Record after record for Hopper and the travel industry

Montreal-based Hopper is expanding its product offering as demand for its travel booking services reaches record highs. However, the big boss of the online travel agency realizes that the current craze is unsustainable.

Posted at 05.00

Richard Dufour

Richard Dufour
The press

“It’s crazy right now,” says Hoppers founder and CEO Frédéric Lalonde. “Every week is a record.”

People want to travel after two years of the pandemic, and it shows across the industry.

Hopper has doubled his income in six months, says Frédéric Lalonde. “Booking has just recorded its best quarter since its inception in 1997, and eDreams, the European Expedia, has just announced its best results in 10 years,” he adds.


Photo EDOUARD PLANTE-FRÉCHETTE, LA PRESSE archives

Frederic Lalonde, CEO of Hopper

“At the moment, we do not feel that the economic context can dampen the enthusiasm of travelers. But it is quite certain that there will be a slowdown in the coming year, ”says Frédéric Lalonde.

“It is impossible that what is happening at the moment is being supported, because it is two years without traveling, it is the recognition that the government can prevent us from traveling, which no one had thought was possible. But it is also because governments have given huge amounts of money to consumers during the pandemic. People accumulated a little debt on their credit cards, so it created a supercycle, an abnormal wave. »

Rising interest rates make mortgages and other debt more expensive, stock market volatility puts pressure on pension savings, and inflation inflates the value of consumer goods.

“There is probably a recession on the way. That’s not how it can continue, ”says Frédéric Lalonde, who talks about the demand for reservations for flights, hotels and rental cars.

New products

Fuel demand and costs combined with limited capacity put pressure on airline tickets and prices on hotels and rental cars. Therefore, the price of travel this summer, according to Hopper, has skyrocketed from previous years.

Management adds that high prices, frequent delays and continued uncertainty exacerbate consumer anxiety and that Hopper-designed financial products alleviate this anxiety.

Hopper has been testing a few new financial products since the beginning of the year and is now ready to officially launch them.

Frédéric Lalonde’s favorite novelty is the product “leave for any reason”. This product allows you to check out at or after check-in and to book a room in a new hotel in the same star category at no extra cost.

“You can arrive at the hotel and realize that there is a hammer next to your room,” says Frédéric Lalonde. The dissatisfaction may also be related to the cleaning, which does not meet the standard, or simply that the customer expected to have a view of the sea.

We are the only ones on the planet that offer this.

Frederic Lalonde

Offering a product like this is easy, according to the CEO’s own admission. Not losing money by offering it is another thing. “It’s difficult,” he admits, explaining that costs are calculated dynamically.

“When someone books a room at the Ritz-Carlton and decides they do not want to go there, we have to pay in full for the new reservation. The supplier takes no risk [hôtel ou transporteur aérien]. You need to be extremely good at calculating risk. »

With each transaction, algorithms calculate at what price the product should be sold based on the risk. If a customer buys a plane ticket with connection insurance and a hurricane is known to be on its way, the price will increase.

In general, Frédéric Lalonde estimates that the price always fluctuates between 6 and 15% of the price of the purchased travel product. “If you buy a plane ticket for $ 100, it will cost an average of $ 6 to $ 15.”

In a context where demand “explodes” and “everything is filled everywhere”, the CEO finds it difficult to hide his enthusiasm for the success and potential popularity of this new product.

Cancellation and freezing

Hopper now offers the option – already available for flights – to immediately cancel a stay, for whatever reason, if you have not already checked in, and get the price of the room refunded free of charge.

Another new feature, products that maintain air fares, are now available for car rental for a period of up to 21 days. If the cost increases, the Hopper pays the difference up to $ 100, and if the cost decreases, the customer pays the lower price.

“It’s important because it means it’s possible to freeze a price for pretty much everything available in Hoppers’ app,” says Frédéric Lalonde.

Hopper also quickly realized that there are many reasons to book directly with their airline or hotel chain, if only because of loyalty programs.

Hopper’s financial products are therefore now offered to users, no matter where they book.

If you book directly through Air Canada or any airline, you can now add flexibility products that were previously only available if you were a Hopper customer.

Frederic Lalonde

“We want everyone to buy on our platform, but the reality is that this is not how the industry works. Being able to add these financial products to any reservation allows us to cross a new frontier. »

Mare, whose value was estimated at $ 5 billion just six months ago, does not disclose its earnings. However, the CEO maintains that they are now 30 times higher than they were in 2019 before the pandemic, mainly due to the addition of the various financial products developed.

The gross value of Hopper reservations this year is expected to be between US $ 4 billion and US $ 5 billion.

Hopper counts Investment Québec, Caisse depot et placement du Québec, OMERS (Ontario Municipal Employees Retirement Fund), Brookfield and Inovia among its investors.

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