Airbnb Inc. is in discussions to buy home-sharing site Xiaozhu.com, one of its largest competitors in China, according to a person familiar with the matter.
A deal would give the San Francisco startup a rapid boost in its effort to expand in the world's most populous country. Further details about the discussion?including the price Airbnb would pay?couldn't be learned.
The talks come as many large, U.S.-based startups are struggling to gain traction in the Chinese market, where competition from homegrown imitators and startups is fierce. For instance, Uber Technologies Inc. suffered heavy losses in an effort to build up its business in China, only to retreat this summer when it sold its China unit to ride-sharing competitor Didi Chuxing Technology Co.
Thus far, Airbnb has had a relatively small presence in China, with a staff of just 30 in the country, limited marketing and just 75,000 home listings, a tiny slice of the company's roughly 3 million global listings. The company has struggled to hire a chief executive for its China unit and brand recognition is stronger for some of its local rivals, which have far larger staffs and invest more in marketing.
Still, Airbnb is pushing growth of its own?it expects to have 100,000 hosts in China by the end of this year and it is adding staff there, hoping to hit 300 within two years.
Xiaozhu launched in 2011 with a similar online home-rental model to Airbnb. Based in Beijing, it has listings in cities across China, and its users are heavily tilted toward the domestic-travelmarket. More so than travelers in many other countries, Chinese domestic guests typically prefer to rent the entire apartment rather than share an apartment with a host, according to landlords in China who host their homes on both Xiaozhu and Airbnb platforms.
Both Xiaozhu and Airbnb trail well behind market leader Tujia.com, a Beijing-based home-rental company with a valuation that tops $1 billion and an investor roster that includes Chinese online-travel firm Ctrip.com International Ltd.
Globally, Airbnb is seeking other ways to boost revenue?moves that could help better position the company for an initial public offering. Last week it announced a new service called "Trips," offering local tours and other experiences for guests.
These moves come shortly after Airbnb in September brought in $850 million in additional funding, valuing the company at $30 billion.
The discussions between Airbnb and Xiaozhu were reported earlier by Bloomberg News.
Write to Eliot Brown at firstname.lastname@example.org
(END) Dow Jones Newswires
November 23, 2016 20:05 ET (01:05 GMT)
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