Frederic Lalonde, founder and CEO of Hopper Inc., outside its offices in Montreal, on March 19, 2021.Christinne Muschi/The Globe and Mail
Online travel services company Hopper Inc. is getting ready to turn on the jets.
The Montreal company is already one of Canada’s largest, fastest-growing and most valuable technology companies, three years after rebounding from what chief executive officer Fred Lalonde has described as an “extinction-level event”: the pandemic, which grounded the travel industry. Last fall, Hopper’s valuation topped US$5-billion; this year its revenues surpassed US$500-million, up from US$14-million in 2019.
Now it’s unveiling the first in what it says is a coming slew of global deals that will build off the success of a partnership with U.S. credit-card issuer Capital One Financial Corp. COF-N
In this latest deal, Nu Holdings Ltd. NU-N, also known as Nubank, a Sao Paulo-based digital bank with more than 80 million customers in Brazil, is partnering with Hopper to launch a new mobile travel booking portal next year, marking the South American company’s entry into the travel category. While Latin America is Hopper’s second-biggest market outside North America, it previously had no presence in Brazil.
Hopper said Thursday it will power the service, which will offer bookings for flights, accommodations and vehicles to Nubank clients. The service will also offer a unique set of high-margin ancillary financial products for travellers, pioneered by the Canadian company.
Those products, built by Hopper using machine learning that leverages vast data sets obtained by travel booking systems, include the ability to freeze a flight price for days, buy the right to cancel for a full refund for any reason, rebook a missed connection at no extra charge or change a ticket to a different day without forfeiting its full value. Hopper takes the financial risk for the products, leaning on algorithms to dynamically price its offerings in real-time.
Hopper president Dakota Smith said in an interview that the company is set to announce “about a dozen other partnerships” in the next few months, including one in Canada and others in Europe, Asia and Australia. “We’re looking to partner with market leaders who have large credit-card lines of business and an innovative and technology-forward approach, in pretty much every country, every region” globally.
Hopper initially made its name with millennial consumers by building a mobile travel-buying app that predicted the best times to purchase flight tickets inexpensively. It then parlayed its data-focused approach to travel into a prosperous side business by partnering with Capital One to power the credit-card issuer’s travel booking and reward services, starting in September, 2021. Since then, it has added similar deals with Uber in Britain (for the ride-hailing company’s flight-booking service), Singapore online travel booking platform Agoda and Marriott Australia’s CommBank.
Capital One has also led Hopper’s past two financings, in 2021 and 2022, when the company raised a combined US$266-milllion. Other Hopper investors include Brookfield Asset Management BAM-T, Goldman Sachs GS-N, Citi Ventures, WestCap Group, Caisse de dépôt et placement du Québec, Brightspark Ventures, Inovia Capital and OMERS Ventures.
Hopper’s business-to-business side venture, known as Hopper Cloud, now generates more than US$3-billion in annual booking volume, which translates into hundreds of millions of dollars in revenue – up from zero less than two years ago – and accounts for more than half its sales.
Hopper Cloud services are now available to 150 million customers of its clients – in addition to the 100-million-plus people who have downloaded Hopper’s own consumer app, and not including tens of millions more to come next year from Nubank. Mr. Smith estimated Hopper Cloud revenues would account for two-thirds of the company’s total in 12 months. “Three years ago we thought of Hopper as our app, our corporate identity was the app. These days we think of Hopper as the platform that powers the app” as well as its ancillary financial products and its e-commerce platform.
Mr. Smith forecast that overall revenue would reach US$1-billion in two years, about the same time he said the company would likely break even. Hopper now claims to be North America’s third-largest online travel agency.
“It’s crazy, sometimes I see the charts and I’m like, ‘Wow, maybe that’s the most successful ramp up of a B2B business in history,’” Mr. Smith said.