US vacation rental company Airbnb is planning to close its domestic business in China this summer for reasons such as costly operation and the COVID outbreaks, a source close to the company told the Global Times.

The company also published a letter to its Chinese customers, saying it will suspend its domestic homes, experiences and its reservations from July 30.

But the company will continue to focus on China's outbound travel business, which it is confident of further developing despite the current challenges.

According to the source, Airbnb decided to close down Chinese listings for several reasons. First, the domestic segment is "costly and complex to operate." Second, the COVID-19 epidemic has worsened these issues and heightened their impact on the company's business.

Airbnb formally launched its mainland business in 2016. Since 2016, about 25 million guests have booked Airbnb's Chinese listings.

China has encountered two acute waves of coronavirus since 2020, one in Wuhan of Central China's Hubei and one in Shanghai. Both caused city-wide sealing off. Sporadic outbreaks of COVID-19 have emerged in other cities.

However, the company said it would not entirely give up the Chinese market, but will pivot their efforts in China to focus on the outbound travel business.

"Then, and now, the biggest opportunity was outbound travel," the source said, adding that historically outbound travel from China has been a significant source of travel into other Asia Pacific destinations and therefore a valuable driver of Airbnb's network effect in the region.

He noted that the overlap between Airbnb's outbound and domestic businesses was limited.

The company also said in the aforementioned letter that it believes Chinese tourists' outbound travel needs will be released generally as borders reopen and global pandemic gets effectively controlled.

A CNBC report disclosed that Airbnb will maintain an office in Beijing with hundreds of employees, citing one source.

Chinese short-term lodging rental platform Tujia said it has opened an auditing channel, and will launch several services to help mainland home owners on Airbnb to transfer their business to Tujia.

Airbnb's retreat from domestic business in China is another reflection of business difficulties for travel companies in China, not only because of external challenges like the COVID, but also for internal challenges like rising costs and competition, experts said.

According to a recent survey conducted by the China Chamber of Tourism, about 68 percent of the surveyed travel employees are in a state of unemployment. Most of them lost jobs because of the coronavirus.

Global Times