Hopper: the AI-Based Travel App
Hopper is an award-winning travel booking app that can only be used via a mobile device. Currently (7 October, 13:31 pm), the application has been installed 30,830,065 times whereby in total 77,732,362 trips were planned (Hopper, 2018). Hopper was founded in 2007, yet already its current market valuation has surpassed $780 million US dollar.
Hopper falls under the category of online travel agencies (OTAs). This implies that booking happens in the application itself instead of re-directing the user to other websites. Thereby, Hopper’s revenue streams are derived from commissions based on the value of the flight. This combined with a focus on expensive, long-haul flights has brought Hopper great success so far.
This success is evident when looking at the user ratings of the application, whereby Hopper is rated as number 1 travel app in over 35 countries. What can explain these achievements?
Hopper is built on an AI Framework that helps users to monitor flight prices and accordingly informs them when it is the best time to purchase a ticket. Hopper watches planned trips of users’ multiple months before the actual departure. This allows the system to learn about the specific user’s intent. For this, it mainly uses push notifications. Whether a user responds to those notifications influences the ability of Hopper to further reshape the profile it has made of its users. It is hereby critical that the users trust the recommendations provided by Hopper. Hopper has managed to live up to this task, as it builds on billions of data points when producing recommendations. This ensures the high reliability of the application.
Additionally, due to the AI technology, users book 2.6 times more often trips they did not initially search for. This is an important determinant of the exponential growth of the application.
Hopper has recently started to focus on the hotel market too. This it is an interesting move. By getting more experience with the accommodation industry, Hopper could become more prepared to engage in a partnership with a private-home platform such as Airbnb. This could result in a strong AI fueled accommodation-platform, which could fundamentally change the industries as we know them
Sources
https://www.hopper.com/company
https://www.sabre.com/insights/hopper-making-a-splash-in-the-ota-pool/
Hi Cas,
Thanks for your blog, I think it was a very interesting read!
Mainly the part about a potential partnership between Hopper and Airbnb caught my attention. I think this could be a great opportunity for both companies, as potentially recommendations could be given for rooms from Airbnb after booking a flight with Hopper. Yet, I also see a potential major downside.
I believe that this partnership could give these companies too much power in both the OTA as the accommodation industry. By combining their data, they could create immense databases which could create a very difficult to beat competitive advantage. Since, by deploying machine learning algorithms they could more accurately predict future demand and improve their internal processes. Next to this, potential increased network effects (due to their shared user base) could enhance their power even further. Eventually, this could create economic inequalities since a lot of money and power will be in the hands of a small group of people.
Hence, although the possibilities of this partnership are astounding, I believe we have to critically assess whether this would be a step in the right direction for the economy as a whole.
What do you think?