Airbnb is discontinuing its local business in China and the company plans to inform staff as early as Tuesday morning Beijing time, two persons familiar with the subject revealed.
By this summer, all mainland Chinese listings, including residences and experiences, will be removed.
Airbnb established its mainland China operations formally in 2016. Since then, about 25 million guests have booked accommodations through the website.
The company faces intensifying rivalry from domestic competitors. Sources said the segment was already expensive and difficult to operate. The COVID-19 pandemic exacerbated these problems and amplified their impact.
In spite of in-country branding and putting Airbnb cofounder Nathan Blecharczyk in charge of operations, revenue from stays in China on the platform has accounted for less than 1 percent over the past few years.
Sources added that Chinese outbound travel represents a greater opportunity for Airbnb, and the business will refocus its efforts on providing listings for Chinese passengers who are traveling abroad.
One insider disclosed the overlap between Airbnb's international and domestic companies was minimal. It added that Airbnb will maintain an office in Beijing with hundreds of staff.
The company's shares have declined more than 30 percent this year in the face of a broader selloff in tech markets, but it is still trading considerably above its initial public offering price of $68 in 2020.
Airbnb suffered in the early days of the COVID-19 pandemic, laying off around a quarter of its workforce in May 2020, before going public in November 2020.
The World Tourism Organization of the United Nations said the number of Chinese tourists traveling overseas tripled in less than a decade, reaching 155 million trips in 2019.
In its IPO prospectus, Airbnb noted that to avoid COVID-19 transmission in China, it employed a five-step cleaning method that differed from the standard five-step cleaning approach used in the rest of the world.
The company has witnessed an increase in long-term rentals this year as a result of the flexible work arrangements that many employers implemented during the global health crisis, which has led to a resurgence in tourism.
However, the Chinese economy has recovered considerably more slowly, since the nation has periodically shut down to combat new waves of sickness.
In 2017, in an effort to expand, the company renamed its Chinese operation Aibiying, which means to welcome each other with love and is easier for Mandarin people to say.
