If the Covid pandemic has proven any axiom, it’s that an
ounce of prevention is worth a pound of cure — and if you can’t prevent or
Travelers are taking that lesson to heart and, as they
return to cars, planes and cruise ships, they’re looking to hedge their bets by
insuring trips, locking in prices and more — when, where and as easily as they
can. And they’re willing to pay for that peace of mind, according to travel app
“There’s an enormous appetite for security and stability,
and customers are willing to pay for this,” said Hopper founder and CEO
To help meet that need, Hopper announced Tuesday it’s
teaming with Amadeus to offer customers of the Madrid-based global distribution
system and travel software giant its fintech insurance and price-freeze
solutions via its Hopper Cloud business-to-business initiative.
Hopper describes itself as the largest North American travel
app and a “mobile-first travel marketplace.”
In return, Hopper users now have access to Amadeus’
worldwide car rental inventory via the Amadeus Travel Platform, with 40 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 sales the past year
from 2 million hotels, 300 airlines and several existing car rental partners,
began using Amadeus for flight content late last year.
The expanded partnership is a natural fit, said Lalonde.
“Amadeus has huge reach; they’ve become, to my knowledge,
the largest provider of travel technology in the world,” he added, noting the
firm “has a network of technology and sales that powers a huge amount of this
huge $2.1 trillion [travel category].”
The deal is another step in Hopper’s expansion from travel
into fintech, or financial services technology. “When we started thinking of
how to offer Hopper Cloud, our financial products, to everybody, there was
really one name at the top of that list,” said Lalonde.
The Hopper Cloud products Amadeus is deploying include
Cancel for Any Reason, which lets passengers instantly 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 hold a price for up to 14
Any travel seller using the Amadeus Travel Platform, such as
online travel agencies and airlines, will be able to offer customers the fintech
products, for which Hopper underwrites all the risk, once the firms’
integration process is complete. Lalonde says specialization in travel fintech
products has let the firm, which has U.S. offices in New York and Cambridge,
Massachusetts, not only stand out but thrive.
“We’ve gotten extraordinarily good at pricing risk, of
prices changing, of things being disrupted,” he said, noting Hopper doubled its
revenue during Covid.
“We’re the only OTA [online travel agency] that I know of,
except for one in India focused on trains, that actually grew during the
pandemic,” added Lalonde. “When we started seeing how much more robust our own
business was, we started thinking ‘Should we offer these financial services to
For Amadeus, the deal is part of an ongoing diversification
“We’ve distributed, for many years, traditional travel
insurance from the insurance companies everyone knows, and we’ve done that very
successfully in different channels: online, offline and with the airlines,” said
Peter Altmann, the company’s head of mobility and insurance, noting Amadeus
powers 40 air carriers’ website insurance purchase offerings.
But the insurance-type fintech from Hopper is different,
“We believe consumers will buy more of these products than
traditional travel insurance, especially the younger generation,” he added,
noting that cancel-for-any-reason, as a financial services product, is not
bound by global legal strictures as traditional insurance policies are.
In addition, Altmann said, “it brings the app experience, so
you not only purchase the product on the app but you do all the follow-up on
the app, as well.” So, instead of sending claims forms by registered mail or
e-mail, customers can instantly complete a claim via the app.
They’ll likely find willing customers, according to Hopper’s
research; the company said 80% of travelers said they would book a flight if
they could change or cancel the ticket without penalty. (For its part, Amadeus
has found 41% of travelers will book international travel within six weeks of restrictions
Meanwhile, 60% would buy at least one fintech product as
part of their travel booking and, according to Hopper, there’s an 87%
likelihood they’d buy again. Lalonde said such travelers in the U.S. spend $55
more on average per booking.
“For the same dollar of travel sold, customers spend 15%
more” with Hopper Cloud fintech, Lalonde said. Lalonde estimated the total
potential market for travel-related financial services is at least $200
billion. “That’s larger than gaming,” he noted. “There’s an incredible
opportunity to develop that.”
Hopper — whose fintech development effort, begun in 2018,
ended up accounting for half of all revenue just a year later — may be looking
at other financial services opportunities such as savings accounts. “We’re
extremely interested,” he said.
“We gradually went from a travel company to a financial
company,” he said, noting Hopper took all the risk for fintech products on its
profit-and-loss statement. As Covid hit, “we had more outstanding liabilities
than we had cash,” Lalonde said. “There was a time in 2020 that I was sure we
“As bad as Covid was, in hindsight what we learned from that
black swan event about customer behavior and the risk models is invaluable,” he
added. “It would have taken decades to get equivalent data.”
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