Expedia Group announces ugly split with Hopper

Expedia Group is pulling its hotel and vacation rental supply from Hopper, charging the rival online travel agency with taking advantage of consumers. Hopper denied the criticism, saying Expedia's move is because it views Hopper "as a significant competitive threat."

With a statement attributed to a company spokesperson, Expedia launched the first salvo: “Expedia Group terminated its supply relationship with Hopper today. The reasons for termination are simple: as Hopper's product has evolved, we have determined that its features exploit consumer anxiety and confuse customers, leading them to purchase services they neither need nor fully understand. As leaders in powering the B2B travel market, we have a commitment to travelers and to our supply partners that we take very seriously and, as such, we are ceasing placing our trusted supplier content on the Hopper platform.”

Hopper fired back with its own statement, also attributed to a company spokesperson.

“Expedia notified us today that they will no longer distribute their inventory via Hopper channels. Given Hopper’s rapid growth in direct-to-consumer market share, the success of Hopper’s fintech products, and Hopper’s growing B2B business, Expedia clearly views Hopper as a significant competitive threat.

The reasons for termination are simple: as Hopper's product has evolved, we have determined that its features exploit consumer anxiety and confuse customers, leading them to purchase services they neither need nor fully understand.

Expedia Group spokesperson

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“Although it seems that Expedia planned and delivered its notice in an anti-competitive attempt to cause disruption to Hopper’s business, there will be no impact at all. Hopper has always had a multi-sourced strategy when it comes to our inventory. Expedia was one participant among many within Hopper’s marketplace. As Hopper has grown its market share, we’ve moved substantially to direct inventory to ensure we always offer the best price and selection for our customers. Expedia’s decision to withdraw from Hopper channels will not affect the selection or prices available to Hopper consumers. Hopper will continue to be the best place to book travel."

After the news was first reported by Skift, an Expedia Group spokesperson confirmed the termination of the relationship and that it was providing hotel and vacation rental supply to Hopper via its Rapid API - but declined to specify the number of listings. Expedia Group's Rapid API information page indicates it provides access to “700,000 properties across 250,000 destinations and over 25 different property types” while a second mention indicates “900,000+ vacation rentals via the Rapid API.”

Hopper began adding hotels to its platform in October 2017 through a variety of supply partners, including SiteMinder which it added in February 2022. At the time it said its app had more than 2 million hotels available.

In January 2022, Hopper added alternative accommodations to its app with the launch of “Hopper Homes.” And in August 2022 it announced it had more than 2 million properties available, with Evolve as its “largest direct vacation rental supplier.”

On an FAQ page related to hotels and homes on Hopper’s website, there is still a question regarding Expedia Group-owned Vrbo. Hopper's response says, “We have partnered with VRBO (Vacation Rentals By Owner) for a small portion of our hotel bookings …”

As part of its statement responding to Expedia Group, Hopper said it has more than 100 million app downloads and is the third-largest online travel agency in North America.

Given Hopper’s rapid growth in direct-to-consumer market share, the success of Hopper’s fintech products, and Hopper’s growing B2B business, Expedia clearly views Hopper as a significant competitive threat.

Hopper spokesperson

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"The company’s market share of third-party air travel increased to 13.3% (source: MIDT)," the statement continued. "Hopper sells $6 billion worth of travel and travel fintech every year; 2022 sales were up three [times] over 2021.

“With Hopper’s growing B2B business, the company is currently powering some of the world’s largest brands. Hopper Cloud currently reaches over 150 [million] consumers via our white-label solutions and distributed fintech ancillaries for banks, airlines, hotels, and OTAS. Similar to the Hopper app, there will be no impact on inventory for our Hopper Cloud partners.”

Industry experts were taken aback by the tenor of the exchange, if not the split itself.

“This seems to be a far from amicable breakup between Expedia and Hopper, and it’s unclear who wins here in the long term," said Lorraine Sileo, senior analyst and founder of Phocuswright Research. "In the near term, Hopper will lose hotel and short-term rental inventory, which given that the U.S. is its biggest market and Expedia has a strong U.S. base, makes it vulnerable. But there is some risk to Expedia too as it will forfeit, in our estimation, not insignificant revenue by breaking off the relationship.”

Charuta Fadnis, Phocuswright's senior vice president of research and product strategy, said competition may have played a role in the break.

"Two factors that may have played some part in Expedia’s decision are its strategic focus on growing its own app users and building loyalty and its fast-growing B2B business," she said. "While miles apart in gross bookings, Expedia can’t ignore the competition from Hopper with its ambition to become a super-app. And with the B2B business doing well, they likely think that this is a trade-off worth making."

While not explicitly mentioned in its statement, it’s clear the crux of Expedia Group’s concerns about features that “exploit consumer anxiety and confuse customers” relate to what Hopper calls its fintech ancillaries, available both to those booking in its app as well as for bookings through its Hopper Cloud customers, including Capital One, MakeMyTrip, Agoda and others.

Hopper says 60% of travelers booking in its app purchase at least one fintech product when making a booking, which can include flight disruption guarantees, price freeze and “leave for any reason.”

In an interview at The Phocuswright Conference last November, Hopper co-founder and CEO Frederic Lalonde said, “There is a fundamental appeal [to these products] ... when you go to a marketplace or a booking site or whatever where fintech is fully staffed – you have all of our products - customers spend between 12 and 15% more. … There is somewhere between $200 [billion] and $400 billion of unrealized fintech spend for the taking – just put the products there and people will buy it.”

Hear Lalonde talk about the company's fintech products, as well as the company's "customer obsession" and the fact it is still not profitable, in this interview from The Phocuswright Conference 2022.