According to an announcement made on social media on Tuesday, Airbnb Inc (NASDAQ: ABNB) is shuttering its domestic business in China and will cease listing homes as soon as this summer.
Inside sources told CNBC on Monday that the company was preparing to announce the decision, noting that Airbnb faced stiff competition from Chinese companies. From what sources told the network, it seems that the company was facing far too much in costs to maintain its operations than it was making from domestic bookings. While the company has benefitted from a recovery in demand for travel elsewhere, Airbnb did not see nearly as much improvement in China.
The company intends to maintain its Chinese operations for outbound bookings, noting that it received more business from Chinese consumers seeking travel abroad than those booking domestically. The company also faced pressures from Beijing's overbearing oversight and the considerable amount of data that Chinese regulators demanded access to, stating in an annual report that government policies could "adversely affect our brand."
However, even focusing on outbound bookings doesn't seem likely to reinvigorate Airbnb's presence in China too much. A significant reason for Airbnb's woes is China's Zero COVID policy, which has impacted everything from tourism to domestic production and affected both Chinese and foreign companies. Outbound traffic is difficult for Chinese citizens, who can experience any number of delays or obstacles leaving or re-entering the country under Zero COVID.
While the results of Airbnb's attempt to penetrate the Chinese market might be disappointing, the company has plenty going for it in the coming months that should offset any noticeable slump from its partial divestment from China. The company noted earlier this year that rebounding travel demand looked to help it recover considerably from lockdowns in the past two years.
Airbnb seemed to be benefitting from some decent momentum during trading on Wednesday, gaining 5.1% by 3 p.m. and recovering somewhat from a 6.5% slide on Tuesday.