Montréal travel technology company Hopper’s relationship with its largest client is evolving.
Hopper, which built and managed Capital One’s online travel booking portal for credit cardholders, confirmed earlier this week that, after four-and-a-half years, the American financial services giant is bringing the Capital One Travel platform and the employees behind it in-house.
Dakota Smith, Hopper
“They were our largest managed platform client, and now they are our largest API client.”
This transition was first reported by Skift in November. The travel industry news publication also reported earlier this week that Capital One is making a “payout” to acquire the software, team, licences, servicing contracts, and supplier relationships from Hopper that power Capital One Travel. Skift reported that 150 Hopper staff responsible for the platform are joining Capital One, and that Hopper will lose most of its revenue from Capital One as a result of this shift.
In an interview with BetaKit, Hopper co-founder and president Dakota Smith positioned the move as an “update” to the partnership that will see Capital One begin managing the travel platform internally. Smith claimed this is a sign of the success of the platform. “It’s doing great, and that’s why they are doubling down and investing in it.”
Neither Smith nor a Hopper spokesperson BetaKit later spoke with confirmed the number of Hopper employees who have joined Capital One. The spokesperson did claim that Skift’s reporting on Hopper’s revenue was not accurate. Meanwhile, Smith said that under the updated partnership Capital One remains Hopper’s largest B2B client.
“They were our largest managed platform client, and now they are our largest API client,” he said.
Capital One, which launched its own mobile travel app this week, did not respond to BetaKit’s request for comment on details of this transition and the rationale behind it.
Going forward, Smith said, Capital One will continue to leverage Hopper’s application programming interfaces (APIs), which help business-to-business (B2B) partners integrate its flight and hotel inventory, price prediction, price freeze, and disruption protection products.
From managed platform to API
Capital One became the first and “keynote” customer of Hopper’s B2B division, Hopper Technology Services (formerly Hopper Cloud), in December 2020. Hopper spent the next nine months building Capital One Travel, which the two companies launched in September 2021.
Since then, Hopper has been managing the platform, which has seen booking volumes grow more than tenfold and, the company claims, turned into “one of the most successful credit card travel portals in the industry.”
RELATED: Hopper closes $96 million USD from Capital One at over $5-billion valuation
Capital One has also become a significant Hopper shareholder in the interim, leading the company’s $170-million USD Series F in March 2021 and doubling down with a $96-million USD investment in November 2022 that valued Hopper at more than $5 billion USD. Smith said those investments have given Capital One “influence and insight” into the work Hopper is doing, and asserted that Capital One remains a strong believer in the company.
Hopper, which got its start in 2007 as a consumer-facing travel app, has used this capital to build up its B2B operation, which now accounts for 90 percent of the company’s revenue.
“We’re incredibly grateful that Capital One took an early bet on us, and we’re excited for what’s ahead,” Hopper shared in a statement.
For Capital One, bringing Capital One Travel in-house could give it more independence as it looks to innovate, deepen direct relationships, and compete with credit card travel rivals like JPMorgan Chase and American Express.
Hopper eyes profitability
Smith claimed that in the travel industry, API partnerships represent more than 80 percent of B2B volumes. He said Hopper already has other large B2B clients, such as Air Canada, using only its APIs, as well as other partners over the past year who have scheduled the same shift as Capital One from Hopper-managed platforms to only leveraging Hopper’s APIs.
As part of Hopper’s shift to B2B and push towards profitability, the firm has made multiple rounds of layoffs since 2023. Smith said it reached positive earnings before income, taxes, depreciation, and amortization over the past six months and is no longer shedding employees.
Today, Smith said Hopper has approximately 400 core staff, a figure that does not include customer service workers, and is “infinitely more capital-efficient” with much higher margins. He declined to share Hopper’s current sales but said the company hopes to reach $1 billion in annual revenue within the next few years.
While B2B partnerships are driving the vast majority of Hopper’s revenue today, Smith said the company’s consumer app remains a key testing ground for innovative new products they later bring to enterprise partners, calling it Hopper’s “sandbox.” Smith referred to it as “the foundation” of the company’s B2B growth.
Feature image courtesy Hopper.