Behind the Data, with Hopper’s Hayley Berg

Episode Transcript

Hayley Berg: Back in 2019, we started a program we call Hopper Trees. For every booking made on our app, we plant two trees. Right now we’re planting mangroves in an effort to contribute to offsetting the impact of travel booked on our app. And the reason we did that is the overwhelming feedback that we had from our users is they were interested in learning how to reduce their footprint, understanding how to travel more sustainably, but many of them didn’t really know how. Travel is an incredible thing and connecting people and cultures, but aircrafts emit an incredible amount of CO2. So there was definitely a challenge that users didn’t really feel like they could overcome and understanding how to do better going out. 

Robin Trimingham: Welcome to the Innovative Hotelier podcast by HOTELS magazine with weekly thought provoking discussions with the world’s leading hotel and hospitality innovators. Welcome to the innovative hotelier brought to you by Hotels magazine. I’m your host, Robin Trimingham. In today’s discussion, we’re going to delve into the use of big data analytics in uncovering and predicting travel industry trends around the world by touching on both the ways in which traveler demographics and behaviors have changed since the pandemic, as well as the impact on inflation and higher interest rates are having on consumer spending in both leisure and business travel. We’ll look at the ways that airline ticket availability is impacting travel decisions and ultimately hotel bookings. My guest today, Hailey Berg, is the lead economist at online booking at Hopper, and she’s here today to discuss how the summer travel season is shaping up and offers some insights into the benefits of predicting travel behavior. Join me now for my conversation with Hailey. F.O.H is a global food service and hospitality company that manufactures smart commercial grade solutions headquartered in Miami. The company designs and manufactures all their restaurant and hotel products. They have showrooms and distribution centers located throughout the globe, and their products are always in stock and ready to ship from any of their distribution centers worldwide. Welcome, Hayley. It’s great to chat with you today. 

Hayley Berg: Great to be here with you. I’m excited to talk travel trends. 

Robin Trimingham: Well, I was very interested to read about Hopper. I’ll be perfectly open with you. I previously knew a little bit more about maybe some of your competitors, so I’m very excited to be chatting with you. But I think for my global audience, maybe we better start by asking you to just very simply explain what is Hopper and how are you guys using big data to uncover and analyze travel trends? 

Hayley Berg: Yeah. So first and foremost, Hopper is a travel marketplace. We offer bookings for flights, hotels, rental cars. And as of last year, rental homes. We started mobile first. We launched an app in 2015, the Hopper app, and have steadily added more and more travel categories. We’re continuing to expand that now, but the basis of much of the Hopper app and really the way we work at Hopper is big data, machine learning and predictive algorithms. We have an incredible historical archive of prices that we use to forecast the future price of travel so we can give our users recommendations, very specific recommendations about when you should buy, when you should wait, how much you should expect to save. And as our app and as our marketplace has grown to include web and white labeling for cloud customers, we’re using all of that data to now build fintech products that make the travel booking or the travel actual traveling process easier for our users. And all of that is using that big data and the data warehouses we’ve built over the years. 

Robin Trimingham: So this is very interesting to me. So if I’m understanding you right, then you’re basically the equivalent of messaging people and saying, Hey, this hotel is likely to sell out or hey, these travel dates would be cheaper. 

Hayley Berg: Yes, we use a lot of notifications and emails to let our users know when is the right time to book. And to your point, recommending alternatives that may be cheaper. A really interesting stat that one of our teams just shared with me is that 7% of our hotel bookings on the Hopper app are actually coming from recommendations that we’ve made to users to stay with this super low price we’ve found or stay at this hotel because there are better rates for your dates or shift your dates. There are better rates here. So those recommendations are driving tremendous amount of bookings for our hotel customers in particular. 

Robin Trimingham: I think people really love a bargain. So to at least to a certain point, consumers must absolutely love this app because you’ve got access to all of this big data. Let’s talk about some of the trends that you guys are seeing because you’re in a unique place, because you’ve got a view of basically the entire marketplace, because you have the travel side, the rental cars, the airlines and also the booking side. Are you seeing any significant demographic trends since the pandemic has subsided? 

Hayley Berg: We really have a unique insight into the travel planning through traveling process end to end, because we’re an app, we can see that. Search all the way through what’s actually booked and where travelers stay and to an extent, what their whole trip looks like. So we are seeing that full picture and the majority of our users on the app are Millennial and Gen Z. And this is really where the biggest shifts have happened in the last four years. And I think the most important part of that shift is Gen Z are four years older than they were in 2019. Pre-pandemic. They more than half of them are over 18. They’re coming of age. They’re starting to build wealth. They’re building their discretionary income. And this generation is passionate about travel. We’ve heard it time and time again about millennials, but it’s even more true of Gen Z. They are willing to spend a lot of their discretionary budget on travel. They prioritize experiences more so than previous generations. They’re trading in mortgages and child care costs in their early 20s for these trips and vacations. And really, it’s we’re seeing the beginning of that transformation with this generation coming of age. And I think that’s really what we’re going to see over the next ten, 20 years is what this generation does to travel. But all of that happened very quickly because this past four years haven’t been normal travel. And now here we are. 

Robin Trimingham: I think it’s going to be interesting when we’re a few years further down the road. My hunch is that a lot of this stems from the fact that the millennials took their children everywhere. You know, previous generations. It was the sit up and behave and you put on your party dress for grandma once in a while. Millennials took their kids everywhere. So I think this travel thing is really becoming part of their DNA. Let’s talk about travel planning behaviors generally. Have you seen any changes with that? 

Hayley Berg: We’ve seen a really seismic shift in how planning is happening and when. And that’s really the most notable change that I’ve seen. As I said, we can see that entire planning process in the app from the first search made to what’s eventually booked. And what we’re seeing is that travel planning process is starting almost two weeks closer to trip start dates than pre-pandemic, about a 30% reduction in the amount of time people are planning trips. And it’s really a hold over from the pandemic when most bookings in 2020 and 2021 happened at the very last minute, whether it be for flights or hotels. And what that means is that window that we have as travel marketplaces to convert these customers to take this flight or book, this hotel is much smaller than it was pre-pandemic. And it means we need to be better at giving the right recommendations and showing the right products or offerings to convert customers in that window. And it’s an interesting problem to solve because oftentimes the best prices are not available in that very short window before the trip begins. And we worry our customers are missing out on them. But that is the biggest change. That’s what we need to adapt to the most. 

Robin Trimingham: Unless, of course, you’re a cruise ship. My understanding is that the cruise industry, there really are some last minute deals. What’s your hunch here? Is this just still a reactionary behavior from pent up travel demand from the pandemic, or do you really think this is here to stay? Like are people booking 2024 right now or are we really literally booking July and August? 

Hayley Berg: We’re still seeing July and August are popular for bookings right now. Hotel bookings have always been aired on the side of being more last minute. So it’s really the flight bookings that kind of anchor for a lot of trips that are happening much on a much shorter advance. I think what we’ll see is over the next few years, that advance that planning time, it will spread back out, especially as prices are so high. And we know consumers are price sensitive. There’s inflation. Budgets are stretched. So booking at the right time to get the cheapest price will become more and more important, really even in the next 18 months. I think some of this is just that pent up Covid 19 demand. We saw it last year for domestic trips. We’re seeing it this year for international travelers are willing to book at the last minute pay the higher prices coming out of the pandemic. But I imagine that we’ll see those advances, that planning period, stretch out as we get further away from such a huge black swan event. 

Robin Trimingham: It’s interesting because if you think about I’m going to call it something either exotic or complicated, like the once in a lifetime trip to climb the pyramids, go to Machu Picchu. You don’t I don’t think you can really realistically plan those overnight. So I’m wondering, as people get braver about going out in the world again, you know, how much of this is going to be last minute and how much of it is going to normalize. As you say, you mentioned interest rates and inflation. Okay. So that’s really a thing everywhere, isn’t it? And consumer spending is being impacted left, right and center. How is it how is travel being impacted by all of that? Do you discern any difference at all between leisure travel spending and business travel spending, for example? 

Hayley Berg: It’s interesting, really, since 2021 when leisure travel started inching back and interest rates started inching up, we’ve been asking the same question over and over again, which is when will all this economic pressure start impacting desire to travel or willingness to pay to travel? And really, we’ve failed to find any indicators that it is. What we’re seeing instead is that budget being reallocated to get more for it. So for example, I mentioned travelers are planning very last minute, but in that shorter planning window we see users coming back and checking the price of their trip 30 to 50% more times than they did in 2019. So short of the window of planning, but checking prices significantly more. They’re booking the cheapest hotels or accommodations or flights that they can find. But it’s because on average, they’re taking more trips. They’re fitting in an extra domestic trip in the year or potentially adding a few days to an international trip. So we’re really seeing whether the leisure budget is the same, slightly smaller, slightly larger, depending on the consumer and the age group. The main theme is getting more for your money. Even with all of these inflationary pressures as travel continues to be the focus. 

Robin Trimingham: Yeah, it’s interesting because I think to a certain degree there are a lot of people out there who are saying, okay, we couldn’t go anywhere for so long, let’s go while we can. Whether we can really afford it or not, we’re somehow going to make it happen. 

Hayley Berg: We’re definitely also seeing the theme of we want to go on that bucket list vacation. We’re willing to take the time off work or school and to make it happen. We will stay at the hotel Sunday to Tuesday instead of for a weekend, or we’ll fly on a Wednesday night instead of Friday night. There is definitely, I call it deal seeking behavior, but behaviors that are enabling people to potentially keep their travel plans the same. Even with airfare, for example, in Europe right now, incredibly high, $1,400 for 4th of July. Europe trips, 1200 for the summer. In general, you have to do a lot of budget wrangling to make that work. But travelers are. 

Robin Trimingham: Yeah, it’s it gets really pricey for a family of four. Definitely. We keep hearing announcements in the news that more and more workers who were remote based are being called back into the office. So it makes me wonder, what does your research say is going on with remote working or this whole bleisure travel thing? Do you see any trends there? 

Hayley Berg: We absolutely do. And we’re seeing it not just in survey data when we’re asking our users how is this impacting your travel, but in actually how they’re booking on the app. So about half of hopper users have some sort of remote work flexibility, and those with flexibility all say they’re traveling more, they’re traveling for longer or they’re traveling midweek or working around their work schedules a little bit more easily. But the subset of those users, users who are also traveling for work, this is incredible. Three quarters of them plan to tack on personal travel when they go on a business trip this year. So they’re maybe going to a conference and staying a few extra days or going somewhere and then going on to a second destination for a getaway, really tacking on something additional. And really what we find is that this remote work is one, changing how people approach travel, but two, also seemingly creating new opportunities to build on existing business travel. 

Robin Trimingham: Established in 2002, is a woman owned global food service and hospitality company that manufactures smart, savvy commercial grade products, including plate wear, drinkware, flatware, hotel amenities and more driven by innovation. F.O.H Is dedicated to delivering that wow experience that restaurants and hotels crave all while maintaining a competitive price. All products are fully customizable, and many are also created using sustainable eco friendly materials such as straws and plates made from biodegradable paper and wood and PVC free Drinkware F.O.H has two established brands front of the house focused on tabletop and Buffet Solutions and Room 360, which offers hotel products. Check out their collections today at FOHWorldwide.com. It’s really interesting when you’re home based, which I am permanently, and you have interesting gaps of time and it’s like, Oh, I can actually do something now because my work for the day is really done. I was quite intrigued in reading one of your recent travel reports that Hopper’s estimating that 60% of the users on your site are flexible, not just in the travel dates, but the actual destination, and that there’s a discernible number that are really starting out looking for a trip to one country and winding up booking something entirely different. Talk to me about this. 

Hayley Berg: It’s incredible how much flexibility there is at the beginning of the travel planning process, and it gives us a really unique opportunity to convert customers to something different than what they first searched for. And we really see this in the travel planning process where customers will look at multiple sets of dates for the same destination or the same dates for a few different beach destinations or a few different cities in Europe. Europe Europe’s an easy example because it’s such a hot destination for those 10 to 14 day summer vacations, those bucket list trips. We do see a lot of users who will look at first London or Rome or Athens, but then see a very inexpensive flight to Lisbon and they’ll go there and start their trip there instead. So there is flexibility, especially for those customers who are working backward from an experience they want rather than a destination they’re going to. So, for example, I want to go on a trip to Europe and see a few cities. Well, that could start in Rome, but it could also start in Milan, where there are a lot of inexpensive flights from New York City, for example. Same thing for domestic trips, different beaches. So there is a lot of flexibility there. But capitalizing it on it at the right time is challenging, which is why we actually have a team at Hopper who’s working on how do we make better recommendations and how do we surface more interesting deals in similar destinations so that customers can actually take those trips and spend a little bit less? 

Robin Trimingham: You’re making me wonder, then, what are the primary motivators for travel at the moment? Is social media simply driving all of this, or is there something deeper going on? Do you have an opinion? 

Hayley Berg: I definitely see social media continuing to be a part of the travel planning process and a real major part of the inspiration for travel planning. And we have a fun example. So there was a show, The White Lotus. It was set in Sicily. It was hugely popular earlier this year, and since then we’ve seen incredible volumes of hotel bookings in Palermo and flights to airports in Sicily. And there’s a lot of social media behind all of this advertising for the White Lotus. And really it’s what people are consuming, whether it be social media or actual television shows, is influencing where people are going. We see it to Yellowstone, Montana, as well. So whether it be Facebook, Instagram, TikTok or what people are consuming via Netflix, HBO, you name it, there is definitely inspiration that’s now coming not just from ads or what’s the cheapest, but from what people are consuming. 

Robin Trimingham: I’m interested in how social media is changing and affecting behavior as we go forward. In the beginning of social media, if you had pretty pictures, everybody reacted, but the pictures were not necessarily authentic, as we all now know. And I think authenticity is becoming more and more important. Do you see any connection between authenticity and travel booking behaviors? 

Hayley Berg: I think we are. And what really comes to mind is not the biggest destinations, but those smaller ones that are trending more and a bit of a movement of finding places off the beaten track. We see on social media a lot of romanticizing of, in one example, a back to nature lifestyle. And in that we’re seeing really small airports in Alaska, in Chile, near Patagonia becoming increasingly popular. And they’re not becoming the largest airports in the region, but they’re building demand. And I really think that that is tied to one exposure of those destinations, which is oftentimes done by travelers who are posting videos on TikTok or families that are creating a business out of their own travels and advertising destinations. So I absolutely think social media is driving a lot of this. 

Robin Trimingham: That’s very interesting. You recently commented, and I’m going to read this to make sure I get it right. Airlines have been conservative, only bringing back enough capacity that they can fly reliably on time. Okay. So that’s kind of a double edged sword because on the one hand, for the traveler, there are less delays. You’re getting to your destination in a more timely manner, but that’s also driving ticket prices through the roof. What do we think about all of this? Is this just going to drive up prices so high it negatively impacts travel. Is there a point at which the airlines should be putting on more planes and they’re holding back? What’s the data saying about all of this. 

Hayley Berg: Where we are today? There are routes and definitely regions where capacity is back above 2019 levels. And in a lot of those areas, we have seen major improvements in price. Domestic is a great example. We’re right around 2019 seat capacity levels. There are still fewer flights in the air. We’ve swapped out smaller jets for larger ones to bump up the numbers, even though there are fewer flights. But, you know, we’re seeing where capacity has come back the most. Prices have seen relief. So domestic airfare this summer, for example, it’s $100 lower than it was at this time last year when capacity was completely constrained. Jet fuel prices were out of control. So we’ve seen improvements, but really on international routes, especially to Europe and Asia, that’s where we’ve seen the most conservative re-adding of flights and seat capacity, and that’s where prices are incredibly high right now. So what we’ll need is time. Some of this is operational, bringing back what we can operate on time, bringing back what the airports themselves can handle. New York is a great example. There aren’t enough air traffic controllers for capacity to be added at New York airports right now. So the rest of the recovery is going to take time and we may end up in a position where like to Europe, like to Asia, there are fewer seats available to book and more people who want to book them. And a bit of throttling. But we have seen optimization airlines at the end of the day, want to get a paying customer onto a plane and onto their destination. So where there’s the most demand, we see more flights being added, capacity being added. But until shipments of planes that were delayed by Covid come in, until staffing by the FAA and air traffic control is increased, those are the factors that are going to hold us back and potentially throttle some of the demand. 

Robin Trimingham: Yeah, it really takes a village, doesn’t it? When I look online myself and I’m searching for flights and it doesn’t really matter whose app or site you’re on, the flights will come up and it’ll be shortest duration, highest price on average, and then there’ll be these crazy options. Well, if you’d like to change planes 3 or 4 times and take 23 hours to do a two hour flight, I’m exaggerating. Of course. Oh, here’s this great deal. Are people really going for that as the average length of short haul or long haul trips changed? 

Hayley Berg: We absolutely see people who are willing to connect four times and do a spin and circle back or whatever it is to get to their destination for the lowest fare. And part of that is not new. Part of that is hacker fares. When you have two one ways combined to make a round trip. Those have been around for a really long time. And marketplaces like Hopper, we combine those, we show them to you as if it’s a round trip fare. They have chipped away at that lowest price available. So now we’ve gotten used to having either via a low cost carrier or these hacker fares, really low fares available and in a position like we are today, where there’s less capacity, especially to a destination like Europe. That’s my favorite example. There might only be a few, a few direct flights to your destination in Europe, but if you can get tricky with all of these different one ways, you might be able to get there with just 1 or 2 stopover for a lot less. That said, that is a lot of pressure to put on consumers to say, go do all this math, connect all the dots and figure out how to get to your destination for cheaper than anywhere else. So we actually have a team that works on a product. It’s called Virtual Interlining. And it is essentially the question of how can you get from A to B and back if you need to for the cheapest, but without a 48 hour layover or an extended time stuck in any one place because duration is important, those nonstop flights are very attractive. But if we can find a middle ground, we do see really incredible conversion. People purchasing flights that may be a little less convenient, but are so much less expensive it’s worthwhile. 

Robin Trimingham: Well, I’m glad to hear that, because I really do think some people don’t realize that when they book one of those trips to Europe, the first leg is, Oh, we’re landing in Amsterdam. Well, that’s that sounds good. And you don’t really realize when you’re booking it that you’re going to be at the airport at 3 a.m. as far as your body is concerned. And then you’re going to walk the entire length of the airport to get to your connecting flight. It’s definitely an interesting time out there. Are there any emerging trends at all when it comes to sustainability and eco friendly travel? Because I keep reading that, oh, more and more travelers are green, aware and choose making choices based on that, but haven’t really seen any data on that. 

Hayley Berg: We actually really put a bet on this back at the end of 2019 that this was important to travelers. So back in 2019, we started a program we call Hopper Trees, and for every booking made on our app, we plant two trees. Right now we’re planting mangroves in an effort to contribute to offsetting the impact of travel booked on our app. And the reason we did that is the overwhelming feedback that we had from our users is they were interested in learning how to reduce their footprint, understanding how to travel more sustainably. But many of them didn’t really know how want to go to these destinations. Travel is an incredible thing and connecting people and cultures, but aircrafts emit an incredible amount of CO2. So there was definitely a challenge that users didn’t really feel like they could overcome and understanding how to do better. So we said, We’ll do it for you. We’ll take on the onus of planting trees and doing the offsets, and the feedback has been incredibly positive. More than half of our users say that us having this program makes them a lot more likely to recommend us to a friend, to a family member or a colleague. That’s the proof that we were looking for, that there is a desire there. There’s definitely confusion, maybe some uncertainty about how consumers should go about it. And we took the the angle of we’ll try to solve that problem for you. But I imagine that especially as we come out of the pandemic, people are traveling more. There will be a continued focus on how do I do this more sustainably? What are decisions I can make that maybe reduce my impact or change it? 

Robin Trimingham: Yeah. And I think more and more people involved in the travel industry, in all kinds of companies, are really going to have to step up to the plate and offer more carbon offsets and just be more eco friendly and eco aware as a whole. We’ve got a couple of minutes left here. Let’s talk about I generally. I’m just going to ask your opinion. There’s no doubt that AI is reshaping the travel industry as a whole. Why do you think that the travel booking experience is going to look like a couple of years down the road now that everything is changing so rapidly? 

Hayley Berg: First of all, and we made our bet on this in 2015 when we launched the Hopper app mobile only. The experience we believe, will be mobile. First. You’ll be ideating looking on social media where wherever it is to get the ideas on where you’ll travel, you’ll do your planning process on mobile, you’ll book on mobile, you’ll have your boarding pass on mobile, maybe your room key on mobile. So really the experience is going to start with technology, and that means that I can become a much larger part of your travel experience with a phone. We have a window to users almost at all times, can make recommendations, can really proactively present options to users. So I think in future we’re going to see mobile driven personalization of recommendations. What specifically do we recommend to you based on your behavior where you’ve traveled more targeted ads, more programmatic listing of different options? If you aren’t willing to spend ten hours at 3 a.m. at Amsterdam Airport to get onto your destination, we won’t show you that flight. And all of that will really be powered by big data machine learning and AI. And then of course, on the generative side, the lowest hanging fruit is definitely customer service, getting people answers that are relevant to them. I see that definitely playing a big role. And on the inspiration side, social media can inspire people to go places. I think generative AI will be able to do something very similar or fuel apps like ours to show ideas and get involved in that ideation process. 

Robin Trimingham: Or support your research in choosing. 

Hayley Berg: Absolutely. 

Robin Trimingham: I really want to thank you so much for taking time to chat with me today. Very interesting conversation. You’ve been watching the innovative hotelier. Join us again soon for up to the minute insights and information specifically for the hotel and hospitality industry. You’ve been listening to the Innovative Hotelier podcast by HOTELS magazine. Join us again soon for more conversations with hospitality industry thought leaders.