Hopper Inc.’s drive to create a giant global, AI-powered online travel agency puts it in Airbnb Inc’s sights.
The Montreal-based company, one of Canada’s fastest-growing and best-funded technology companies, on Thursday added short-term home rentals to its app-based offering, which also offers flight, hotel and and automobiles, targeting 25 to 35 year olds. leisure travelers. Hopper also sells financial products, including an offer that allows customers to cancel reservations for any reason.
Chief Strategy Officer Dakota Smith said Hopper sells US$1 billion worth of hotel rooms a year to its customers, but “given that half of the accommodation spend they make while traveling goes alternative accommodation…we know there’s another billion” that Hopper customers spend on accommodation elsewhere.
“We want to capture that.”
Hopper said he was launching the homes business with more than two million properties worldwide, many of which are managed by large groups that have consolidated the supply of the peer-to-peer online travel accommodation space. to-peer. “For us, not having homes in this ecosystem was a big shortcoming,” said Susan Ho, Hopper’s homes manager.
Hopper went to market with what he acknowledges to be a “minimum viable product.”
But Hopper claimed it would bring more transparency, flexibility and the lowest prices to the US$100+ billion short-term home rental category, including better refund and cancellation policies than competitors such as Airbnb Inc. and Vrbo, owned by Expedia Group Inc.. Hopper will allow customers, for a fee, to cancel up to 24 hours before their trip for a full refund, and unlike rivals, Hopper says it will offer a low price guarantee by spring. “We’re very good at setting prices and figuring out what our customers want,” Ms. Ho said.
Jamie Lane, vice president of research at AirDNA, a Denver-based market research firm on the short-term rental market, said Hopper is entering “a very hot industry” that has seen a 22.5% increase nights spent in 2021 compared to 2020 and 2.7% more than the pre-pandemic year of 2019.
He predicted that Hopper would compete more with Vrbo, whose supply comes more from large property managers than Airbnb. “Do I think Hopper will eat in Airbnb and Vrbo? Probably not.”
But he added that given the speed of industry growth, Hopper “will be absolutely successful,” as have others who have entered the short-term rental space.
Hopper has seen a dramatic turnaround since the start of the pandemic, which chief executive Fred Lalonde called an “extinction-level event for the company.” Hopper had been the darling of the travel press for years with its innovative mobile app. Hopper leverages large amounts of quote data obtained from travel booking systems like Saber, applying AI to predict the best times to book flights. One of its distinguishing features is the fact that it frequently messages its millions of monthly users. not buy, but wait for the price to drop.
Hopper added hotel bookings in 2017, followed by car rentals, but revenue growth was modest, reaching $17 million in 2019. That year, her fortunes began to skyrocket when she began adding ancillary financial services-type products, leveraging its access to large datasets of price-seeking travelers. Travelers could now pay extra to freeze the price of a flight for multiple days, purchase the right to cancel for any reason for full credit, rebook a missed connection at no additional cost, or change a ticket to another day without lose the full value of the ticket. Hopper figured out how to price deals to turn them into high-margin products, based on algorithms and probabilities gleaned from his data — more, he acknowledged, trial and error.
Everything started to click and in February 2020, monthly revenues increased by 450% year over year, largely thanks to financial products. The company believed it would top $100 million in revenue that year. Then the pandemic hit. Until airlines agreed to refund tickets for canceled flights, Hopper faced the possibility that claims on its financial products would wipe it out. It laid off or furloughed half the staff – around 250 people – and took months to sort through reimbursement claims.
But Hopper has also managed to raise over US$400 million across three separate financings in 2020 and 2021, reaching a valuation of US$3.5 billion. Hopper has also started partnering with consumer-facing companies to power their travel booking services, starting last year with Capital One Financial Corp., an investor.
Hopper’s move into financial services has helped consumers start traveling again. Revenues, the company says, doubled in 2020 and grew more than 300% in 2021, when Hopper was the most downloaded travel booking app in the United States, according to Apptopia; it has now been downloaded 70 million times.
Hopper’s revenue is now growing at an estimated rate of more than US$200 million a year and it has nearly 1,900 employees.
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