The generational signs are there, according to Hopper Chief Frederic Lalonde , and they're showing a future for superapps in the West.
Hopper’s long trajectory in the travel industry, going from an online travel agency to venturing into fintech, has led it from barely making revenue to now earning 70 percent from selling financial products to third-party businesses.
But the company has bigger plans ahead in its ongoing mission to continue being the best at lowering the cost of travel for consumers — it’s betting on the future of superapps for travel, which are already popular in Asia.
“There will be a Western global superapp for travel — it may be owned by Google, Facebook or Alibaba, but it will be a superapp and we’re trying to become that,” said Frederic Lalonde, CEO of Hopper, at Skift Global Forum, in conversation with Skift founding editor Dennis Schaal.
Lalonde did not flinch at Uber CEO Dara Khosrowshahi’s skepticism on superapps working in the West in the way they do in Asia.
“I’m obsessed with it,” Lalonde said. “Our thesis at Hopper is that the East is ahead of the West in terms of customer behavior. If you look at kids today, it’s a completely different behavior. If you slice it generationally and you start to look at millennials and Gen Z, you see it.”
Lalonde added that people compare on average 34 websites, and won’t be doing that on apps in the future — consumers will pick one third-party app, and the share between third-party apps and online travel agencies are growing equally, Lalonde added, noting that the aggregators are winning a much larger share.
Hopper has reached 70 million users on its app, and Lalonde sees it growing. Part of the reason is that the company is innovating a lot, as well as its obsession over consumer travel pricing.
“We understand future prices better than everybody else so we can price the risk in a way that nobody else can do,” Lalonde said.
Skift’s Schaal asked whether Hopper describing itself as fintech was a buzzy way to up its valuation, but Lalonde said that given its revenue does not come primarily from being an OTA but rather from orthogonal financial products.
Lalonde said that it might even be a better version than some of the standard fintech products.
“About one out of three of our customers that freeze the price say they don’t have the money in their bank account to pay the whole thing. They’re using this as a deposit. It’s a better version of buy now pay later,” Lalonde said, adding that what Hopper does is hold the price for the consumer.
Pointing to Hopper’s recent deal with Amadeus, Skift’s Schaal asked whether the end game for Hopper was to become a B2B company or a consumer company. Lalonde recognized that it might be considered a stupid move to take your financial products and give it to your competitors, but that the fundamental reason is behind Hopper’s obsession to lower the cost of travel for its customers.
“We’re here to steal share from Expedia all day — the way we do that is we drop the price of travel. We have a digital wallet — or what we call a carrot — customers respond to a $2 difference. It’s primarily about price at the end of the day in leisure, that section our app is good at.
“I don’t see people clamoring for this kind of thing,” said Skift’s Schaal in bringing back the focus to a future travel superapp for the West. But Lalonde said that the reason is that it’s being done wrong in the West, citing the example of Pinduoduo e-commerce app in China.
“It’s this absurd mix of gamification, live streaming, the largest ramp up to $5 billion revenue faster than Alibaba and how did they do it? They have 700 million monthly active users and they sell travel. So what they did is they said people are willing to invest time doing various things, comparison shopping to save money in commerce and travel. They will make it available in the app but make it fun.”
“This app does one thing I’ve never seen: if you engage with it, you get real money back — just for using it,” Lalonde added. “So you’re not seeing this pick up in the west because we are doing it wrong and we don’t understand how customers are going to behave in the future.”
Google won’t become irrelevant, according to Hopper’s CEO, but he predicts that searching will lose share. Accepting virtual currency and getting the wallet infrastructure right is also part of the plan, which Asia does so much better, Lalonde said.
“Your DNA has to be built up from the ground up completely differently,” Lalonde said.
Will Hopper succeed in its aim to become the travel superapp of the West?
“Let’s talk in five years,” Lalonde said.
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Photo credit: Hopper CEO, at Skift Global Forum 2021, said he sees a future in superapps for the West in the years ahead.