Hopper's strategy to focus on fintech has it well-positioned to take advantage of the growing appetite for products that make trip planning less stressful.
Frederic Lalonde, the CEO and founder of online travel agency Hopper, attributes much of his company’s success to its array of financial technology products, such as one that lets customers pay a fee to leave a hotel after check-in for any reason.
“The reason we’re able to grow is because of our fintech products,” Lalonde said in discussion with Executive Editor Dennis Schaal at Skift Global Forum Wednesday in New York.
“When consumers come to Hopper, they’re able to spend $50 more to buy the same travel stuff that they can buy anywhere else.”
He cited products such as disruption protection in case of flight delays and cancellations and one that enables customers to pay a fee to freeze the price of a hotel room before it goes up.
“The reason that these products are working is partially because we’re able to able to sell them,” he said, adding he believes that fintech unlocks between $200 and $400 billion worldwide of new customer spending.
“But more importantly, they work when you need them. 80 percent of the time, everything is seamless from getting your money back instantly to getting rebooked.”
Lalonde said the company generates nearly 40 percent of its roughly $1.3 billion annual revenue comes via fintech products. Nearly half of that figure comes from flight revenue as Hopper is the third largest online agency travel agency flight booker in the U.S. between behind Expedia Group and CheapOAir.
However, Lalonde acknowledged that Hopper initially loses money on products it introduces.
“You release it to a small group, you lose a lot of money on a few people, you figure out what you did wrong and then you scale,” he said. “If you do it the other way around, that’s bad.”
Meanwhile, Lalonde said Hopper is entering into the vacation rental market because it found its customers are twice as likely to stay in a home than a hotel. He also noted the company is enjoying with younger customers due to the appeal of its app, which features what Lalonde described as “a crazy bunny.”
“There is a momentum to catering to that generation,” he said.
Photo credit: Hopper CEO Frederic Lalonde in discussion with Executive Editor Dennis Schaal at Skift Global Forum Wednesday in New York. Skift