AI algorithms may help Hopper drive 75% flight bookings
04/13/2018|4:06:21 PM|Forbes

Since its launch in 2015, Hopper has become the most formidable newcomer in an $800 billion flight market dominated by Expedia, Lalonde's former employer, and Booking Holdings, and now boasts more than 20 million users.

In January, Hopper was the fourth-most-downloaded travel app in the U.S., after Uber, Lyft and Airbnb. The 120-person company, led by Lalonde, 44, and cofounder and CTO Joost Ouwerkerk, 46, generated about $15 million in revenue last year by selling flights, almost entirely through push notifications.

Customers buy more than $1.5 million in flights per day across more than 300 airlines, and give Hopper a $5-per-ticket fee (airlines pay a 1% to 4% commission). Hopper says customers save an average of $50 per ticket and claims its airfare forecasts are 95% accurate up to a year in advance. Meanwhile, Kayak predicts flight prices only seven days out, and many competitors, such as Google, indicate whether prices will go up but not whether a better deal is coming.

Hopper has raised $83.6 million in venture funding from firms such as Accomplice and Omers Ventures (the company was valued in late 2016 at about $300 million), and it's poised to become much larger. Purchases driven by AI--for example, suggestions to travel on different dates or to different locations--now drive 25% of sales, up from 5% in November. The AI knows, for example, that Hopper users watching a flight from New York to Hawaii are more likely to end up purchasing a flight to the Caribbean. Over time, Lalonde expects AI to generate 75% of purchases.

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