Skift Take
Hopper said it is on track to process about $500 million in gross bookings — a number much larger than actual revenue — this year. Its expansion into hotel bookings would bring fatter commissions and hopefully more engagement. But the company will go up against better-funded players. All bets are off.
How can travel startups hang on these days given the dominance of a few incumbents?
It's hard to be optimistic about the chances of consumer-facing travel startups to succeed when Expedia Inc., the Priceline Group, and Ctrip appear to have the muscle to crowd out new entrants.
These questions come to the fore as Hopper, a mobile-only travel startup that has raised $78 million, begins to expand beyond airfare predictions and flight bookings to offer consumers hotel rate predictions and room bookings — beginning with New York City.
Hopper will have to compete with the incumbents, which enjoy so-called "network effects." By attracting more consumers and spending collectively about $9 billion in annually on marketing, they create attractive markets for hotels and airlines. And by attracting more suppliers, they make their marketplaces more appealing to consumers — which, in turn, creates a cycle that makes the platforms grow.
Even startups backed by major companies, like Alibaba's Fliggy and Ctrip-supported MakeMyTrip struggle to gain traction quickly. One problem: The rising cost of customer acquisition because of gatekeepers such as Google and Facebook.
Despite being founded in 2007 and executing a series of missteps,
