Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

Quebec private equity firm Novacap has made an undisclosed “major” investment in the Montreal travel-upgrade startup Plusgrade LP, as the company helps its partners take advantage of new trends in a travel sector that is gradually returning to life.

Plusgrade partners with travel companies, usually airlines, to allow travellers to buy or bid on perks such as seat upgrades. The Caisse de dépôt et placement du Québec bought a $200-million stake in the company in late 2018, valuing it at more than $600-million then.

With nearly a year and a half of pent-up demand finally turning into trip bookings thanks to increasing vaccinations, startup investors have begun to heap cash into companies that smooth out the travel experience. Last month, another Montreal startup, Hopper Inc. – which provides travel cancellation insurance and uses artificial-intelligence software to help consumers figure out the best time to make bookings – announced its second infusion of about $170-million this calendar year, valuing it at US$3.5-billion.

Story continues below advertisement

Plusgrade chief executive officer Ken Harris said that the pandemic first introduced panic among the company’s airline partners. Many scrambled to offer customers upgrades in the first months of 2020, in order to cobble together ancillary revenue during a wave of cancellations. By the time much of the Western world faced lockdowns that March, Mr. Harris’s team began retooling their offerings to help those partners find even more additional revenue.

“In good times, airlines love us, and in bad times, they need us, because we provide critical revenue streams to them,” he said in an interview Friday.

Plusgrade helped partners in less-developed markets make web check-ins easier, while boosting upselling opportunities more broadly during such digital check-ins to help deliver those airlines some additional revenue. The company also began to offer airlines a “dynamic seat blocker” program to allow customers to prevent adjacent seats from getting booked.

Seat blocking, once considered an extraordinary privilege in pre-pandemic times, was suddenly recast as a precautionary measure – one that Mr. Harris said has yielded significant revenues for Plusgrade and its partners. The company begun working more closely with the cruise and rail sectors, too.

Mr. Harris founded Plusgrade in 2009 after finding himself surprised at how difficult it was to pay to upgrade his seat to business class; it seemed like a lost business opportunity. As the pandemic reshapes travel patterns, he said, leisure travel has outpaced business travel – only boosting airlines’ opportunities to upsell customers into pricier seats that would otherwise sit empty in business class.

“We think that’s a positive trend for us,” said David Lewin, a senior partner at Novacap. The private equity firm sees this both as an immediate opportunity for growth, and one that could be boosted in the long term with potential acquisitions, too. “We’re going to let everybody know that we’re hungry to grow,” Mr. Lewin said of the new company in Novacap’s portfolio.

Plusgrade said in a press release that Novacap was now a “major investor,” but neither Mr. Harris nor Mr. Lewin would disclose the value of the new investment in Plusgrade. But Mr. Harris said that some of the money would be used to reduce the stake of a previous private-equity investor, Boston-based TA Associates.

Story continues below advertisement

Plusgrade has about 110 employees, largely in Montreal, with some in New York and Singapore. Mr. Harris said he expected to increase hiring as the company grows. Montreal, he said, has an “incredibly strong footprint in the travel industry” – not just with traditional transportation companies such as Air Canada, Transat AT Inc. and Bombardier Inc., but also Hopper and, for a while, the short-term rental-booking company Sonder Corp., which now calls San Francisco home. “It doesn’t surprise me that you see these incredible travel-tech companies emerge from Montreal, too,” Mr. Harris said.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies