The metamorphosis of Travel Hopper online, from selling flights to Fintech – Skift

Rather than crush it, the pandemic helped travel startup Hopper accelerate its metamorphosis from a mobile app that tracked flight prices to an online travel agency making the majority of its money from sales. ancillary services such as price protection and travel protection.

“It’s strange that it took a pandemic to realize this, given that we first launched financial services products in 2018,” said founder and CEO Frédéric Lalonde. “But the crisis has made it much more clear that financial services have increased customer spending while also being a higher margin than travel products themselves.”

Hopper said on Tuesday it had closed a $ 175 million investment, led by private equity firm GPI Capital.

Glade Brook Capital, WestCap, Goldman Sachs Growth and Complice also participated in this round, which was all in shares.

Hopper Fintech for Travel

As Skift reported, Hopper’s “fintech” offerings now account for “the majority” of its revenue, which a spokesperson’s email specified as “50%” of its revenue. His solutions increased the total transaction size by an average of $ 40 and generated an average margin 55% higher than that of travel sales, he said.

Hopper has dubbed its products “fintech” after the trend of companies offering financial services that use technology but ignore the traditional banking structure.

“Hopper has created a great market opportunity with unique fi ntech products for the travel industry that apply a fully differentiated and attractive business model,” said Khai Ha, Managing Partner of GPI Capital.

One of the products is the “cancel for any reason” protection, which allows a traveler to retire on a flight up to 24 hours before departure and recover most of the price of the ticket. The other policy is a “price freeze” product that allows a traveler to retain a price for up to two weeks before booking.

The products rhyme with the parallel rise in power of “insurtech”. These companies aren’t traditional insurers, but they help create insurance policies by creatively collecting data and calculating numbers using new techniques. Hopper began selling some of his technology to create fintech products through third parties. At the same time, Hopper offers “white label travel portals for companies that aspire to sell travel with a differentiated consumer experience and offering.”

“If all travel distribution channels offered our fintech, it could increase total consumer spending for the industry by $ 200 billion per year,” Lalonde said, referring to Hopper Cloud.

Earlier this year, Hopper announced that it was working with U.S. bank Capital One to power Capital One Travel, a travel booking “experience” designed for the bank’s cardholders to appear later this year.

Since launching in 2007, Montreal-based Hopper has raised $ 584.6 million, including this latest round. Only a dozen other travel startups around the world, such as Airbnb, Oyo, Deem, and GetYourGuide, have already raised that much.

The travel booking feed on the Hopper app. Source: Hopper.

Hopper IPO could be the next step

Hopper referred to the last cycle of the cycle as “Series G” – a term that generally means that the next step for a business will be to go public or be bought out.

“At the moment, there are no plans for a traditional IPO or IPO via a SPAC at this time. [a special purpose acquisition company]”Said Lalonde. “The company is focused on iterating our fintech capabilities in the Hopper app and growing the Hopper Cloud business line. Hopper puts all profits back into marketing spend to accelerate growth. “

While Hopper may not have plans to go public at the moment, his latest round lead investor GPI Capital has seen many companies he has invested in since 2016 go public.

Recent investments by GPI include Social Finance, a provider of consumer debt such as student loans, which went public in June. GPI has also invested in Zeta, a cloud marketing software publisher, which made its initial public offering in June.

GPI Capital is also an investor in Grab Holdings, a Southeast Asia superapp that aims to go public through a SPAC in a $ 39.6 billion deal led by Altimeter Growth and other investors.

Hopper plans small acquisitions

The company made an acquisition earlier this year that was not previously disclosed, namely to be the app for mobile travel deals in Paris Mowgli, for an unspecified value. Hopper has also obtained intellectual property from small companies such as Journy, OptionsAway, Gravy.AI and GDX Travel since 2019.

“The company is actively seeking to acquire other teams in travel, data science or engineering startups to introduce new product offerings and fuel international expansion,” said a spokesperson.

He also said he has started hiring an additional 500 staff, with around 300 focusing on customer service.

In other news, earlier this month Lalonde became an independent director of Ixigo, an India-based online travel company that filed documents with regulators last week about its intention to go public.

OTA Plus Meta

The company has described itself as a “mobile-only” marketplace and an online travel agency. But in recent years, it has also offered a search by comparison of hotel prices, or metasearch, on the desktop version of its American site as well as on its mobile application. In short, its user interface often mixes the online travel agency model with a touch of the metasearch model.

On its office site, the brand frequently advertises “exclusive Hopper rates”. In several sample research, he compared the “Exclusive Hopper Fare” to quotes from online travel agencies such as Expedia and Booking.com without providing links to view those quotes on those sites. Hopper typically handles the transaction and customer service on behalf of the property at a commission rate typically reduced for major giants.

hopper price

A screenshot of a recent search on Hopper’s desktop app for Ritz-Carlton Residences, Waikiki Beach, for dates October 2021.

Repeating searches on the startup’s mobile app, we found similar ‘exclusive Hopper fares’, but the online travel agency also provided links to other online travel agencies in a metasearch style. .

Fred Lalonde on the left and Joost Ouwerkerk source hopper

Hopper co-founders Frédéric Lalonde, on the left, and Joost Ouwerkerk. The online travel startup said it closed a $ 175 million Series G funding round led by private equity firm GPI Capital. Source hopper

That said, flight sales remain the main source of income for Hopper. The company forecast it will exceed $ 1.5 billion in gross sales this year, with 60% of travel sales coming from the sale of airline tickets and related products and services.

Its signature interface is a mobile-only experience that includes the ability to track flight price changes and purchase various protections, such as instantly changing the reservation if a consumer misses their flight, as explained in a new promotional video. . The company said it now has a larger air travel market share in North America than it did before the pandemic.

“Hopper has five times his valuation since early 2020,” a spokesperson said on Tuesday. Its current valuation is over $ 1 billion.

The startup said it had “already passed its pre-pandemic Q1 2020 revenue peak,” with “triple-digit revenue growth” of “over 100%” from that peak. Skift Pro subscribers looking for context on Hopper’s rise to power can read Dennis Schaal’s recent analysis of the company.

Photo credit: A user of Hopper’s travel booking app. The online travel startup said it closed a $ 175 million Series G funding round led by private equity firm GPI Capital. Hopper

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