Capital One launches new premium travel booking portal, leading Hopper to $170 million funding round.
Gary Leff at 24. March 2021.
The Hopper app is a flight and hotel booking tool that helps you find the best prices, including making predictions about when to buy to get the best deal.
Most of us are busy figuring out how much a travel product usually costs. Then, if the price is lower, it’s a good deal, jump on it. And if it’s higher, try to figure out why – maybe a special event? – And if there’s no good reason and there’s still plenty of time for your trip, wait and see if prices drop. I hate prepaid, non-refundable hotel reservations because prices go down alongside plan changes.
Hopper is a good guide for those who are not as knowledgeable or encyclopedic about airline and hotel prices. They raised enough money to complete a Series F funding round of $170 million. And Capital One led the way.
In a way, Hopper’s price comparison model is also a natural extension for Capital One, as the bank offers its own trading tool that compares product prices and also finds and applies discount codes. (Capital One bought WikiBuy two years ago).
In addition to the investment in Hopper, Capital One is working with them on a new Capital One Travel tool for its card customers, which is expected to launch later this year.
They promise Hopper-like price forecasts and alerts, as well as products and service options that make it easy for customers to change or cancel their reservations. If reservations are more flexible than other places, it could be interesting. And the portal will offer both points earned on paid trips (presumably commissions will be returned in some form) and exchanges. They will likely offer better buyback deals through their portal than through a standard flexible buying gum where you can buy back shipping costs.
The value of a travel portal depends on how it addresses the common shortcomings of travel agency sites like Expedia or credit card booking sites.
- Customer service is not satisfactory. You haven’t had enough to do if you haven’t spent an hour on the phone with an Expedia representative. The person in the outsourced call center cannot help you. So you get put on hold to talk to someone. If they come back before you are closed, you may even be referred to someone to whom you have to explain your problem again. Don’t believe them when they promise to call you back.
- You won’t find a better price than this. Third parties generally do not offer better rates than direct bookings, although it is possible that one site may offer a different price than another for a complex fare. Hotels insist that you pay a little more if you book through an online booking site, but honestly, you may not even know you’re booking a Hilton or flying Delta. Why not go to a comparison site (Google!) to find out, and then book directly with the airline you want to travel with.
- You do not receive credit or benefits for elite hotel status and do not earnpoints. Overall, you won’t save any money on the hotel and in some ways it will cost you more because you won’t earn points in the hotel’s loyalty program. They also shouldn’t get elite benefits like upgrades, and residencies shouldn’t count towards their status either. (You may also be assigned a smaller room if you book the Marriott Key Bridge across from DC via Third, which means you get a rickety motel-like room at the back of the property.)
- There is no good guidance on what to book. A travel agent should help you make the best travel decisions for your specific needs. Should I book a 40-minute layover in Chicago in the winter? Which hotel best suits your needs? But Expedia can even show you hotels based on ad revenue, not what’s best for you.
- They are in a bad position as the reserve turns south. There is a third party between you and the tour operator. This increases the risk of something going wrong. If the hotel is busy, you may find yourself at the end of the queue. When schedules change, it can be harder to get help changing or reissuing tickets.
- Try to get a refund. Even when airlines were willing to refund tickets for flights cancelled during the pandemic, online travel agencies often refused refunds. If they returned the tickets, they had to forfeit the commission. So you had your money in hand.
It’s too early to tell how Capital One and Hopper will solve these problems, but there’s potential if it’s handled properly. I used to like to book through third-party vendors to take advantage of the shopping portal and proprietary loyalty programs, but they aren’t as profitable as they used to be and the complications have become much greater.
Three years ago, Hopper launched a fare consolidator with several international airlines to offer lower prices than published fares.
And in the hotel sector, member sites can bypass the best rate guarantee offered by the hotel chain – they get lower rates from individual hotels. If Capital One’s limited booking site was used in this way, it could get very interesting.
You can offer a higher cash value through commission refunds. And while there are cheap points on flights and car rentals where customers lose nothing by booking through a third party, these discounts may be the reason members book some paid trips through the site.
Finally, price prediction disrupts the usual model of online travel agencies. The OTA tries to get you to book a room at any price, often by scaring you about the limited number of hotel rooms or the few tickets left at a certain price. Price predictions often tell you not to book, and that’s a relief – even if their predictions are no guarantee.
Hopper is imperfect. For example, their claim that prices for flights to London will fall by 12% when JetBlue launches this service doesn’t seem credible (and is based on a lot of thin market data). But creating alternatives to Expedia only benefitsconsumers.
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