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Frederic Lalonde, founder and CEO of Hopper Inc.Christinne Muschi/The Globe and Mail

One of Canada’s most heavily financed and fastest-growing private technology companies, online travel seller Hopper Inc., has made its seventh acquisition in a deal that secures a strategic partnership with hotel giant Marriott International Inc.

Montreal-based Hopper said Tuesday it had purchased Boston-based ETMA Inc. (which operates as PlacePass) for an undisclosed amount. Like Hopper’s past deals, a key rationale was to acquire the startup for its brains, known in the industry as an “acqui-hire.”

“When we add founder DNA, it helps so much,” Hopper CEO Fred Lalonde said. “We’ve found it’s an amazing way to expand our culture as we scale.”

But unlike most past Hopper deals, PlacePass’s 12-person team also comes with an actual revenue-generating product: an online platform used by hotels, airlines and vacation rental companies to offer activities and tours to their customers in more than 800 global destinations.

“We typically go for the teams,” Mr. Lalonde said. “With this, we got to double-dip, because we got a really good platform out of it.”

Montreal travel company Hopper secures $175-million financing as it enters a ‘travel supercycle’

As part of the deal, Hopper takes over management of Marriott’s PlacePass-powered tours and activities platform offered to its loyalty-club members. Hopper will also kickstart its own activities and experiences business based on PressPass’s offering, Mr. Lalonde said.

Hopper has had a remarkable turnaround during the pandemic, which the 14-year-old company initially viewed as an “extinction-level event,” prompting the layoff of nearly half its staff as revenues slumped.

The company, which sells airline tickets, hotel bookings and car rentals through its mobile app, had found an innovative way to build its business, by leveraging the vast amounts of price-quote data obtained from global travel transaction systems and using artificial intelligence to accurately predict the best times for people to book. One of its signature features is that Hopper frequently messages its millions of users to tell them not to buy yet, but to wait until the price of their desired booking drops.

Two years ago, it hit on the idea of adding ancillary financial services-style products, leveraging its access to vast data sets. Now travellers could pay extra to freeze a flight price for days (and apply the fee to their purchase if they booked), buy the right to cancel for any reason for full credit, rebook a missed connection for no extra fee or change a ticket to a different day without forfeiting the full value. Hopper believed it could make money by pricing its offerings just right, based on algorithms and probabilities gleaned from its data.

By November, 2019, everything started to click with the financial services business and revenues soared. Then the pandemic hit, and the company was besieged by angry customers looking for refunds on cancelled flights, which took months to sort out.

But Hopper managed to secure US$70-million in fresh capital in May, 2020, led by WestCap and Inovia Capital. Meanwhile, its shift into financial services helped. Revenues doubled in 2020 as travellers continued to book lodgings and sign up for new products. Bookings then skyrocketed early this year as leisure travel surged, and Hopper surpassed as the most downloaded travel-booking app in the U.S., according to market intelligence firm Sensor Tower.

Hopper’s annualized revenue is up 500 per cent over 2019 levels, running at an estimated US$200-million-plus at current rates. That’s based on data supplied by Hopper that it generates a low double-digit “take rate” on bookings, which are running at US$2-billion annualized. Hopper now has about 1,500 workers, more than two-thirds in customer support.

Now, Hopper is aiming to partner with giant companies, including Capital One Financial Corp., to power its customer-facing travel-booking mobile apps on what it calls “Hopper Cloud,” offering them access to the company’s financial products. Mr. Lalonde said Hopper had signed such deals on every continent but Antarctica.

On the strength of its surging business, Hopper has raised US$350-million this year in two separate financings, bringing aboard Capital One, Goldman Sachs and New York City-area private capital firms GPI Capital and Glade Brook Capital as investors. Its latest financing in August valued Hopper at US$3.5-billion, making it one of Canada’s most highly valued private technology companies.

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