Skift Take

Hopper aims to be a big player in short-term rentals, and it's still under development cancel-for-any-reason feature could draw a ton of positive attention from hosts and guests. It could either mean a ton of red ink for Hopper or, if successful, spur competitors to scurry to offer knock-offs.

Series: Dennis' Online Travel Briefing

Dennis' Online Travel Briefing

Editor’s Note: Every Wednesday, Executive Editor and online travel rockstar Dennis Schaal will bring readers exclusive reporting and insight into the business of online travel and digital booking, and how this sector has an impact across the travel industry.

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Hopper’s still-in-formation plan to offer a cancel-for-any-reason feature for vacation rental bookings could reverberate throughout the sector — if Hopper doesn’t go broke trying it.

With this product, which the company said it plans to introduce “in the next few months,” Hopper would enable guests to pay a fee — the amount of which hasn’t been specified and would fluctuate — and then cancel their vacation rental bookings for any reason, and receive an 80 percent to 100 percent refund from Hopper, a spokeswoman said.

Host would be huge beneficiaries, as well.

“Hopper pays out the cost of the stay in full to the host, as if the customer did not cancel,” the spokeswoman said. “Hopper takes on the financial risk with all of its fintech products.”

Of course, the terms and conditions would be all-important with this feature. Would guests be able to cancel because a new Covid variant was spreading like a California wildfire? Would the cancellation window be unlimited? Could the guest cancel on the morning of the check-in?

“At this point, we don’t know the exact cancellation window yet, but we will aim to be as flexible as possible,” the Hopper spokeswoman said. “We’ll be testing to see what level of flexibility customers are looking for, and adjust our offerings accordingly. Ultimately, our cancellation plan will be most relevant when hosts have more restrictive 30-60 day policies. And like I mentioned, the host won’t take on the risk if the customer cancels.”

Why Would a Cancel For Any Reason Policy Be So Disruptive?

Hopper, which claims to now have access to more than 2 million vacation rental properties, contracted through property managers and likely through aggregators, could attract a tsunami of host sign-ups if they knew Hopper would refund bookings in full when guests bailed out.

Keep in mind that during the beginning of the pandemic, Airbnb refunded guests for cancelled bookings and didn’t compensate hosts, leaving untold numbers of hosts penniless and scrapping to pay mortgages, which outraged many, forced hosts out of business, and alienated a large number of them from the company. Expedia’s Vrbo had a more even-handed policy, and subsequently sought to recruit Airbnb super hosts who soured on the company.

Given today’s tumultuous travel, working and living environments, where countries get locked down, new travel requirements pop up by the day, and plans need to change, vacation rental guests could find this cancel-for-any- reason feature very attractive, depending on the amount of Hopper’s fees and the fine print.

The multibillion dollar question is whether Hopper can make money on this proposition when it hedges and calculates the fees it would charge versus the risk of cancellations. Or would Hopper take a bullet, be OK with having the feature be a money loser to a certain degree in exchange for a tremendous boost to its short-term rental business?

Hopper would also likely distribute this feature, as well as a planned price prediction one for vacation rentals, to its growing roster of distribution partners, including Capital One, MakeMy Trip, Trip.com Group, and Kayak, as well.

Speaking at Skift Global Forum in September, Hopper CEO Fred Lalonde noted about the company’s price freeze product for flights, that it lost tons of money in the beginning, but boasted that it ultimately worked out the risk to Hopper’s advantage.

“When we launched this in air, at first we lost enormous amounts,” Lalonde said. “It was ridiculous the amount of money we were losing on this, and the reason we can do it is the same reason that people were throwing rocks at me for our aggregating the data, is we understand future prices better than anybody else, so we can price the risk in a way that nobody else can do.”

If Hopper can make a cancel-for-any-reason feature work in short-term rentals, it would certainly be disruptive, and could attract a bevy of imitators. To be clear, Airbnb, Vrbo and Booking.com executives aren’t trembling over Hopper’s rhetoric about a feature that is still in the planning stages.

But the platform leaders in short-term rentals would likely make changes if they see Hopper, which has a nascent business in the sector, winning the allegiances of hosts and guests with this until now novel cancellation feature.

App-Only Hopper to Get a Booking Website

Did we bury the lede? Meanwhile, a well-funded Hopper seems to be engaged in a hiring frenzy based on its posted job openings, in tech, marketing, and homes, for example.

Hopper has been app-only up to this point but is hiring software engineers “around building out a web platform mirroring the Hopper App experience.”

Like previously app-only HotelTonight, Hopper is on its way to offering desktop bookings, as well.

Why leave all of that money on the table?

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Tags: airbnb, alternative accommodations, cancellations, Dennis' Online Travel Briefing, fintech, guests, hopper, hosts, marketing, refunds, short-term rentals, Skift Pro Columns, super bowl, travel