Skift Take

Expedia ended its supplier relationship with Hopper over a variety of business practices it finds abhorrent. Was there a competitive motive involved, as well? Yup.

Expedia Group, which has supplied rival Hopper with hotel and vacation rental inventory for several years, terminated the relationship Wednesday over a variety of practices that Expedia believes are anti-consumer, Skift learned exclusively.

“Expedia Group terminated its supply relationship with Hopper today,” an Expedia Group spokesperson told Skift. “The reasons for termination are simple: As Hopper’s product has evolved, we have determined that its features exploit consumer anxiety and confuse customers, leading them to purchase services they neither need nor fully understand. As leaders in powering the B2B travel market, we have a commitment to travelers and to our supply partners that we take very seriously and, as such, we are ceasing placing our trusted supplier content on the Hopper platform.”

A Hopper spokesperson said Wednesday that “although it seems that Expedia planned and delivered its notice in an anti-competitive attempt to cause disruption to Hopper’s business, there will be no impact at all. Hopper has always had a multi-sourced strategy when it comes to our inventory. Expedia was one participant among many within Hopper’s marketplace.

“As Hopper has grown its market share, we’ve moved substantially to direct inventory to ensure we always offer the best price and selection for our customers. Expedia’s decision to withdraw from Hopper channels will not affect the selection or prices available to Hopper consumers. Hopper will continue to be the best place to book travel.” (See Hopper’s full statement below.)   

Expedia Group has supplied hotels to Hopper for around five years, and more recently provided Hopper with vacation rentals, as well, although Hopper has other suppliers, too.

“Lodging supply that we provide via our Rapid API will no longer be available on the Hopper platform today,” the Expedia Group spokesperson said. “We will, of course, continue to support travelers with current bookings after the termination date.”

Sources familiar with the partnership termed Hopper a “significant partner” for Expedia Group — and that characterization would seemingly hold true for Hopper, as well.

It’s unclear what the impact on Hopper — and its distribution partners such as Capital One — might be. Hopper certainly has other hotel suppliers — although Expedia is likely a major one — and vacation rental partners. Hopper offers some 2 million hotels, and around 4 million private rental properties. At the end of 2022, Expedia reported having “3 million lodging properties available, including over 2 million online bookable alternative accommodations listings through Vrbo, approximately 900,000 hotels and alternative accommodations through our other brands.”

So Expedia might be supplying close to half of Hopper’s hotels. However, Expedia would appear to be providing vacation rental inventory to Hopper in the low single digit percentage range.

The sources also said that Expedia’s areas of concern about Hopper were focused on customer trust and the use of junk fees, allegedly misleading marketing claims, high-pressure sales tactics and anxiety, and questionable insurance practices where some guarantees aren’t backed by licensed insurance companies.

When asked by this reporter at Skift Global Forum last September whether he is a fan of airline cancellations as a way to boost Hopper’s assortment of so-called fintech products, CEO Fred LaLonde said: “I love anxiety.  I want people to be worried that the logistics around the trip might not be great. And I want to provide a complete, delightful antidote to anything going wrong …” (See the video embedded below.)

“Much of Hopper’s growth can be attributed to its expansion of fintech products (rolled out early 2019), as well as the launch of its B2B business Hopper Cloud (launched in 2021) — each making up close to 40% of Hopper’s total revenue today,” according to a Skift Research report, Hopper’s Rise in Travel (subscription), published in May.

Pranavi Agarwal, who wrote the Skift Research report on Hopper, said Wednesday that “Expedia’s termination of its relationship with Hopper clearly suggests some bad blood but it also goes to show how competitive online travel is becoming with new entrants proving to be very much capable of disrupting a market that for so long has been dominated by the duopoly [Expedia and Booking] of the legacy players.”

In its U.S. home base of Massachusetts — Hopper is headquartered in Canada — Hopper has an “F” rating and accreditation from the Better Business Bureau.

Hopper said Wednesday that it has focused on resolving customer issues directly rather than on the Better Business Bureau platform.

Hopper’s Alleged Junk Fees for Flights and Hotels

Hopper is constantly testing and changing its products, but we’ve seen examples of where after showing an airfare in the booking path, Hopper then presents a flight with no price above the fold. But then when the app prompts users to swipe to book the flight, they automatically get added to a bundle that includes a charge of $40 or so for a VIP Service. At times, a ticking clock pressured users to book before time ran out, presumably dissuading travelers from further checking the airfares.

A similar scenario occurred for hotels with consumers being automatically added to a VIP Service for $25 or so.

Hopper Touted Airfares as Refundable When That Wasn’t Always the Case

We’ve seen Hopper market an airfare as a Best Refundable fare but in reality the customer gets a travel credit instead. At times the price for a “refundable by Hopper” fare can be hundreds of dollars higher than the initial airfare that Hopper quoted. The customer loses the credit if he or she cancels the flight.

Some of Hopper’s Price Freeze Products Are Misleading

Hopper sometimes promotes its price freeze product, where you can freeze an airfare for a certain time period for a fee, as the default or recommended choice. It pushes a 24-hour price freeze on airfares for a fee when the U.S. the Department of Transportation allows airline bookings to be voided without penalty within the first 24 hours.

Hopper also markets its price freeze product on flights that are already fully refundable.

With its hotel rate price freeze product on fully refundable hotel bookings, guests wouldn’t save anything. If the customers paid a $45 fee to Hopper to freeze their refundable hotel bookings, then they wouldn’t recoup the fee if they cancel the bookings.

Some of Hopper’s ‘Guarantees’ Aren’t Backed by Insurance Companies

Hopper offers a variety of legitimate travel insurance products backed by Cover Genius, but critics have long charged that some of its “guarantees,” such as for flight disruptions, missed connections, and overbooking seem to be insurance-like products, although they aren’t backed by licensed insurance companies.

In an interview with this reporter in May, Expedia Group CEO Peter Kern talked about some of the problems he has with Hopper’s so-called “insure-tech” products.

“I think they [Hopper] have a lot of products around insuring against every little thing. It’s going to rain, it’s going to this, it’s going to that. The customer’s not winning in that trade. It doesn’t mean customers won’t pay for it. It doesn’t mean some won’t be happy with it, but there’s just a lot of stuff in there that reminds me of the days when there was the box you put the envelope in for air insurance. So just when you’re afraid to get on the plane, you put a $20 in the box, and just in case the plane goes down, your family gets a million dollars.

“They have some good product, don’t get me wrong. I’m just saying there are a lot of things they do that we elect, we choose not to do. We don’t think it’s a good consumer experience.”

Hopper has been a disruptive online travel agency. It was the most downloaded app in the U.S. in 2021, and is considered the third largest online travel agency in North America behind Expedia and Booking. So it’s easy to believe that beyond looking out for consumer benefit that Expedia has at least some competition motive in its decision to terminate its relationship with Hopper.

Still, Expedia has gone after Booking’s Agoda in recent months for allegedly offering unsanctioned wholesale hotel rates, and had discussions with Google over bait and switch tactics by some of the online travel companies that Google features in Google Hotels.

Portions of a Hopper spokesperson’s statement not cited above:

“Expedia notified us today that they will no longer distribute their inventory via Hopper channels. Given Hopper’s rapid growth in direct-to-consumer market share, the success of Hopper’s fintech products, and Hopper’s growing B2B business, Expedia clearly views Hopper as a significant competitive threat.

“Hopper has over 100 million app downloads and is the #3 largest online travel agency in North America. The company’s market share of third-party air travel increased to 13.3% (source: MIDT). Hopper sells $6 billion worth of travel and travel fintech every year; 2022 sales were up 3X over 2021. 

“With Hopper’s growing B2B business, the company is currently powering some of the world’s largest brands. Hopper Cloud currently reaches over 150M consumers via our white-label solutions and distributed fintech ancillaries for banks, airlines, hotels, and OTAS. Similar to the Hopper app, there will be no impact on inventory for our Hopper Cloud partners. 

“Per Skift’s own research, “Hopper with its data driven strategy and technology capability also allows it to be differentiated from the older, more traditional OTAs. This coupled with Hopper’s fintech offering layered across all of its products provides partners and suppliers an alternate avenue to diversify their source traffic and revenue streams, allowing Hopper to be a very real competitor to the giants of Booking and Expedia.”

Hopper CEO Fred LaLonde at Skift Global Forum in New York City in September 2022

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Tags: capital one, expedia, expedia group, fintech, flights, hopper, hotels, online travel newsletter, vrbo

Photo credit: Expedia ended its supply relationship with Hopper over its business practices. Pictured is Hopper CEO and co-founder Frederic Lalonde (left) at Skift Global Forum in New York City in September 2022. Source: Skift Skift

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