Hopper, a mobile app for tracking and booking cheap airfares, says it has been enjoying rapid growth.
Hopper's apps for Apple and Android have been downloaded 4.5 million times since December, bringing the total number since the product's Apple debut in early 2015 to 6 million. One explanation: This winter, Hopper was been named as a "best app" by Apple and "a standout startup" by Google Play.
Usage within the apps has also been speeding up, the Boston-based company says.
In a key feature called "watch", users need to click a button to track price changes on a trip by agreeing to accept push notifications. Use of the "watch" feature has been accelerating. So far, consumers have tracked nine million trips in this way, Hopper says.
This summer it has been seeing users track close to two million new trips each month.
A year ago, Hopper wasn't selling tickets.
It was acting as a metasearch, referring users to other sources to buy. But since last September, it has been an ARC-accredited agency and has been booking tickets and acting as the merchant of record.
This year it has sold tickets in 130 countries.
The company expects to sell "hundreds of millions of dollars of air" this year. It believes that this rapid business growth makes it the fastest growing mobile travel agency (MTA).
"I think it's fair to say there has ever been any company that has gone to selling tickets in 130 countries within six months," said chief executive Fred Lalonde.
Hopper's success defies the conventional wisdom that people won't complete purchases of airline tickets on mobile devices and use mobile devices only for research. (Hopper only has smartphone apps, though it says about 10% of its users are on tablet devices.)
Lalonde chalks this up to a revealed preference by consumers for mobile usage. If you get the user experience right -- as he claims Hopper has -- consumers prefer to book by mobile. Lalonde says:
"The Millennials certainly want to buy on their phones, and Millennials are 52% of our audience."
He predicts the whole industry will shift to an overwhelmingly majority of flights being purchased by mobile devices within a much shorter timeframe than is conventionally anticipated.
All travel companies will eventually learn to master the new form factor and related set of consumer behaviors and expectations.
Consumers are using Hopper to buy expensive flights on their mobile devices, Lalonde says.
International flights represent almost two-thirds of the tickets the startup sells. From its user base of cross-border flights, the average annual spend per user is $1,400. Lalonde says:
"We are not a last-minute app. On average, people start tracking flight prices three months prior to departure. So our users fit right within mainstream travel buying patterns."
The company's default interface focuses on helping consumers research flights. It does not immediately start pushing ticket offers at users. It instead focuses on telling consumers when is the best time to buy, with a claimed 95% forecast accuracy.
It says 60% of the push notifications it sends are about telling consumers not to buy at that moment.
Lalonde says he doesn't think there's any other brand in travel that sends so much communication to caution consumers against making a purchase at any given moment.
Hopper says that on two out of three routes, on average, it see price drops at least once prior to departure. In other words, there isn't an inexorable step-wise march upward in airfare as the clock ticks down.
The company uses multiple sources to source fare data, including the major global distribution systems (GDSs), but not ITA Software by Google.
One flaw: Hopper doesn't include some airlines, which decline to participate in the GDSs, such as Southwest Airlines, which is neck-and-neck in a race with Delta to be largest airline by domestic passenger volume in the US.
New functionality
Starting on Thursday, Hopper changed its user interface to introduce push notifications. About 90% of its revenue comes from push notifications.
The company views each set of notifications as "a conversation" about an origin, destination, and date pair that a consumer has asked it about.
More than half of its users have set up more than one date pair for the same destination. They're basically asking Hopper to watch more than one date, which presumably means they have some flexibility in their travel plans.
On average, the app users are watching more than one destination per date pair. Again, suggesting flexibility, the company argues.
To help consumers more easily browse deals during the inspiration phase of trip planning, the company updated its apps on Wednesday with a new notification feature. Until now, the notifications only appeared briefly on people's home screens.
Now there's an ongoing stream of notifications in the app that suggests destinations and dates based on the latest data.
If a notification goes out saying there's a fare deal at, say, $340 and, say, 7 seconds later Hopper's computers find the fare has changed, the app will replace/refresh the notification with the more up-to-date fare.
The more a user interacts with the notifications, the more personalized the results become, the company says.
Some skeptics might argue that the interface is at fault if users feel they need to set up multiple watches to capture a broader net of options.
The company counters that even if a consumer picks a date pair that misses a great deal by, plus or minus, a day or two, Hopper will still alert the user to what the user's too-narrow-of-a query missed.
Lalonde believes that dynamically adjusting notifications presage the evolution of Netflix-style recommendations to flight shopping for the online travel category.
Hopper is working on its back-end systems to intuit and adjust the frequency of notifications depending on the preferences of its users, which, to generalize, can vary by generation.
But Hopper does not have chat bots. You can't text an agent about your booking. There's no natural language search. In short, there are none of the trendy conversational commerce trends being discussed in the industry.
Lalonde says his company will soon release a set of discovery features that will enable users to say, essentially, "Here are some dates, give me your ideas," or "Talk to me about Europe in June."
On this topic, Lalonde says:
"There are two things that are extremely hard to do in online travel. I mean, like Google hard to do. One, is figuring out what to tell a user, and when -- without annoying them.
"Two, is the execution of accurate pricing information -- meaning how to avoid a bait-and-switch on airfare quotes when airfares keep dynamically changing. It's awful when the notification says there's a $200 airfare but when you click through it's actually $500."
Four months ago, the company said it had raised $16 million, in an investment round led by BDC Capital IT Venture Fund.
Despite the fresh funding, the company has remained small, with only 30 employees -- though it is hiring, and its next goal is to establish its international presence.
Its marketing is unconventional in some senses. It has done "very little" ad tech, with no social media retargeting or Google AdWords.
Hopper remains a pure consumer play. But it does offers for free to airline partners predictive visibility in consumer trends, especially outside of their home markets.
As far as future trends, Hopper plans to ride the Millennial wave as long as possible, though not exclusively, by understanding the psychographic.
"There is hype and exaggeration about Millennials that needs to be ignored. But many generalizations about the Millennials, especially around their behavior and engagement with brands and what they trust online, are true. They do behave differently than other generations."
As noted before, half of Hopper's users are Millennials, defined as 18- to 34-years old. Its next largest group of users is "Zoomers," or Baby Boomers that are retired and travel often.
The company also plans to ride the growing trend in mobile-first behavior. Europe and the United States are behind much of the world in mobile-first behavior use.
"Never believe anything you've heard or read about what consumers supposedly won't do on a phone. Mobile is going to rule. We're not the only company proving that."
Lalonde aspires to make Hopper the number-one distributor of air and other travel services by mobile in the world.
The company, based in Cambridge, Mass., and Montreal, had to pivot from its original conception many years ago of aggregating destination search and building a comprehensive trip-research tool.
What's the CEO's advice to other entrepreneurs on seeking product-market fit?
"Companies are only as good as their teams. Who you hire is more important than everything else, and while many founders pay lip service to that, many overlook it and I can't emphasize it enough.
Another thing is you have to have patience. In our case, we knew this was a multi-year effort to get anything out. Air is such a closed, opaque, consolidated distribution business. To lean-iterate your way into the global air ecosystem takes time.
Encountering pivots is okay. Many famous businesses have pivoted. There is no shame in that. Don't listen to the echo chamber. If the critics actually knew how to build your product, they would be building it instead.
My advice to entrepreneurs more broadly is that they should act as if, in a shorter period of time than we believe, 100% of commerce will happen on the phone and Millennials will be the biggest buyers.
That prediction will be close enough. Build businesses accordingly. Stop worrying about the averages of everything."
Disclosure: Frederic Lalonde is chairman, co-founder, and an investor in Tnooz.