Predicting airfare is a $750-million business

Trying to predict the price of plane tickets has become something of a parlour game for companies looking to stand out in the online travel business. Microsoft Corp. gave it a shot with Bing Travel before abandoning the feature several years ago. Kayak offers its own buying advice tool, with a warning that draws comparisons to the reliability of a weather forecast.

Today ’s emerging contestant in airfare prognostication is Hopper Inc. The travel-booking startup said its predictions are 95-per-cent accurate. Travelers — and investors — are buying in. A new investment values the business at about US$750 million, said a person familiar with the transaction, who asked not to be identified because the terms are private.

Hopper said the new round of funding totalled US$100 million and was led by the venture capital arm of the Ontario Municipal Employees Retirement System. It puts the startup in a small club of travel apps, which also includes Hotel Tonight Inc., that have raised sizable venture capital instead of selling themselves to one of the industry’s giants: Booking Holdings Inc., Expedia Group Inc. or Ctrip. com International Ltd.

Frederic Lalonde, a former vice-president at Expedia, left the company in 2006 and started Hopper the next year. The Montreal-based venture became a star of Canada’s tech scene and earned backing from local VCs, pension funds and the state-owned development bank BDC. Hopper has raised US$184 million since its founding.

Hopper looks at millions of historical flight prices to estimate how costs will change for certain destinations over time. Using that info, it tells customers exactly when to book to ensure they get the best deal.

The service is only available as a mobile app, a major departure for an industry that still gets the majority of travelbooking revenue from people on computers. The app has been downloaded more than 30 million times; 90 per cent of sales come from notifications to users saying a flight they’re monitoring is going for a good price, the company said.

Hopper is tiny compared with Booking and Expedia. Customers have booked less than US$1 billion through Hopper since August 2015, when it added the ability to buy flights through the app. Expedia and Booking each booked more than US$80 billion last year alone.