Airbnb's challenges in China mean opportunity for hotels

Airbnb is stepping up its efforts to grow in China—but the popularity of existing home-sharing sites and local challenges may provide opportunities for traditional hotels to gain ground. 

Airbnb in China

In Shanghai today, Airbnb announced a new Chinese name. Aibiying—“welcome each other with love”—will be part of the company's efforts to grow its presence in China. Aibiying will also hire locals and offer perks for travelers booking rooms through the service—not unlike how hotels gain traction in communities.

But Airbnb may face some challenges beyond traditional hotels and Chinese business laws. First and foremost are the local homesharing services like Xiaozhu, which has about 140,000 listings, and Tujia, with more than 420,000 listings. While Airbnb—which has about 80,000 listings in China—may draw international visitors, these sites are geared toward Chinese citizens. Significantly, that demographic, according to the New York Times, is largely responsible for the $500 billion in travel spending China saw in 2015. If Airbnb cannot capture the local market in China, it may not gain the foothold it wants.

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China's internet access is also more restrictive than that of other countries, which could also present challenges to Airbnb. The government already blocks Google, Facebook and Twitter, and Uber had to sell its business to local rivals in the face of domestic competition. If Airbnb presents a challenge to the local companies, it may find itself unavailable to domestic users. 

To that end, Airbnb has already worked out agreements with Chinese tech giants like Alibaba and Tencent and has teamed up with officials in cities like Shanghai to promote tourism. It is also complying with Chinese laws that require it to keep Chinese data only on domestically based Chinese servers. As the Times noted, this could expose it to requests from the Chinese surveillance authorities to track any of its users. Last year, Airbnb sent a message to its users in China informing them that data would be stored in the country.

What This Means for Hotels

There is no shortage of global hotel companies in China, and partnerships are only help to improve brand awareness. While Airbnb is still growing and overcoming the above challenges, this is a good time for brands to make the most of their advantages and gain traction.

Global hotel companies have already formed their partnerships with Chinese businesses, making it easier for them to acquire or develop new hotels across a range of segments. With the growth of outbound Chinese travel, these brands can build awareness internationally and prove their appeal for domestic travel as well. Any market where Airbnb lacks a presence, after all, is an opportunity for hotel growth. 

 

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