Airbnb said to buy Chinese home-rental rival

San Francisco - Airbnb is in talks to acquire China’s Xiaozhu.com to expand in the nation’s home rental sharing market, according to a person familiar with the matter.

The companies have had multiple meetings and the discussions are advanced in nature, the person said, asking not to be identified as the talks are private. A deal is likely, the person said.

While Airbnb is the biggest platform for people to rent their homes to travellers globally, it’s grappling with more established local rivals Xiaozhu and Tujia.com in China.

The San Francisco-based company already has about 75 000 properties listed in the world’s most populous nation and plans to increase staffing 10-fold to 300 full-time workers.

Airbnb and Xiaozhu declined to comment on whether the companies were in talks about a deal.

China’s online holiday rental market could reach 10.3bn yuan ($1.5bn) in transaction volume by 2017, up from an estimated 6.78bn yuan this year, according to IResearch.

Xiaozhu, which was founded in 2012, this month, said it raised $65m of new funding. The company says it has 10 million active users and more than 100 000 listings in 301 cities across the country.

Chief executive officer Kelvin Chen Chi said at the time of the funding announcement that Xiaozhu expects to deliver 500 percent organic growth in 2016.

A deal for Xiaozhu would help Airbnb reduce the risk of a costly battle for market share?

Uber Technologies lost more than $1bn in China in a battle with Didi Chuxing before selling its business in the country to its rival.

In September, Airbnb said it raised $555.5m in new funds as it expands around the world. The funding round, which valued the company at $30bn, could eventually reach $850m, a person familiar with the matter said at the time.

Tujia was valued at more than $1bn after a $300m funding round last year from investors including All-Stars Investment.

The company is also backed by HomeAway, Ctrip.com International, LightSpeed Venture Partners and GGV Capital.

The company says it has listings for 450 000 homes in total, including 335 destinations in China and 1 018 overseas.