- Hopper has received $175 million in a Series G round of investment, barely five months after announcing an equal amount in a Series F round.
- The firm offered to save customers up to 40% by tracking millions of flights.
- Hopper eventually extended its platform to include hotels and vehicle rentals, but with the pandemic wreaking havoc on the travel sector, the firm was compelled to quickly broaden its business model and diversify to B2B.
- Hopper Cloud, a new collaboration initiative for airlines, online travel agents, meta-search firms, and corporate travel-related organizations, was launched in March.
Hopper, the massively financed startup best known for its AI-powered predicted airline and hotel pricing platform, has received $175 million in a Series G round of investment, barely five months after announcing an equal amount in a Series F round.
Hopper was founded in Cambridge, Massachusetts in 2010 with the goal of building up its backend and collecting billions of travel fares to answer a single question: “Should I book my flight now or wait?” The firm offered to save customers up to 40% by tracking millions of flights. Apparently, two-thirds of flights will see a price decrease before departure – the issue is when.
Hopper eventually extended its platform to include hotels and vehicle rentals, but with the pandemic wreaking havoc on the travel sector, the firm was compelled to quickly broaden its business model and diversify to B2B. Hopper Cloud, a new collaboration initiative for airlines, online travel agents, meta-search firms, and corporate travel-related organizations, was launched in March. Hopper invited them to use its core technology and content in a white-label service.
Hopper’s future plans
The primary partner was financial behemoth Capital One, which announced the introduction of an enhanced Capital One Travel platform that would utilize Hopper’s huge troves of data and predictive analytics to create a new travel booking interface for the bank’s cardholders later in 2021. Capital One was also the first investor in Hopper’s Series F financing.
Hopper has attempted to build a stronger fintech emphasis while providing clients with flexibility and peace of mind when booking flights.
“Hopper used to be recognized primarily for its predictions technology, which informed clients whether to buy now or wait for a better deal,” said Hopper CEO and co-founder Fred Lalonde. “Our business model was similar to that of any other online travel agency in that we received a booking commission from our airline or hotel partners when a consumer booked a trip via the app.”
Hopper began developing a suite of AI-powered products in late 2019, including a price-freezing feature that uses “proprietary short-term prediction algorithms” to allow customers to lock in a maximum price for flights for up to 14 days and hotels for up to 60 days, with the assurance that if the price drops during that time, they will pay the lower amount. This enticed would-be tourists to make a purchase.
“It reaches out to passengers early in the funnel, even before they book,” Lalonde explained. “By locking in the ticket price, passengers get confidence that it will not rise in the unpredictable market, while also gaining time and flexibility to confirm arrangements with individuals they are traveling with before purchasing.”
In addition, Hopper provides travel protection insurance via AON. More broadly, it promotes a flexible attitude in the case of travel cancellations or schedule changes, including a “change for any reason” plan that allows consumers to reschedule a trip up to 24 hours before departure, with Hopper covering any airline expenses incurred as a result of the change. All of these capabilities and services are included in Hopper Cloud, allowing travel-related businesses to incorporate them into their own offerings.
Hopper’s new fintech emphasis has helped it establish a connection with travel-focused global distribution systems (GDS) business Amadeus, which is preparing to distribute Hopper’s B2B smarts through its own network of airlines, travel agents, meta-search companies, and others.
Shifting to B2B while maintaining a direct consumer emphasis has also enabled Hopper to compete with online travel heavyweights such as Expedia, Booking.com, and Google Travel.
Other investments raised by Hopper
Hopper has raised about $600 million since its start, including its most recent financial infusion sponsored by GPI Capital. With a new $175 million in the bank, the firm is now well-capitalized to expand its consumer-facing platform, which has seen its mobile app downloaded 60 million times. It is also planning to expand its API-powered B2B product line.
“It [the investment] will be utilized to continue to expand the team in the B2B business,” Lalonde explained. “The first Hopper Cloud clients will go online between now and the end of the year, but based on current demand, we expect Hopper Cloud to be a significant component of our operations, revenue, and capital expenditures.”
As the world steadily recovers from the epidemic, Hopper claims that its current run rate puts it on track to achieve a 330 percent revenue increase over last year. Despite the fact that the firm was forced to lay off 40% of its staff last year, it claims to have already eclipsed its pre-pandemic sales high (from Q1 2020) by more than 100%. Lalonde went on to say that many of the employees who were laid off eventually returned, and the company’s employment has tripled. Just before the epidemic, the firm laid off 362 people, a figure that has since risen to nearly 1,000.
Goldman Sachs Growth, Glade Brook Capital, WestCap, and Accomplice are among the other investors in Hopper’s Series G funding round. Hopper did not provide a precise value in this round, but it did state that the figure had increased fivefold since early 2020.