Potential Airbnb-Xiaozhu linkup praised

If home-sharing giant Airbnb acquires Chinese rival Xiaozhu Inc, it will help the US company gain market share in the mainland market, analysts said.

Published reports this month have indicated that Airbnb is in talks to buy Xiaozhu. Airbnb has a relatively small presence in China, with a staff of just 30 and 75,000 home listings. Xiaozhu said it has more than 100,000 listings in more than 300 cities in China.

However, Xiaozhu and Airbnb both trail Tujia.com in China, which said it has listings for 450,000 homes, including 335 destinations in China and 1,018 overseas.

Peng Liu, an associate professor of real estate and finance at the Cornell University School of Hotel Administration, said in an email that Airbnb is doing well in China but not great. "Acquiring Xiaozhu at a reasonable price is a great strategy for Airbnb," he added.

Wolfgang Georg Arlt, director of the China Outbound Tourism Research Institute in Hamburg, Germany, said a Xiaozhu acquisition would help Airbnb to become a more "Chinese" company when dealing with the authorities and the Chinese market.

Arlt said the home-sharing market in China has great potential.

"For a group-orientated society, the idea of home-sharing is very attractive; meeting new people combined with saving money sounds like a formula for success. If Airbnb and similar companies can succeed in giving home-sharing a positive image and avoid the image of 'only people too poor to pay for a hotel do this' and can succeed in convincing the authorities that there is no danger for political stability involved, it can open domestic travel to new segments of the society," he wrote in an email.

Liu doesn't anticipate any resistance from regulatory officials in China if the transaction becomes a reality.

He also said having a local partner will help Airbnb avoid some of the problems that US startups like ride-sharing service Uber have had in China.

"Earlier this year, Uber sold its entire China business to rival Didi in exchange for a stake in its Chinese rival. Uber was doing great, but Didi is doing even better. Home accommodation is a local business, and a low-entry and competitive industry. Local firms would have the natural advantage of operations and understanding the ever-changing consumer preference," he said.

paulwelitzkin@chinadailyusa.com