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Reuters/Lucas Jackson
Do as the tourists do.

AirBnB’s China strategy is to get more people to leave China

Josh Horwitz
By Josh Horwitz

Asia Correspondent

Serving Chinese citizens outside of China has become an industry in and of itself. Case in point—AirBnB, the accommodation rental startup, is preparing to set up shop in the Middle Kingdom.

According to a company blog post, the company will be targeting Chinese tourists looking for accommodations  abroad. In order to prepare for a domestic launch, the company has become “strategic partners” with China Broadband Capital and Sequoia Capital China, and is looking for a CEO to head up a domestic branch. Sequoia’s founding partner, Neil Shen, co-founded CTrip, one of China’s leading travel booking websites. It is not clear whether those partnerships consist of financial investments in AirBnB’s China operations.

Targeting outbound tourism is an obvious move for the AirBnB.

For one thing, China is already home to several well-funded AirBnB-esque companies that serve the domestic market. Tujia, for example, has been in business since 2011, and recently raised $300 million from some of the country’s top VC firms. Unlike AirBnB, the company has taken a decidedly “hands on” approach when it comes to managing its listed rental properties in China. It has staff that personally verifies each rental space, and also provides cleaning services and 24/7 call support.

Moreover, China’s outbound travel market is booming. China’s outbound tourism has increased ten-fold since 2000 to 109 million travelers last years, who spent $164 billion overseas. By 2019 that figure is expected to increase to $264 billion, according to Bank of America Merrill Lynch.

AirBnB is already benefiting from this surge, even without any on the ground operations in China. Users already can opt to use AirBnb’s website in simplified Chinese, and pay for bookings using local payment methods like UnionPay and Alipay.

On its blog, the company says that annual growth in bookings from outbound Chinese increased 700%, its fastest-growing segment, but did not disclose how many bookings that is.

Tujia said that it is currently setting up offices abroad in hopes of catering to its customers outside of China. The company currently has 300,000 properties within China, and 15,000 in other countries. AirBnB, though, claims to have 1.5 million listings worldwide.

 

Fritz Demopolous, former CEO of Chinese travel site Qunar (which also offers property bookings along the lines of Tujia), says that AirBnB has a strong advantage when it comes to outbound Chinese tourism, thanks to its vast supply of properties round the world. But he says that travel within China remains the largest part of the overall Chinese travel market. AirBnB might have to adapt its model if it hopes to crack it.

“Domestic Chinese travel is probably 80 to 90 percent of the overall travel market,” he tells Quartz. “There are already all sorts of smaller players and the large travel providers all have activities within this area. Not only must they aggregate supply but they have to market to Chinese demand, which requires all sorts of new competencies.”

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