If the Covid pandemic has proven one axiom, it is that an ounce of prevention is worth a pound of cure – and if you can’t prevent or cure it, insure you.
Travelers take this lesson to heart, and when they return to cars, planes, and cruise lines, they try to hedge their bets by insuring trips, setting prices, and more – when, where, and as easily as possible. And they are ready to pay for this security, according to the travel app Hopper.
“The appetite for security and stability is enormous and customers are willing to pay for them,” said Hopper founder and CEO Frederic Lalonde.
To meet that need, Hopper announced on Tuesday that it is partnering with Amadeus to bring its fintech insurance and pricing solutions to customers of the Madrid-based global distribution system and travel software giant through its business-to-business initiative Hopper Cloud.
Hopper describes itself as the largest North American travel app and a “mobile-first travel marketplace”.
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In return, Hopper users can now use the Amadeus Travel Platform to access Amadeus’ global car rental portfolio with 40 car rental companies in more than 3,500 cities in 191 countries. Montreal-based Hopper, with more than 50 million downloads and $ 1.2 billion in revenue last year from 2 million hotels, 300 airlines and several existing car rental partners, began using Amadeus for in-flight content late last year.
The expanded partnership is a natural addition, Lalonde said.
“Amadeus has an enormous reach; they have become, to my knowledge, the largest travel technology company in the world, ”he added, noting that the company“ has a technology and distribution network that powers an enormous amount of this huge $ 2.1 trillion [travel category]. “
The deal is another step in Hopper’s expansion from travel to fintech or financial services sectors. “When we started thinking about how we could bring Hopper Cloud, our financial products, to everyone, there really was one name high on that list,” said Lalonde.
The Hopper Cloud products that Amadeus uses include Cancel for Any Reason, which allows passengers to cancel any flight reservation up to 24 hours before departure and get at least 80% of the fare back, and Price Freeze, which allows travelers to get a price of up to 14 days.
Any travel seller using the Amadeus Travel Platform, such as online travel agencies and airlines, can offer their customers the fintech products for which Hopper assumes all risk once the companies’ integration process is complete. Lalonde says that specializing in travel fintech products not only made the company stand out, but also prosper, with US offices in New York and Cambridge, Massachusetts.
“We’ve gotten extremely good at price risk, price changes and disruptions,” he said, noting that Hopper doubled its sales during Covid.
“We’re the only OTA [online travel agency] that I know of, with the exception of one in India which focused on traits that actually grew during the pandemic, “Lalonde added.” When we started seeing how much more resilient our own business was, we thought, ‘Should we offer these financial services? Everyone?'”
For Amadeus, the deal is part of an ongoing diversification project.
“We have been selling classic travel insurance from the well-known insurance companies for many years, and very successfully on various channels: online, offline and with airlines,” says Peter Altmann, Head of Mobility and Insurance at the company Airlines supported on the insurance purchase website.
We have gradually grown from a travel company to a finance company.
Frederic Lalonde
Hopper CEO
But Hopper’s insurance fintech is different, said Altmann.
“We believe that consumers will buy more of these products than traditional travel insurance, especially the younger generation,” he added, noting that for whatever reason, as a financial services product, cancellation is not bound by global legal restrictions like traditional insurance policies.
Additionally, Altmann said, “It brings the app experience so that you not only buy the product in the app, but also do all of the tracking in the app.” Instead of sending claims forms by registered mail or e-mail, customers can close a claim immediately via the app.
After Hopper’s research, you will likely find willing customers; According to the company, 80% of travelers would book a flight if they could change or cancel the ticket without penalty. (For its part, Amadeus has found that 41% of travelers book international travel within six weeks of the restrictions being lifted.)
In the meantime, 60% would buy at least one Fintech product as part of their travel booking and, according to Hopper, would buy it again with an 87% probability. Lalonde said such travelers in the US spend an average of $ 55 more per booking.
Amadeus now offers fintechs like Price Freeze (pictured) and Cancel for Any Reason from travel app developer Hopper.
Amadeus
“For the same dollar of trips sold, customers spend 15% more” with Hopper Cloud Fintech, Lalonde said. Lalonde estimates the total market potential for travel-related financial services to be at least $ 200 billion. “This is bigger than gaming,” he noted. “There’s an incredible opportunity to develop that.”
Hopper – whose fintech development began in 2018 and accounted for half of all revenue just a year later – might consider other financial services options like savings accounts. “We’re very interested,” he said.
“We gradually went from being a travel company to being a finance company,” he said, noting that Hopper assumed all of the risk on fintech products on his income statement. When Covid struck, “we had more outstanding debt than cash,” Lalonde said. “There was a time in 2020 when I was sure we were dead.”
“As bad as Covid was, in hindsight what we learned about customer behavior and risk models from that Black Swan event is invaluable,” he added. “It would have taken decades to get equivalent data.”
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