Record after record for Hopper and the travel industry

Montreal-based Huber is expanding its product offering as demand for travel booking services reaches record levels. The senior manager of an online travel agency, however, realizes that the current frenzy is unsustainable.

Posted at 5:00 am

Richard Dufour

Richard Dufour
Journalism

“It’s crazy right now,” says Frederic Lalonde, Hopper’s founder and CEO. “Every week is a record. »

People want to travel two years after the pandemic, and it’s showing up across the industry.

Huber doubled his income for six months, says Frédéric Lalonde. “Booking just posted its best quarter since its founding in 1997, and eDreams, the European company Expedia, just announced its best results in 10 years,” he adds.

Photo EDOUARD PLANTE-FéCHETTE, LA PRESSE archives

Frederic Lalonde, CEO of Huber

For now, we don’t feel that the economic context can discourage travelers. But it is absolutely certain that next year there will be a slowdown,” thinks Frédéric Lalonde.

“It is impossible to support what is happening at the moment, because two years without travel, it is the realization that the government can stop us from traveling, which no one thought possible. But it is also because governments have given huge sums of money to consumers during the pandemic People accumulated a little debt on their credit cards, so it created a super cycle, an unnatural wave.”

Higher interest rates make mortgages and other debt more expensive, stock market volatility puts pressure on retirement savings, and inflation inflates the value of consumer goods.

“There is likely to be a recession coming. It cannot go on like this,” said Frédéric Lalonde, speaking of demand for flight, hotel and car rental bookings.

new products

Fuel demand and costs along with limited capacity are putting pressure on airline ticket prices, hotel rates, and car rentals. That’s why, according to Huber, travel prices this summer are higher than previous years.

Management adds that high prices, frequent delays, and persistent uncertainty exacerbate consumer anxiety, and that Hopper-designed financial products mitigate that concern.

Huber has been testing some new financial products since the beginning of the year and is now ready to officially launch.

Frederic Lalonde’s favorite novelty is the “Vacation For Any Reason” product. This product allows you to check-out at or after check-in and book a room in a new hotel of the same star category at no additional cost.

“You can walk into the hotel and realize there is a jackhammer next to your room,” says Frédéric Lalonde. Dissatisfaction can also be linked to housekeeping that is not up to standard, or simply to the fact that the customer expects to have a sea view.

We are the only ones on this planet that offer this.

Frederic Lalonde

Offering a product like this is easy, the CEO himself admitted. Not losing money by giving it away is something else. He admits it is “difficult,” explaining that the cost is calculated dynamically.

“When someone books a room at the Ritz-Carlton and decides they don’t want to go there, we have to pay the full cost of the new reservation. No risk from the supplier [hôtel ou transporteur aérien]. You must be very good at calculating risk. »

With each transaction, the algorithms calculate the selling price of the product based on the risk. If a customer buys a plane ticket with connected insurance and it is known that a hurricane is on the way, the price will go up.

In general, Frédéric Lalonde estimates that the cost always fluctuates between 6 and 15% of the price of the purchased travel product. “If you buy a plane ticket for $100, it will cost an average of $6 to $15.”

In a context where demand is “exploding” and “everything is filling up everywhere,” the CEO is finding it hard to hide his enthusiasm for the success and potential popularity of this new product.

Cancellation and Freezing

Hopper now offers the ability — already available for flights — to instantly cancel a stay, for any reason, if you haven’t already checked in, and get a free room charge back.

Another new feature, products that freeze flight prices are now available for car rentals for up to 21 days. If the cost goes up, Hopper pays the difference up to $100, and if the cost goes down, the customer pays the lower price.

“It’s important because it means it’s possible to freeze a price for just about anything available on the Hopper app,” says Frédéric Lalonde.

Hopper also quickly realized that there were many reasons to book directly with the airline or hotel chain, just because of the loyalty programs.

Therefore, Hopper’s financial products are now offered to users, no matter where they book.

If you book directly through Air Canada or any carrier, you can now add flexibility products that were previously only available if you were a Hopper customer.

Frederic Lalonde

“We would like everyone to buy on our platform, but the truth is that this is not how the industry works. The ability to add these financial products to any booking allows us to cross new frontiers.”

Hopper, who was valued at $5 billion just six months ago, does not disclose his earnings. However, the CEO asserts that it is now 30 times higher than it was in 2019 before the pandemic, mainly due to the addition of the various financial products that have been developed.

The total value of Hopper’s bookings this year is expected to be between $4 billion and $5 billion.

Huber counts Investissement Québec, Caisse de Depot et placement du Québec, OMERS (Ontario Municipal Employees Pension Fund), Brookfield and Inovia among the investors.



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