TRANSCRIPT
EPISODE 24: Ella Alkalay Schrieber
Jim Freeze Hi! And welcome. I’m Jim Freeze, and this is The ConversAItion, a podcast airing viewpoints on the impact of artificial intelligence on business and society.
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Today, I’m excited to speak with Ella Alkalay Schreiber, Vice President of Fintech and Data at Hopper, the travel company that leverages AI to predict flight and hotel prices, and offer consumers personalized booking recommendations.
Ella will share how AI addresses common pain points in the travel booking process, like price volatility, and how the technology helped Hopper navigate the pandemic’s significant impact on the travel industry. Following the company’s recent funding round in March, she’ll also offer a glimpse at what’s next for Hopper.
Ella, we’re thrilled to have you on the show. Welcome!
Ella Alkalay Schreiber Thank you so much, Jim. I couldn’t summarize that better.
Jim Freeze Oh, excellent. Good, I’m glad we’re off to a good start then.
Ella Alkalay Schreiber Definitely.
Jim Freeze So to start, could you tell us a little bit about Hopper and what initially brought you there? Give us an overview of your role and the team you manage.
Ella Alkalay Schreiber Of course, happy to. So as you already mentioned, Hopper was built on the premise of empowering travelers with data-driven travel advice on when to buy and when to actually go and travel. We help them to save on their travel planning and to score the best price for their trip. We are mobile only and today we have over 50 million installs to date.
A bit about myself and how I got to Hopper. So I’m a data scientist and I’ve always been passionate about data and innovation. And when we decided to move overseas, I looked for a company that does not compromise and strives to be the best in its field. And as soon as I met the Hopper team and learned about the vision of the company and the interesting product and data as its core product on Hopper, it was exactly what I was looking for and I joined. So that was five years ago, and I currently lead the Fintech team at Hopper.
Our focus is creating unique AI financial technology products that offer travelers an unparalleled level of flexibility in their planning. Those products currently make up 65% of Hopper’s revenue. So this is a really, really exciting time for the team. Prior to this role, I led the company’s data science team and spearheaded our AI and machine learning efforts. So definitely a very, very exciting journey and I feel very thankful to be part of Hopper journey.
Jim Freeze Yeah. It sounds like a privilege to be there. And it sounds like you’ve done a lot over your five years, so that’s fantastic. So I want to talk a little bit about travel. Now travel, it is—and every consumer can relate to this—it’s incredibly unpredictable and I would say somewhat even confusing, which is why apps like Hopper can be really so useful. So can you walk us through what a customer journey is using Hopper, from the moment they open the app to the time they press the purchase button, and specifically talk a little bit about the role that AI plays in that experience?
Ella Alkalay Schreiber Yes. And as you said, our role is to make travel planning so much easier and less painful than what it is to consumers today. So the user launches the app and searches for either flights or hotels or car rentals. And from that point, we actually take immense databases that we constantly archive and feed into our systems. So to date, we have eight years of historical data and over 60 billion price itineraries. And we start to model the advanced core of prices to the very granular view of the trip that the users search for.
So what we’re doing with this data and the advanced group of prices that we model is we are able to tell the user that looks at a specific price, if this is a good price, or they are likely to score a better price in the future. So we are able to tell them if the price is going to go up or down, as well as if they should book now or wait for a better price.
Thanks to that, we already saved customers around $50 on domestic trips and $110 on international trips. Now, we started to build a complementary set of features to our price prediction capabilities. So if we tell you to wait and think that we can score a better price in the future, but you’re actually willing to finalize your travel plans and book now, we let you add a price drop to your trips. So we will continue to monitor prices after you book with us. And if we see a better price in the future for the trip that you booked, we’ll give you back the difference.
Jim Freeze Wow, that’s impressive.
Ella Alkalay Schreiber Another way that we can help you is that if we actually tell you that you should book now and the price is good, the price that you see today is a good deal price, but you’re not ready to book. So we will let you hold the price that you see today for a few days and come back at a more convenient time in the future. So if the price will go up, we will pay the difference.
And if the price goes down, we will let you book the cheaper price. So those are just two features from the product portfolio, those are Price Drop and Price Freeze. We also have flexibility options to make your trip totally flexible. We are cancelable for any reason. And everything in its core is about understanding what are the pain points in the planning journey and how can we add value with our knowledge about you as a consumer, as well as the market pricing and volatility trends.
Jim Freeze So that’s really interesting because I mean, you’re right. Even when I book personal travel, I’m always trying to guess, “How’s the price going to go down?” So it sounds like you’ve developed a pretty sophisticated predictive model. And the other thing I heard is that you have so much confidence in that model that you’ll almost guarantee it. That if you say it’s going to go down, then you’re going to stand behind that, which is pretty impressive.
Ella Alkalay Schreiber Yeah. Today we’re accurate 97% of the time. So this is a pretty good number.
Jim Freeze That’s a very good number. So one of the things that I wanted to touch on is, the travel industry, travel and hospitality in particular has been hurt more than probably any other industry during the pandemic. And it obviously threw the industry into chaos. Have you seen a shift in user behavior or requests? And if so, what role did AI play in meeting those evolving needs during the pandemic?
Ella Alkalay Schreiber Absolutely. And that was quite a year in the travel industry, and lots of different changes and interesting challenges for us, especially around the Fintech portfolio. So customers want flexibility and peace of mind when planning travel, but the pandemic specifically brought this to light, and our Fintech products address exactly this customer need. So we see a lot of changes in the market. A few that I can already point out is that there’s less international and more domestic.
There’s also a shorter trip planning window. So if a customer usually planned 60 days in advance for their trips, today they plan 30 days on average in advance to their trip. We also see new trends around pricing from airlines and from the hotel side. So the revenue management really changed. The average price per ticket is almost half what it was pre-pandemic. Also the volatility really changed. So what happens here is that our Fintech portfolio is more relevant than ever, but the market is totally new to us.
And the environment that we price in is totally new to us. It’s only thanks to our adaptive technology that we were able to learn from those new signals and the new customers’ consideration set, and continue to offer our Fintech products in a way that adds value to our customers, as well as maintain healthy business unit economics for Hopper. So this was a really, really challenging, but also exciting time because it really paid off. As I mentioned, Fintech is 65% of our revenue and Hopper actually closed 2020 with 100% year-over-year growth, which means that we doubled our revenue, which is unheard of in travel, right? And this is thanks to Fintech leading the recovery of the entire app from the pandemic.
Jim Freeze Yeah, It’s interesting. You’ve talked a little bit about the company originally and still is obviously focused on travel, but you’ve also done a big pivot to Fintech. Can you talk a little bit about that and how the pandemic accelerated that shift?
Ella Alkalay Schreiber Yeah. When you look at the high growth and high margin with Fintech, it becomes clear that what Hopper is actually good at is the data capabilities behind its travel marketplace. We are experts in that field. And the way we think about the marketplace is that we add value in the planning journey. So what happens usually, if you think about your experience with hotels or flights or cars, everyone tries to monetize more and more the booking itself, the actual travel booking with, for example, if we take flights with upgrades for your seats or your class on the plane, or add bags to your trip and things like that.
But what Hopper does is we are thinking about conversion and our added value to consumers in a totally different way. So we unlocked the monetization and the value in the planning journey. So instead, if we take that market average of 3% conversion rate, in Hopper it’s actually much higher, instead of monetizing or targeting the 3% of users that become customers, we monetize and add value to the 100% of users that are actually planning their trip and searching for their travel.
And this leads to a compounding effect. So what happens here is that once you give someone price freeze and they froze the price with you, when they will come to access these prices and actually buy the flight in a later time when it’s a better time for them to book, they would also book the booking itself, the future business and Hopper. So there’s a compounding effect here, and this is so much more interesting and such a higher growth opportunity for Hopper. And this is what we’re actually doing. So this is much more around Fintech and data than travel.
Jim Freeze That’s really interesting. And I think you guys recently raised $170 million in new funding, quite a milestone, congratulations. What’s the impact of that funding on your portfolio and in particular, your new B2B platform Hopper Cloud?
Ella Alkalay Schreiber Yes. So we’ll be focusing on Hopper Cloud, which is our new B2B initiative with Capital One as our first partner. The product channel fit of Hopper Cloud is actually unparalleled. As I mentioned before, that product market fit of Fintech. So Hopper Cloud is something I’ve never seen before. What happens is that we look at the unit economics and the opportunity of Fintech and the next thing we said was, “Why not offer our Fintech portfolio everywhere else?” And then we started to play with this idea and started to reach out to partners.
And the idea here is simple. We take all our AI capabilities, in-house pricing and data knowledge and expertise, and offer all our partners super lightweight integration. We do the pricing, we do the servicing, we take the risk and liabilities on us, and we have a rev share model with them. So they enjoy a new revenue stream, a diversified stream that is really healthy and it has a lot of demand in the market.
So this drives through them revenue, conversion, retention, all the gross levers that businesses are interested in. We started to talk to different partners and everyone basically wants to join. So Hopper Cloud, which is basically offering our Fintech and travel infrastructure everywhere else, if you think about it, it’s a totally new travel market category, I would say. And if we would offer our portfolio on all the different travel portals and banks, all the different GDSs, or flight search websites. We are looking here at something around $80 billion, a totally new market opportunity.
Jim Freeze Wow. Well, as a marketing guy, I got to say, looking at the $80 billion dollar market opportunity is a pretty good one to pursue.
Ella Alkalay Schreiber Yes. So we think the same.
Jim Freeze Obviously. And then your investors think so too, you just raised $170 million. So my last question is, as we look towards a more stable future for the travel industry, post pandemic and knock on wood, hopefully we’re not too far from that, what do you envision the role of AI being and helping evolve that industry even further?
Ella Alkalay Schreiber I think there are two main opportunities, the first one is personalization and the second one is that we’ll start to see AI in every touch point in the travel journey. So I can elaborate a bit more about each. So personalization as we see at Hopper, there’s a clear value and impact when you better understand consumers and their consideration sets and what their traveling tent and what their fears are and what they are looking for.
I think that the more hotels and airlines and car rental companies better understand the consumers and build smart segmentation using AI, the better experience their customers will have, the better they would be priced in the competitive set because they actually understand the trade off that uses make between the price and the quality of the flight or the brand as well as they do, which clearly leads to customer satisfaction. But these always come with also increasing their market share, which is what they try to optimize for.
So that’s one better personalization and better understanding the market would be really good for the seller and the consumer. And I think that today it’s not something that is very strong in travel. So that’s definitely an opportunity. And the second one is that we will just start to see AI in every touch point. So in the offering, in the planning, at the booking time, at the airport, at the hotel or during the flight. Customer support is a huge area where we start to see a lot of AI driven conversation. So I think that AI is going to play a major role in the future of travel.
Jim Freeze I couldn’t agree with you more, especially on the personalization point. We’ve actually done some primary research on that point and consumers very much want personalization because you’re right, it leads to a better experience and it saves time for them as well, right? So I think that’s fantastic. Ella, I have to say this has been fantastic.
We all can very much relate to what you’re talking about because of the travel experiences we’ve all had. And I think it must be a very exciting time for Hopper given that it looks as though we’re coming out of the pandemic once again, fingers crossed, knock on wood. And there’s huge pent up demand for consumers across the globe to get back on the road and enjoy some travel again. So I think this episode is going to be very timely and I, once again, thank you very much for joining us today.
Ella Alkalay Schreiber Thank you very much. Have a great day.
Jim Freeze That’s all for this episode of The ConversAItion. Join us next time for an episode featuring Supriya Gupta, Senior Director of Product and Head of Recommendations at Credit Karma. We’ll discuss the growing role of AI in personal finance, and how the technology fuels hyper-personalized experiences for Credit Karma customers.
This episode of The ConversAItion podcast was produced by Interactions, a Boston-area conversational AI company. I’m Jim Freeze, and we’ll see you next time.
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