Lufthansa invests in artificial intelligence partnership with Hopper to help predict flight demand

28 January, 2019

The Lufthansa Group and the Lufthansa Innovation Hub have entered into a research alliance with Canadian travel technology specialist Hopper focused on the subject of artificial intelligence. This will be their third technology-related investment within a year, following investments in the start-up's Fleet Logistics and, and will support Hopper's further expansion into the European market.

Hopper operates what has become recognised as one of the world's most innovative travel booking apps. By leveraging powerful machine learning and artificial intelligence, its proprietary technology works to predict flight and hotel prices, offering its users personalised recommendations at the optimal booking time, as well as alternative travel offers.

With this research project - in which the Lufthansa Group is making a multi-million-dollar investment - the two companies will develop a long-term collaboration on predictive analytics models and flight-demand forecasting. In addition, the project will utilise artificial intelligence to learn customers' preferences on a much deeper level in an attempt to secure insight to deliver personalised recommendations about additional services or upgrades.

The strategic partnership was initiated and negotiated by the Lufthansa Innovation Hub, the Lufthansa Group's innovation and digitisation unit. In addition to furthering the development of artificial intelligence, Hopper will also use the arrangement and Lufthansa Innovation Hub to expand into the European market. It hopes to leverage the Innovation Hub to provide strategic input on market-specific customer needs as well as access to its network of stakeholders in the European travel and technology space.

Hopper's European rollout is scheduled to start in mid-2019 and Lufthansa Innovation Hub managing director, Gleb Tritus, says that over the coming months, it will support the collaboration with the Lufthansa Group's revenue management and distribution experts. We are also confident that our Berlin team will be able to make a vital contribution to Hopper's European expansion," he adds.

Hopper was first established in Montreal, Canada in 2007 and essentially uses big data to predict when flights and hotels should be booked. At the heart of the Hopper app is a prediction algorithm that processes trillions of data points, allowing it to make what it describes as "precise and personalised travel recommendations". It now has approaching 35 million App installs since its launch in 2015.

Its machine learning algorithms are already driving a quarter of its sales and are rising, and it acknowledges that its artificial intelligence insights on the right time to book flights to get the lowest price are delivering clear benefits to users. This has seen sales to customers who were originally looking at traveling to a different destination or on a different date, but who decided to change their mind upon Hopper's recommendation.

Hopper has distinguished itself as a mobile-only booking company for the travel industry with its conversational commerce model and powerful machine learning. It claims to have saved users more than USD2 billion in expense with a 95% recommendation accuracy.

"Travel is a $1.3 trillion industry. Online travel is $662 billion, with mobile comprising $264 billion of that," explains Frederic Lalonde, CEO and co-founder of Hopper. "As the world continues to shift from web to mobile - and to apps in particular - an estimated 70-90% of time spent online is actually taking place on mobile. Of that, 92% of all mobile time is spent in apps - and not mobile web."

Those figures would seem to suggest that Hopper has found the sweet spot to become a go-to way to book travel and its recent growth would seem to support that. It saw significant international traction in 2018 and, as this Lufthansa agreement highlights, plans to accelerate that growth in key markets abroad - 25% of ticket sales already originate outside of the United States of America.

Early yet significant product improvements, such as the inclusion of 47 low-cost carriers in Europe, have already led to pronounced growth in the region, with sales increasing 2.5 fold year-on-year. Australia, the first market targeted for international launch, has seen its own sales almost quadruple year-on-year.