I thought tipping at Starbucks was bad. Tipping your online travel agency? Really?
A while back, I was helping a client evaluate Hopper’s business model. As we walked through the booking process, we noticed something unusual (to say the least). Hopper had preselected a “tip” at checkout. It wasn’t mandatory, and you could remove it, but unless you were paying attention, you could easily end up tipping an OTA. I suspect plenty of travelers never realized they had.
That experience came back to mind when the FTC announced a $35 million settlement with Hopper over allegations that it used hidden or preselected fees and misleading disclosures around some of its products. According to the FTC, the concerns went beyond tips and included claims involving Hopper’s VIP Support and Price Freeze products. Hopper settled without admitting wrongdoing and says many of the practices had already been discontinued.
To be honest, I’m not even sure what Hopper is anymore. It started as an OTA, became a travel fintech company, and recently sold the technology behind Capital One Travel while continuing to operate its consumer business with a much smaller team.
Regardless of the business model, there’s a lesson here for the rest of the industry.
Charging for real value is one thing. Sneaking fees into the booking process and hoping customers won’t notice is another. That’s not clever pricing. It’s a business model that depends on customers not paying attention.
The FTC can hand out fines. Customers hand out something much more valuable: trust. Once that’s gone, it’s a lot harder to earn back than a few extra dollars in ancillary revenue.
