In just 4 months, Hopper went from 0 to 2 million vacation rental listings available on its travel app. How did the company pull it off? We hear Hopper say that it wants to bring more flexibility to the vacation rental market. Yet, if travelers can cancel at will even more easily, will be Hopper Homes be creating more headaches for property managers and owners? How can you partner with Hopper Homes? How can you increase your booking margins by using Hopper Cloud, its suite of travel fintech products? Why have neither Airbnb nor Booking.com come up with the innovations that Hopper has (e.g. in its app and with its FinTech products)?
In this interview, Susan Ho, Head of Hopper Homes, reveals some keys to one of the biggest launches ever in the short-term rental space.
Takeaways From Rental Scale-Up’s Interview with Susan Ho, the Head of Hopper Homes
How did Hopper Homes move so fast?
Hopper was able to move as quickly as they did by targeting easier-to-connect property managers that were using channel managers. Now, property managers can also directly list their properties on Hopper as well. For the moment, Hopper is welcoming vacation rental managers in the U.S. and will become available for managers in Europe in the spring.
How can Hopper out-innovate Airbnb and Booking.com on the vacation rental side of travel?
Susan Ho thinks that Hopper is more tech-oriented than design-obsessed Airbnb and more attune to new consumer needs than complacent Booking.com.
Airbnb very famously is a design company. It’s not even quite an engineering-driven company. They really focus on great design and they’re very good at that. They’re very good at brand marketing and coming up with a story for their travelers, right? Booking.com is the industry giant, the industry leader, they have such scale. I think that it’s dangerous when you are so comfortable being the titan of the industry that you potentially lose focus on, well, what is the next thing that my customer wants.
Hopper launched a dedicated internal team, called Hopper Homes. The team then created a lot of the tech from scratch, without trying to repurpose existing tools for the Hotels or Flights offers, which gave them more freedom (an issue that Booking.com is still running into 7 years after creating its own Booking Home team).
The goal was to get the offer up and running fast, on an MVP (minimum viable product) mode so that the company would start testing. While collecting the related data to finetune its product, it is also working on leveraging and adapting its suite of FinTech products.
What’s really been innovative about Hopper is the layer of fintech products on top of our travel agency services. These fintech products gave customers peace of mind when they travel. Products like price freeze allow a customer to freeze the price of their flight for up to 14 days or more.
When free cancellation is not the only game in town anymore to create consumer trust (the end to property managers’ headaches?)
Guests may love the idea of having more flexibility, but it means more uncertainty for vacation rental managers and owners. OTAs have been pushing free cancelation policies as the only way to do it for years or even a few weeks ago for Booking.com in its Super Bowl ad. How can Hopper solve this issue in a creative way?
For Susan Ho, the answer will come from Hopper’s upcoming FinTech products for the short-term rental markets. It could work a bit like that:
- Vacation rental managers list their property with a non-refunsable rate on the Hopper app
- Traveler can purchase a sort of peace-of-mind guarantee from Hopper, say for $18. If they need to cancel, the guests get their money back AND the property manager gets to keep the money.
- Hopper calcultes the risk of cancellation for a specific customer and prices it accordingly.
- This is a matter of risk scoring, just like insurance: Many people will buy the guarantee, but only a few will redeem it.
- As a result, the guest is happy, the property manager too, and Hopper is making money.
- An added benefit is that Hopper could remit funds to property managers faster, for instance 48 hours after the customer has paid.
How can you partner with Hopper Homes?
First, property managers can head to this form can get in contact with the Hopper Homes team. For the moment, the format asks whether your company is based in either Canada, Mexico, or the US, or Other. European property managers should be able to join Hopper by this Spring.
You will be asked several questions such as property management software and channel manager you use.
Second, vacation rental management companies can also plug Hopper’s suite of travel fintech products on their website. Basically, you can sell Hopper’s financial products and get commissions. If you are interested, check out the Hopper Cloud offer.
Full interview with Hopper Homes’ Susan Ho
Dear Rental Scale-Up members, today I am with Susan Ho, she’s the head of Hopper Homes. We’ve talked a lot about a Hopper this last month. It’s fantastic to have with us the face of Hopper Homes. We shall be talking about what property managers should be expecting from Hopper Homes. They just launched with more than 2 million properties. That’s pretty impressive for a launch. What to expect for property managers in the U.S. and in Europe? Hopper is supposed to bring more flexibility to the industry. Is it more flexibility for guests and more headaches for property managers? I shall ask these questions to Susan right now. Welcome, Susan, to the show. How are you?
Doing well, thank you for having me.
It’s a pleasure. Thank you so much for taking the time. I was teasing people a bit about, what to expect from Hopper. As I said, it’s been such an anticipated launch, with 2 million properties at the start. Isn’t it the biggest launch ever in the vacation rental industry?
I think as far as I know, yes. We wanted to do that so that we could have a serious impact on the market as quickly as possible and start learning from our customers as quickly as possible. That we know as we go out and build direct relationships with property managers, we know what areas our customers want to book. We know what types of inventory we’re looking at because we want the property managers coming onto the platform to see results very quickly.
That’s really great to hear, and you’re talking about results and we love that. Susan, can you explain a bit, what you do? I mean, you’re the Head of Hopper Homes, while your LinkedIn profile shows that you are a Revenue Leader at Hopper. So what does your job entail exactly?
You’ll see publicly, we are all titled with the head of Hopper Homes, Head of Hotels, etc. I think that’s a title that is more easily identifiable outside of Hopper. Internally within Hopper, we call our leaders revenue leaders because ultimately we want all of our leaders to be accountable for the revenue generated by each business.
In that sense, for people who may not know Hopper really well outside of the U.S., I mean, obviously, it’s not only vacation homes that Hopper is doing. Could you present Hopper to people who may not know it?
Hopper is primarily a mobile app with over 70 million downloads in the U.S. We are the topmost downloaded travel app in the U.S., last year above booking.com, above major players in the industry. Our primary value proposition to customers early on was around our flight prediction. Hopper has the largest database of real-time flight prices. We have trillions of data points around flights, which means we’re 95% accurate at telling our consumers whether they should buy a flight now or wait until later. We also added hotels and car rentals to our marketplace.
On top of that, what’s really been innovative about Hopper is the layer of fintech products on top of our travel agency services. These fintech products gave customers peace of mind when they travel. Products like price freeze allow a customer to freeze the price of their flight for up to 14 days or more. If the price of the flight goes up, the customer pays the lower price. If the flight goes down, we give them the lower price.
We also have a number of flexibility products that help customers again, just protect their investment and travel. This is where there are a lot of interesting areas in which this can apply to the vacation rental industry, which you alluded to earlier. I think what we’re able to do in this space is very different from our competitors, given how data-focused Hopper is as a company.
Why do you think that companies such as Airbnb have not come up with these great fintech products that may make Hopper so different?
I think it has to do potentially with the DNA of the companies. Airbnb very famously is a design company. It’s not even quite an engineering-driven company. They really focus on great design and they’re very good at that. They’re very good at brand marketing and coming up with a story for their travelers, right? Booking.com is the industry giant, the industry leader, they have such scale. I think that it’s dangerous when you are so comfortable being the titan of the industry that you potentially lose focus on, well, what is the next thing that my customer wants.
That’s really what Hopper is so strong at. It’s really about working backward from “What do our customers care about?”. When we entered this market, it wasn’t just “Okay, we’re going to get inventory and we’re going to throw our hat in the ring”. It was really working backward from how can we do this better? How can we solve problems for travelers in this particular space in a way that hasn’t been solved before? We looked at and we surveyed a large swath of our customer base, we found that their biggest pain points were around price. How can I make sure that I’m getting the best price? How it’s very difficult to compare prices across different platforms?
How can I protect my travel investment? Right? The cancellation policies, the payment policies are very confusing and that has to do with the flexibility component. We knew these were the two areas that Hopper needed to focus on the most. We are sourcing inventory in our marketplace or sourcing inventory from multiple places, we do this in hotels, we do this in air, and we will give our customers the lowest price that we find. Right. That on the vacation rental site requires a bit of technical know-how. We are doing machine-learning processing on images, matching availability calendars on the backend, etc, to be able to know with some relative certainty that this is the same unit across all of these different providers on the backend that have the same unit for sale. So that is one aspect of it.
That, and that’s probably a big part of why it’s beneficial for a property manager to go direct with us because when they go direct with us, right, we can further boost their direct property within our marketplace. And we’re aligned, right? I just said, ‘Hey, my internal title is revenue leader. My job is to generate more revenue, which means more revenue for the property managers as well.’ I think that’s really, what’s different and why, we’re starting and focusing and talking about these things first and our competitors will, we’ll probably take a while to catch up.
How can property managers partner with Hopper Homes?
I think if you go to hopper.com, there is a partnership form for homes at the bottom of the website.
We know that in order to work with the property managers that we want to work with, it’s not just building connectivity to the channel managers that we need to do. We plan to invest in building connectivity through multiple property management systems. We’re looking to get unique inventory that is not necessarily as widely available as it is with some of our competitors.
I think that’s a big difference in how we’re approaching the space. Some of the other large major OTAs and larger companies in this space, when they started, they were trying to force vacation rental properties into the model that they had already built for hotels. You’ll see at Hopper, we’ve spun up an entire dedicated team for homes, completely separate from hotels, right? We spent four months in development to build the first version of our, what we call our MVP for homes, on completely separate services that are not dependent and reliant on hotels at all. We can move very quickly and we can move independently of every other part of the business and do what we believe is necessary to support this particular industry.
Booking a vacation rental for a week can be expensive. As you say, it is a travel investment for the consumer. At Hopper, you need to bring peace of mind to travelers. Yet, your job is also to help property managers make money. How do you bring them peace of mind? Because if you bring, let’s say flexibility on the one side, it may see them while somebody has to bear the cost of the fixer. What they just mean here is that, for example, booking.com could come here recently, an ad during the Super Bowl. One of the big messaging was like, cancel anytime basically, or just a flexible cancellation policy, which historically have not been super popular messages, say with property managers in orders. How are you going to solve that?
I think what booking.com did for their Super Bowl ad is probably referring more to their hotels than it’s business, right? That is one of their biggest leavers for conversion is, you can book a hotel, make a reservation there on the agency model. Of course, right, you cancel or not. You show up for the stay or not. That’s not what we’re talking about within vacation rentals at Hopper , right? I want to be very clear that’s not where we’re just passing the ball over to the property manager and saying, ‘Hey, our customer wants a flexible cancellation policy. You need, you need to offer it, if you want to be listed on our platform.’ We know that’s not the answer. We know the dynamics of this industry where property managers are dealing with owners who rely on this as a stream of income. If somebody cancels last minute, they’re out a lot of money, right? And that’s significant. What we plan to do in this space, and I think that this has been built for our hotels business, is that our hotels business will even take the lowest nonrefundable rate that the hotel offers and we will price our own synthetic flexible cancellation policy rate on top of that. Right? So, the customer is actually booking the non-refundable rate and we are calculating the risk of cancellation from that customer and how much we need to charge for that flexible rate, such that the property manager is essential that they will get this booking regardless of if the customer shows up or not. Right. If the customer cancels, or not. There are a few things that can happen there that are beneficial for the property manager. One is being able to enjoy the benefits of increased conversion rate by offering free cancellation, without taking on the risk. I think that’s the most obvious. The second one is it allows us to remit payment to the property manager sooner and faster, right? We know that the customer has paid for the free cancellation rate. We’re guaranteeing it instead of waiting until the day of check-in for the customer to, to ensure that this is a, a real booking that their customer is not going to cancel last minute, et cetera. We can actually remit funds, potentially after a 48 hour grace period. Right. That helps with the cash flows for a property manager. And, in conversations with property managers that I’ve talked to, that is, one of the most exciting things for them.
I’m sorry I didn’t get to some points with it, but if I did, it’s fantastic. So, so let’s imagine a guest, you guys price the risk of cancellation, the guest buys this kind of protection for themselves. She buys it and she’s protected and she uses it. She’s said, ‘yeah, no, in the end, this is something happening I need to cancel.’ What happens to the, and the money has gone into the pockets of the property manager for example. What happened that money stayed with the property manager or what happened here?
That money will stay with the property manager, right? We will basically pay the customer out for that free cancellation policy that they bought. Essentially that’s paid not as an add-on at the end of the transaction, but as a separate rate that they paid. Right. You will essentially say, okay, we will give you up to 80% of your money back in cash, or you could have a hundred percent of your money back in Hopper Care at caps that you can spend on something else within the Hopper ecosystem. Right? I think that’s really key for the cancellation policy so that you don’t have negative incentives, right? That if you want cash back, you get the majority of your cash back, but you don’t get all of it back. If you want Hopper credit that you still protect your travel investment because you can book something else through Hopper.
That’s such a different take on cancellations and telling people to do free cancellations, because what’s about writing property. I should do that. That’s very, I can’t wait to see this happening. Again, so those are maybe some things you can share, something you can not share, obviously, right? I think some property managers in the U.S. can join now. Property managers in Europe can join maybe in the spring, something like this. In terms of all the cool products, we talked about any kind of deadline,
It’s very early, right. We just launched. And, I think that there’s a lot of other priorities that we have to in terms of features to get out for our customers. We will work through those base features first. Then, we obviously want to test and roll this out as quickly as possible for both our guests and also for property managers. We, again, we do a lot of vigorous testing. There’s going to be a lot of data that’s involved in this, a lot of risk modeling, and we want to make sure we get that right for everyone. Right. We don’t. The last thing we want to do is roll out a product that we promised and we realized, okay, we can’t make it work. Right. This is something where we’ll be doing a lot of testing internally to make sure, well, what is the right level of flexibility? What level of flexibility will a customer pay for? Maybe it costs us way more to offer a free cancellation for 24 hours advanced notice, but it doesn’t cost us that much to offer it with 72 hours. That’s the sweet spot of what customers really need. Right? All of these things are things that, we will work backward from and we will measure what the customer wants and what level of flexibility they’re most willing to pay for and what they need.
Thank you, Susan.
So you asked a question earlier about property managers who want to join Hopper in the U.S. and Europe. We’re very much focused on the U.S. to start right now, but it’s the bulk of where our customers are still traveling. We are seeing international travel start to come back up, especially just this month. It’s not back to where it was yet pre-pandemic for us, but we expect that to happen, sometime later this year. In that case, our property managers, who are in Europe will become much more relevant to us. I think another thing to understand is that you’ve probably seen Hopper’s suite of cloud products, right? A lot of our fintech products we’re distributing to other partners. If you go to kayak.com, you can buy price freeze that is powered by Hopper. There is potential there internally where we are planning to potentially distribute our properties and offer additional channels to our property managers as well through distribution, through Hopper Cloud.
That’s pretty fantastic. Susan Ho, the head of Hopper Homes, thank you so much for your time today. Congrats to you and to all the team, an MVP with 2 million properties. That’s not too bad understand right now you are super busy, probably, measuring what’s happening, improving things, and then getting ready to launch completely makes sense. That’s so fantastic. If people want to know more or to reach, what should they do? They just go to Hopper Homes and find the form, for example, to join?
Yep. You can go to hopper.com and I’m at the base of the website, the footer, there is a partnership form. And, I would say this is something that offers a net new customer base for property managers, right? We are primarily app-based. We are the only OTA that is not competing with your direct marketing spend on the web. This is another reason that makes that this is another factor that makes Hopper Homes really unique.
The channel to try as soon as possible. I’m guessing. Thank you again so much for your time for the insights for the frank discussion, really appreciated that. I wish you a great day, Susan.
Thank you so much.