldwide to launch Airbnb Plus. The service will later be expanded to other cities in China, including Beijing and Chengdu.

Airbnb’s announcement of expanded investment in China comes amid growing competition in the short-term lodging market. Airbnb has to fight for homes and market share against Chinese rivals like Tujia and Xiaozhu.

Despite the fast growth, Airbnb’s number of home offerings in China, estimated at 150,000, is still dwarfed by domestic players.

Xiaozhu said it had 250,000 homes across 384 domestic cities as of last year. New listings average over 1,000 per day, according to a company statement.

Tujia has been even more aggressive. Mergers and acquisitions in the past two years have consolidated its status as the market leader in China.

In January, Tujia’s acquisition of Fishtrip, a Beijing-based online travel agency, gave it an additional 300,000 homes — mostly in Taiwan and other Asian locations. That brought its portfolio of home-shares to over 1 million.

In an earlier interview, Tujia’s Chief Operating Officer Yang Changle said competition with Airbnb is inevitable in overseas markets, but he didn’t rule out possible cooperation in areas such as exchanging information about active listings.

Meanwhile, conglomerates like Ctrip and Meituan have also entered the market, hoping to get a piece of what is viewed as a lucrative business.

Blecharczyk appears unfazed about the competition, saying there is room in the market for multiple players.

“Our respective successes do not seem to come at the cost of the others,” he observed.

Airbnb is perhaps one of the few foreign Internet-related companies to succeed in a marketplace replete with big name failures like Uber and even Google. Blecharczyk attributed the success to advantages the company possesses.

It is the only company with an outbound travel network of 4.5 million homes in 191 countries, allowing it to service the 8 million Chinese tourists going abroad, said Blecharczyk. Outbound travelers who have had positive experiences using Airbnb overseas sometimes decide to become Airbnb hosts when they return home.

For instance, Tony, an Airbnb host in Beijing who has received more than 400 guests in three years said he chose to become an Airbnb host because of the interesting hosts he met using Airbnb on his travels.

“There’s been cross-pollination from the outbound business to the domestic business,” said Blecharczyk.

He said one of Airbnb’s strengths is its “experiences” services, designed to connect travelers to local people, neighborhoods and culture. The company in China is focused on reputation and quality.

For example, to ensure its homes are of premium quality, the company has launched a number of “China-only” initiatives, including the review of every online listing and coaching lessons for hosts on how to be more successful on its platform.

The latter led to the recent creation of an “Airbnb Host Academy,” which helps hosts learn the basics of quality hospitality.

To date, the company has held an unspecified number of offline sessions in Beijing, Shanghai, Chengdu and Guangzhou.

When Blecharczyk co-founded Airbnb with Brian Chesky and Joe Gebbia in 2008, their startup company was laughed off as a “crazy idea.”

“People might still say ‘it’s not for me,’ although they approve of Airbnb’s model,” said Blecharczyk.

A Harvard student entrepreneur before he co-founded Airbnb, Blecharczyk said Airbnb’s core values are built on “earning trust.”

The company has instituted measures to adhere to that principle, including eliciting reviews from travelers and hosts. He said they help allay hosts’ concerns about ill-bred guests.

Concerns about sharing a home with strangers were fanned by media reports about the untoward behavior of some Chinese travelers.

Airbnb offers “host guarantee,” an insurance-like policy that comes free with each reservation. It covers any property damage caused during a stay.

“Local players might outspend us, but we are confident of building our reputation and earning the trust of customers through word of mouth and patience,” Blecharczyk said.

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