Home Retail & Consumer AI Travel App Hopper Raises $100M at $780M Valuation

AI Travel App Hopper Raises $100M at $780M Valuation

The development of technology has significantly improved travel logistics for many families worldwide. One of the apps that have revolutionized the travel field is the Hopper.

The mobile-only travel booking application was co-founded by a former executive of Expedia in Montreal, Canada. Unlike many apps, Hopper uses artificial intelligence to simplify your work when searching and booking hotel rooms as well flights.

The app has been embraced and it has passed the founder’s initial target of 30 million installations and 75 million plans for trips.

Today, the app has raised $100 million which will be spent to create more Al algorithms to effectively reach the international market.

The icing on the cake for this app is the ever-rising revenues with the founders alluding to a possible $1 billion in sales this year!

The Hopper’s valuation is nigh 1 billion Canadian dollars (approximately US$ 780 million) which is a rise from US$330 million in 2016. The app has raised around US$235 million to date and has consistently remained among the top-10 travel apps in the United States.

Despite the high earnings, Fredric Lalonde-CEO and Co-Founder opined that they are yet to become profitable since they largely reinvest the returns to fuel the app’s growth.

The latest growth trajectory of the Hopper App was headed by the previous investor Omers together with the Accomplice, BDC Capital IT Venture Fund, Caisse de dépôt et placement du Québec (CDPQ), Investissement, and Brightspark Ventures. Citi Ventures, a new investor, has also contributed significantly to the growth.

There are numerous travel apps in the market where travelers can look up convenient locations and make the appropriate bookings. Such applications include the old market players such as the Expedia/ Travelocity and Booking.com.

Recently, the field has become relatively competitive by the introduction of startups such as Airbnb, Hipmunk (owned by SAP/Concur), and Kayak (recently acquired by Priceline/Booking.com at a price of $1.8 billion).

Despite the high competition in the travel app industry, Hopper has carved its niche by creating an Al framework that enables travelers to get excellent deals and give them ideas on locations that they never knew existed!

READ MORE: 10 Powerful Applications of Artificial Intelligence in Retail

The Al framework helps the user to establish their profiles and update their interests. Hopper will start to build your profile immediately you download the app and start using it. They send well-calculated push notifications that help them establish your interests thus creating a profile that suits your needs as elaborated by Lalonde in an emailed interview:

“We’re able to capture our users’ intent in an unprecedented way in the industry because users start watching their trips four to five months in advance of departure”

The CEO added “During that period, we build a relationship through an ongoing conversation about their trip, which primarily takes place via push notifications. User intent is key to our ability to implement further algorithms based on AI.”

Lalonde said that Hopper uses classic Al methods to learn about their users which help them to build a customized personal profile as well as lookalike profiles with anonymised data from people with similar interests. “It’s similar to how Netflix will recommend a show to you based on what other viewers like you are watching,” the CEO added.

He also confided that the app has helped to mechanize the travel arrangements that were once made by human travel agents thus saving time and enhancing convenience.

Al is a common term today but it has directly influenced the growth of Hopper. Lalonde reported that approximately 25% of Hopper’s bookings result from Al which means that the app’s users are accepting their suggestion even before they search for their convenient destination. “Conversion rates on AI-based recommendation notifications are 2.6 times higher than ones for which the users explicitly searched,” said Lalonde

Unlike many travel apps which uses metasearch provider or aggregator, Hopper is designated an OTA which ensures that the bookings are made in the app other than being passed to a different site. This arrangement allows the company to obtain commissions from all the bookings made through the app.

According to Lalonde, 52% of Hopper’s airline bookings are international flights which translates to more spending when compared to domestic flights. “We’re a very complimentary channel for airline and hotel partners given our users are shopping far in advance on mobile so we aren’t competing with their websites.” he added.

In the future, Hopper App will integrate the various forms of travel that rhyme with its users’ profiles to ensure that it accommodates all the needs of the clients.

Recently, the company added 47 low-cost carriers in Europe which has improved the company’s sales by an impressive 154% in the region. However, Lalonde declined to comment on the possibility of the company including Airbnb or any other private-home platform to allow their users that option.

“Nearly 70% of Hopper bookers are Millennials so alternate accommodations are something we may be interested in exploring,” he said. The CEO added, “However, we’re currently entirely focused on scaling our hotel markets and supply since accommodations is still a very new category for us.”

He said that he believes that the possibility of adding Airbnb is something to watch. The CEO noted that the intersection of Hopper with Airbnb might improve the mutual work between the companies which may lead to one of the companies absorbing the other in a consolidation effort.

Additionally, Lalonde pointed out that Airbnb (currently valued at $31 billion) is on course for an IPO since it is looking to interact the users beyond the travel arrangements business. Hopper does not have the plans to expand into an old-school web!

“Our core strengths are due to the fact that we’re mobile-only so we have no plans to offer a web product,” Lalonde said. Since the laptop usage has significantly declined, the use of smartphones has increased. “Indeed, as laptop usage has declined, smartphones have only grown in their ubiquity. “As the world continues to shift from the web to mobile, and in-app in particular — estimates place online mobile minutes anywhere between 70-90 percent worldwide; 92 percent of all mobile time is spent in-app — we believe Hopper is in a unique position to become the go-to way to book travel,” he added.

Despite the apparent growth, Hoppers is still occupying a significantly small niche of the travel market. The travel industry is currently valued at $1.3 trillion with online accounts contributing $662 billion, and the mobile accounts contributing $264 billion of the amount.

For the people who have invested in Hopper, they are hoping that the mobile accounts will gain more traction to dominate the industry. The investors also believe that the groundwork that has been conducted by Hopper will help it to consolidate its position as a big player in the industry.

Damien Steel, the Managing Partner at OMERS Ventures, said in a statement “Mobile travel is growing 20 percent year over year. By continuing to innovate on mobile and ultimately change the way consumers plan and book travel, we believe Hopper has a tremendous opportunity globally.” He added, “We’re proud to continue supporting Hopper as the company further establishes itself as the leader in mobile travel booking.”

Source TechCrunch

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KC Cheung
KC Cheung has over 18 years experience in the technology industry including media, payments, and software and has a keen interest in artificial intelligence, machine learning, deep learning, neural networks and its applications in business. Over the years he has worked with some of the leading technology companies, building and growing dynamic teams in a fast moving international environment.
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