As 2017 draws to a close, the U.S. short-term rental platform Airbnb (known as "Airbnb" in Chinese) has released its Q3 financial report.The report shows that the company has remained profitable for at least 17 consecutive months, with revenue of approximately $1 billion in the July–September quarter—double the $500 million from the same period last year. Airbnb is expected to launch its initial public offering (IPO) next year.
Reports indicate that order volumes in Asia and Latin America are growing rapidly. However, this performance does not seem to have impressed all analysts, given that booking frequency on the Airbnb platform has declined in the U.S., U.K., France, and Germany.
While the outlook in the European and American markets is not particularly optimistic, China is seen as Airbnb’s next major target market. In recent years, Airbnb has repeatedly expressed its determination to expand in China.
Since its founding in 2008, more than 8.6 million Chinese travelers have used Airbnb. Over the past year, over 2.25 million guests stayed in Airbnb listings in China, marking a 287% increase compared to the same period last year. In 2016, Airbnb contributed approximately 2.1 billion yuan in economic activity in China. Airbnb stated that it will continue to deepen its presence in the Chinese market, support China’s economic development, and provide better services and products for Chinese users.
In fact, with the rise of consumer spending, China’s homestay market is booming. China is a market that no international company can afford to ignore. In 2016, the entire short-term rental market was valued at 8.78 billion yuan, with an estimated 12.52 billion yuan in 2017, and this figure is projected to reach 17 billion yuan by 2018. Despite the large market size, “cultural misalignment” is still considered a major bottleneck for Airbnb’s growth in China. Airbnb has continuously adjusted its strategy in China, frequently changing interim leaders, and its most recent leadership change in China has led the industry to question its progress in localization.
On October 24 of this year, it was confirmed that former Airbnb China head Ge Hong had stepped down. Before Ge Hong’s appointment, Airbnb had been hesitant about selecting a leader for the China region, stating officially that “the Chinese market requires a candidate who understands the needs of Chinese users, is well-versed in IT technology, and aligns with Airbnb’s culture to lead our China team.”
Ge Hong joined Airbnb in May 2016. During his tenure, the Airbnb China team expanded continuously, online services were upgraded, and the localization process gained widespread recognition. Its reputation also improved steadily—an unprecedented achievement. The once “culturally misaligned” Airbnb now stands alongside “Tujia” and “Xiaozhu” as one of the three major players in the market.
After Ge Hong’s departure, Airbnb co-founder Nathan Blecharczyk took on the new role of “China chief.” On November 8, Nathan Blecharczyk announced three strategic initiatives for Airbnb to further strengthen its presence in China.
These strategies include: offering 24/7 localized Chinese customer service globally; providing more high-quality listings in China; and enabling Chinese travelers to enjoy more customized value-added services while using Airbnb’s global network.
Airbnb also announced adjustments to its strategic layout in China, including establishing additional offices in key markets, continuing to recruit more local Chinese employees, collaborating with more city governments and related institutions, and learning from the Chinese market experience.
Additionally, Airbnb plans to open new offices in Shanghai, Sichuan Province, and Guangdong Province in 2018, and has clearly stated it will continue to advance cooperation with various departments of the Shanghai municipal government. Airbnb predicts that China could become its largest source of customers by 2020.