Tripadvisor rolled out a $99-a-year subscription plan, its own version of Amazon Prime. Lola.com shifted from tracking trips for businesses to expense management. And Hopper leaped like a rabbit from its core airfare app to transform itself into a financial tech firm, with travel as its focus.
For Boston’s “travel tech” sector, the COVID-19 pandemic was a humbling experience. The abrupt grounding of most airline trips a year ago posed an existential threat.
These three firms — Tripadvisor, Lola, and Hopper — were among many travel companies that resorted to brutal layoffs last spring amid sudden downdrafts in revenue. But they also got creative with pandemic pivots that may propel them to new levels of growth, as people start packing their bags for the airport again.
The latest pivot: Hopper on Wednesday unveiled a back-end system for credit card companies to better manage travel-related benefits, with Virginia-based Capital One named as the first customer.
Capital One is more than a client of Hopper’s. It’s also an investor: The financial firm led a $170 million venture funding round that should enable Hopper, based in Montreal but with its US headquarters in downtown Boston, to double its staff within the next year, from the current level of about 620. Most of those new arrivals will be either in the Montreal or Boston areas, although Hopper, like many companies, is making fully-remote hires as well.
Chief executive Fred Lalonde said the new platform, dubbed “Hopper Cloud,” will allow credit card companies and other firms to offer some of Hopper’s higher-margin products to their customers. These include travel-protection options for customers, such as paying a premium to freeze an airline price for a certain period of time, or making nonrefundable tickets refundable. These products bring more profit than a typical straightforward airline ticket sale, and the revenue often stays with Hopper even if the trips themselves get cancelled.
Hopper uses its sophisticated data crunching to determine the size of the premiums for taking on risks related to the new products. Hopper also offers hotel and rental car bookings as well.
“There are a lot of people willing to pay a premium, not to have to worry about all the price games,” Lalonde said.
Remarkably in a year when most global travel was curtailed, revenue at Hopper roughly doubled in 2020 from the year before, Lalonde said, largely due to the success of the travel protection products it began rolling out. For 2021, revenue is on track to soar above $100 million. The new products were in the works before COVID-19, but the pandemic accelerated their development and proved their worth.
“When the pandemic hit, … I wasn’t sure we were going to survive,” Lalonde said. “Now we know these models actually work when there’s a downturn. We came out of this realizing the opportunity.”
The pandemic also prompted soul searching at Lola.com, which previously focused on helping companies manage employees’ travel expenses. In October, Lola executives Paul English and Mike Volpe unveiled a new initiative, Lola Spend, which enables chief financial officers and HR departments to monitor nearly every form of corporate expense, not just travel. The shift happened almost overnight. A pre-COVID idea for a future business line suddenly became the focus of half of Lola’s engineering team. English and Volpe say Lola offers an easy-to-use, app-based alternative to cumbersome expense reports.
They are reporting strong growth today. Volpe, chief executive of the Boston company, said he expects half of Lola’s revenue will be from “spend management” by the end of the year, and half will be specific to travel. “New products start small but we find this growth rate very encouraging,” Volpe said in an e-mail.
A different game-changing move could be afoot at Tripadvisor, with the launch this spring of Tripadvisor Plus. The Needham company is turning to consumer subscriptions as an important revenue source. Here’s what you get for your $99 a year: discounts on hotel reservations, typically at least 15 percent, and 10-percent off bookable experiences, along with hotel perks such as free breakfasts or late departures. Coming soon: airline and rental car perks, plus a concierge travel service available by text.
Tripadvisor first started selling its Plus subscriptions in December to US travelers making larger reservations, in which they could come out ahead by joining Plus immediately. Tripadvisor plans to pitch Plus memberships to all US users of its website by early May. It will become available in other English-speaking countries in the second half of 2021, and other international markets soon afterwards.
Analysts peppered Tripadvisor chief executive Steve Kaufer with questions about the Plus rollout on the company’s fourth quarter earnings call last month. It’s hard to blame them for being curious: Tripadvisor’s overall revenue fell 61 percent last year, to $604 million, because of the pandemic. The company could use a new growth engine, perhaps now more than ever.
Kaufer hinted at the potential on that call: If only 10 million users sign up for Tripadvisor Plus — less than 1 percent of the site’s annual traffic — that could translate into nearly $1 billion in new recurring revenue. “I don’t want to get ahead of ourselves,” Kaufer said. “This is not going to happen overnight … but it is a huge market.”
Lindsay Nelson, Tripadvisor’s chief experience and brand officer, said the company might eventually offer a la carte upgrades, or tiers of membership, based on the services that Plus subscribers want. The hotel and attraction reviews on Tripadvisor’s site will remain free to view.
Nelson oversees a new-ventures division, where this idea of a subscription service originated. The pandemic’s cataclysmic impact on the travel industry prompted Tripadvisor to not only accelerate its launch, but to make it a core offering for the company. The slowdown in Tripadvisor’s traditional work freed up employees’ time to focus on Plus.
“It’s not easy for a 20-year-old company to completely reinvent itself,” Nelson said. “It’s incredibly hard to take a risk when you know every risk could compromise your core business. [But] COVID gave us the room and the space … to really double down.”