Montréal-based Hopper has secured $96 million USD ($130 million CAD) in equity funding from American financial giant Capital One to build out its business-to-business (B2B) functionality and support a push into social commerce.
Capital One previously led Hopper’s $170 million USD March 2021 Series F round. Last year, Capital One also became the first and “keynote” client of Hopper’s B2B business, Hopper Cloud, as the two firms teamed up to launch Capital One Travel for Capital One’s millions of credit cardholders.
“We weren’t just staying still and riding the travel boom.”
-Dakota Smith, Hopper
In an interview with BetaKit, Hopper president Dakota Smith said the firm plans to invest in a few areas, including Hopper Cloud, social commerce, and international market expansion. Capital One is also extending the length of its existing strategic partnership with Hopper.
Hopper’s follow-on investment from Capital One comes as tech valuations have taken a beating amid the market downturn. Smith declined to share Hopper’s exact valuation but said the round values Hopper at over $5 billion USD, up slightly since its February secondary financing deal.
“The reason Hopper has been able to outperform the sector, it’s the revenue growth,” said Smith. “The second part as well is that this B2B business has gotten people pretty excited, going from launching for the first time ever in September 2021 to being larger this year than Hopper’s entire business was just last year, that’s a pretty successful rollout.”
Smith described the company’s latest, all-primary financing round, which comes just over a year after Hopper closed $175 million USD in Series G financing, as “opportunistic.” The Hopper president claimed Hopper wasn’t in a position where it needed to raise capital, noting Capital One expressed interest in inking a longer-term deal following the results their existing partnership has generated in just a year.
Founded in 2007, Hopper is a “mobile-first travel marketplace” that facilitates flight, hotel, car, and home rentals. The company, which saw its business take a hit in 2020 amid COVID-19 concerns and restrictions, has benefitted recently from a big rebound in demand for travel that has also given a boost to other companies operating in the space, from airlines to fellow travel tech firms like Airbnb.
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In its quest to build a “travel super app,” Hopper has moved into FinTech and launched Hopper Cloud, a B2B initiative that enables travel providers to integrate and distribute its content. These decisions have fuelled significant growth for the company. “We weren’t just staying still and riding the travel boom,” said Smith.
Over the past year, Hopper claims to have become the fastest-growing travel app in the US, and the third-largest online travel agency in North America, at nearly 80 million downloads.
Hopper said it is on track to sell $4.5 billion in travel and travel FinTech this year across flights, hotels, homes, and rental cars. While Smith declined to share exact revenue figures, according to the company its sales are up four to five times year-over-year, and the firm is on pace in 2022 to pull in 25 times the revenue it generated in 2019.
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On the FinTech side, Hopper’s products include offerings that help protect users against pricing volatility and avoid trip disruptions. This expansion has proven fruitful, as according to Hopper, the firm’s FinTech products now account for 40 percent of its total app revenue, and 70 percent of its air booking revenue.
Meanwhile, Hopper Cloud, which the company launched last year, allows any travel provider to integrate and distribute its FinTech and travel agency content. Hopper Cloud’s clients include Capital One, Kayak, Marriott, Amadeus, Trip.com, and MakeMyTrip. The B2B initiative has grown four-times over the past six months, and according to Hopper, it is on track to make more this year than Hopper’s entire business did during 2021.
Within the competitive and crowded online travel booking space, Smith views Hopper’s FinTech products and push to serve Gen Z users as differentiators. According to Smith, Hopper aims to become “the travel brand” for Gen Z and millennial users.
Hopper Cloud is on track to make more this year than Hopper’s entire business did in 2021.
While Hopper Cloud caters to older adults, the average user of Hopper’s app is 25. This year, Hopper shifted to spending the majority of its marketing budget on social commerce features to attract and retain more younger users, including in-app activities and rewards and loyalty like Carrot Cash promotions, discounts, and sales events.
In order to become that travel super app the company hopes to be, Smith said Hopper’s vision involves covering all travel categories, offering FinTech products for each, and enabling users to earn and redeem rewards for using Hopper and booking travel.
During COVID-19, travel was a “losing category” as people stayed home to stave off the spread of the coronavirus, and all of this pent-up demand has led to the boom in demand at play today.
Now, amid a period that involves rising inflation and falling consumer confidence that could lead to a recession, Smith said, “it is heartening to see that consumers have, even in the face of a pinched pocketbook due to inflation, they’ve shifted their spend to travel, restaurants, and experiences, and kind of away from traditional retail.”
Smith claims that Hopper hasn’t had to freeze hiring or make any layoffs in recent months and doesn’t expect the firm will have to do so in the coming months, but did note that the company is being “more judicious” about headcount growth during this period.
“Obviously, no one can predict the future,” said Smith. “We hope for strong consumer pocketbook and spending profiles in the coming years.”
As to how well positioned Hopper is to navigate these challenging macroeconomic conditions, Smith believes Hopper is in a good spot given the strength of its partners and balance sheet, and citing the company’s ability to bounce back and grow during the pandemic.
Feature image courtesy Hopper.