Backed by a massive new $ 170 million Series F funding round, Hopper is launching a new B2B product called Hopper Cloud with Capital One as its first partner, preparing to “take over the great global empires [of travel] as our next stepping stone. “
These are the words of Hopper’s co-founder and CEO, Fred Lalonde, as he outlines the company’s ambitious plans for the years to come.
According to Lalonde, Hopper is a much stronger company than it was before the pandemic, based on the amount of money it generates per booking and its gross margin. Of course, the $ 170 million infusion also helps: Capital One led the financing round, in which new and existing investors such as GS Growth, Inovia Capital and Citi Ventures participated. With this round, the company’s total funding is $ 423.7 million.
“You will see a lot of initiatives. We’re a bigger company than when we closed. So you will see how we innovate in this regard, ”he says.
“Hopper would be expected to look like a global omnichannel company over time, like the three companies we are now competing with, the three global giants.”
As part of its strategy, Hopper will expand its offering beyond the mobile business – first create a web-based portal that will support Capital One Travel and be used by future Hopper Cloud customers, and then develop Hopper’s consumer-centric market for the web. According to a spokesman, the launch should take place later this year or early next year.
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Lalonde says he does not want to “do the same thing as everyone else” as the company intends to take on the big online travel agencies, but he recognizes that, for example, consumers like “the convenience of multi-screen”.
Right now, the focus is on developing the Hopper Cloud Partnership Program, which will allow Hopper to sell its infrastructure, agency content, financial technology products and data science functions to other companies – and which is sure to be reinforced by the news of Capital One’s commitment.
Hopper Cloud is already getting “crazy traction” according to Lalonde, and the company expects to announce new Hopper Cloud customers soon, most of whom are “much bigger travel sellers” than Hopper themselves.
Capital One
Capital One Travel is the finance company’s existing booking platform for credit card rewards customers – both consumers and small businesses – to book hotels, flights and rental cars. The portal was launched in 2009 and has been operated by CXLoyalty since 2017.
Lalonde says he spoke with Capital One for several years, and the two companies found they “share a lot of DNA” when it comes to innovation and customer focus. However, the details of the collaboration evolved in 2020 and as the work progressed, Capital One decided to lead the latest investment round as well.
“Hopper and Capital One are working together to develop a world-class travel booking offering and are actively seeking ways to meet customer needs,” said Matt Knise, vice president of travel and digital experiences at Capital One.
You should expect Hopper to look like a global omnichannel company over time, like the three companies we are now competing with, the three global giants.
Fred Lalonde – funnel
The two companies are working closely on the development and product development of the new portal, which will be launched later this year and will include everything that Hopper offers in its market – currently hotels, flights, rental cars and private apartments.
“For us, this is not just a check box and set this [Capital One
Travel powered by Hopper] out there. We’re actually trying to understand this business because we think it’s very interesting to use all of our data to better buy travel, ”says Lalonde.
“I can’t commit to any of the specifics, but the idea of saving money, reducing anxiety, and reducing the risk of buying is going to try to deliver all of the value propositions we have Hopper users and increase that for the Capital One customers. ”
Risk as a service
The concept of reducing the fear and risk for travelers has paid off for Hopper in the last year, as around a dozen fintech products such as price freeze, flight delay protection and refundable flight and hotel bookings have been launched.
According to Lalonde, these ancillary products now account for about two-thirds of Hopper’s sales – increasing Hopper users’ average spend by about 15% – and now those sales opportunities can be shared with other travel sellers through Hopper Cloud.
“People spend an average of $ 450 per person buying air, hotel and rental cars. … Since 1994, when Travelocity sold the first ticket online, everyone has fought for a new division of $ 450. Google is getting bigger, AdWords is coming in, spending is going there. Tripadvisor is invented, Kayak comes out, Meta becomes a big part of the category. But all we do is get around $ 450 based on innovation in distribution, ”he says.
“Now new money is coming into the ecosystem from the customer because we invented a product, be it the price freeze, the reimbursable prices or all those things that they consider valuable enough to save more money. … We can create a source of income where the supplier doesn’t have to forego something where the customer brings in new money, so there is a bigger cake to share. Our thesis for Hopper Cloud is that everyone who sells travel on the planet will benefit from these services. We’ll see if I’m right. ”
Development as a global OTA
In addition to the introduction of Hopper Cloud and the further development of its fintech products, the company is further developing its OTA offerings for consumers and is positioning itself for the travel boom that Lalonde is certain to expect.
We can create revenue streams where the supplier doesn’t have to give up, where the customer brings in new money, so there is a bigger cake to share.
Fred Lalonde – funnel
Hopper added rental cars to its app around six months ago – the category now accounts for around 10% of all bookings – and plans to further develop this and the range of alternative accommodation.
“We’re getting a whole team on this this year, and you’ll see we’re doing a lot of things, including direct contracts, like we do everywhere else,” says Lalonde.
“A Hopper user books a house twice as often as the average because of our population – we’re 60% plus Millennial and Gen Z … so we have to get good at it.”
Marketing is also an important part of the future strategy. According to Lalonde, the company will be spending more on marketing in March than ever before.
Now that it comes down to “looking at the conglomerates … the great global empires as our next stepping stone,” he admits that these companies “have hundreds of billions of bookings, tens, hundreds of millions of dollars in marketing spend, so it’s us. ” We have to line up for it. “
For now, the focus will continue to be on social media marketing, but over time – likely as the web interface develops – Lalonde says that Hopper “will become omnichannel over time.”
By investing in the F Series, Hopper will also step up its efforts in Asia, Europe and Latin America, regions where the company was suspended due to the pandemic.
Additionally, the pandemic has spurred the growth of another type at Hopper – in customer support.
The company had a backlash on social media over the past year when angry customers shared their frustration at being unable to reach a support person to help with cancellations, refunds, travel credits, and insurance claims.
Since then, Hopper has doubled the number of support staff and plans to hire more staff and develop more automated in-app solutions.
“My emails and cell phone leaked, and I have rightly received thousands and thousands of calls and texts from angry customers. Every single one of them we deal with, ”he says.
“As far as I know, everyone gets what they should have gotten. And if someone reading this hasn’t called me, it won’t be difficult to find my number and we’ll get back to you one way or another. ”