Airbnb Fights House by House With Local Rivals in China

During 14 months of painstaking renovation, a traditional siheyuan, or courtyard house, in Beijing was infused with hotel comforts and modern styling. Renamed the BBK35, it opened its red lacquered doors for bookings last July on Airbnb, luring hundreds of guests from around the world. Two months ago, the property also signed up with Chinese rival Tujia.com, and that service already accounts for 5 percent of bookings. “We used to think the local platforms couldn’t offer the same level of service,” says Brad Yang, a partner in the converted home. “But now there’s actually not much difference, and we may think of joining a third platform.”

Competition from local rivals is a key problem for Airbnb Inc. as it tries to pull off what Uber Technologies Inc. spent more than $2 billion failing to do: cracking the China market. Although Airbnb has 3 million listings globally, it had only 80,000 on the mainland in 2016. Tujia, which combined its listings with those of Chinese online travel giant Ctrip.com International Ltd., boasts 400,000 properties with an additional 300,000 on its low-priced Mayi.com unit. Xiaozhu.com has 200,000 properties in more than 300 cities. And with local companies drawing venture capital—Tujia has raised 2.8 billion yuan ($412 million), Xiaozhu has raised $150 million, and both are in talks to secure substantially more—competition is set to get even tougher.