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Since the launching of HopRocket in Papua New Guinea earlier this year, social media has been abuzz with a significant number of social media users enquiring about what all the fuss is about while those who have already joined as members are doing their best to convince friend and relatives to sign up.

As with any form of investment that requires a monetary commitment, it’s important that potential entrepreneurs wanting to go into business with HopRocket clearly understand the business process of HopRocket, what it offers, its ability to deliver and equally important is its reputation.

Until all the facts and figures add up, potential entrepreneurs must continue to dig deep and find out whether HopRocket is a worthy investment.  We’ve had a look at some of the facts about HopRocket and on the face of it, it’s very difficult to understand the business and its revenue model.

Here are 10 burning questions we’d like answered.  If anyone has already joined as a member or knows more about it, please let us have your answers on our 10 burning questions.

  1. Why has HopRocket chosen Papua New Guinea as its target market to launch their “business” and marketing campaign? Papua New Guinea isn’t a country that is reknown for exploring the world so it would be interesting to know why Papua New Guinea appeals to HopRocket.  Could it be that HopRocket is able to offer much lower prices that most of the local travel agents aren’t able to offer?
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  2. Even before one can answer question 1, it’s important to understand what goods/services is HopRocket selling?  Is it selling low airfares, cheap accommodation or is it selling membership to join its exclusive club to take advantage of the discounted rates it is offering?  According to its website at www.hoprocket.com, HopRocket is “an exclusive online travel membership club where unpublished discounted rates to the world’s finest accommodations are the norm, not the exception….” . It doesn’t declare itself as a travel agent so it’s fair to say that HopRocket is really selling membership to join the exclusive club.  It does not directly sell any travel products at the discounts it claims to offer its members.  In other words, you have to buy the membership packages on offer before you have any access to the travel discounts it offers.
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  3. Given that the website forms an integral part of the business, what is the revenue model of the website?  Is the website intended to act as a search engine like Kayak where much of the revenue comes from advertising?  Or is it a Expedia type website where it buys airline seats in bulk and offers them at wholesale rates to retail customers by putting on a markup, or is it a Wotif.com type website where it receives a cut from the sales made through its website?  In short, how does it make money from the deals it offers on its site?
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  4. Following from question 3, if HopRocket doesn’t actually make any money from the  “exclusive” deals it publishes on its site for its members, one can assume that most of the content is sourced from other reputable online travel websites like Expedia, Booking.com and republished on their site with their own “discounted” prices.  Could this be the case?
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  5. If 4 is true, how is it able to undercut the prices offered by its direct or indirect competitors?  Seems like the revenue model explained here is more of a loss making model.
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  6. If HopRocket is buying direct from airlines to offer such low prices as it claims, do local airlines Air Niuigini and PNG Air have any direct or indirect arrangement with HopRocket such that it is able to offer low prices as it claims?
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  7. Most airlines use a pricing strategy known as “Yield Management”.  It is a computerized strategy based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, perishable resource (such as airline seats or hotel room reservations or advertising inventory).   That is why prices change regularly and airline booking and price comparison sites like Expedia, Kayak or Wotif attempt to sort out the huge number of pricing options in a more easily readable format so that customers can view the best deals in real time. Considering that HopRocket promises to offer discounts of “up to 50%”, how does this “Yield Management” pricing model affect HopRocket’s own pricing if most of the airlines use this Yield Management model?
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  8. One interesting observation from the membership packages HopRocket offers is that the higher the level of membership the higher the discounts eligible members will be able to take advantage of.  Given that it’s unlikely airlines will be able to offer HopRocket preferential prices over more reputable and longer operating online or offline travel agencies, could it be that membership fees paid by the lower level members is contributing to subsidize the level of discounts offered to members  of the higher level?  Given that HopRocket controls its own pricing, its major revenue is in the form of membership rather than sales from airfares or hotel bookings on its site it could be the case that a certain percentage of membership fees are applied to the benefit of the “elite” level category to get higher discounts in comparison with members in the lower category.  In actual fact, it seems the marketing type utilised here is what is known as “multi-layer network marketing”! Does “pyramid” sound familiar?
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  9. Now its reputation: HopRocket seems to have arrived in PNG earlier this year and we cannot find any credible evidence that it has a successful history.  When did this organisation commence business and how successful is it? For a business that solely works online, one would think that it has a dominant presence online. For an organisation coming from the US, HopRockets Facebook Page only has 3,000 fans.  Its Google+ Page has 26 followers, on Instagram it has 429 followers, on Twitter 274 followers and on LinkedIn a paltry 15 connections.
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  10. Has HopRocket really taken off in other countries? Where else does it do business?  A recent search of the Global Brand Database operated by the World Intellectual Property Office reveals that HopRocket’s brand was only filed for protection last year.  24 April 2015 to be exact.  To this date, their brand remains in the application stage.  Even more interesting is that it has only applied to register its brand in Canada and the US.  Does it intend to register in PNG as well?  Why would they not register in the UK or China where there’s a significantly higher number of tourists who would snatch the deals they offer in minutes? Maybe selling the seats or rooms isn’t their priority but the memberships are.  Maybe they can’t offer the level of discounts to the elite level unless there is a significant number of members signing up at the lower level? Pyramid?
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Potential members and entrepreneurs need to know exactly why they’re joining.  Is it for the travel discounts, is it the business opportunity offered or both?  Researching the facts and figures is essential to making an informed decision because ultimately you want value for your money in a sustainable business venture.

If you’re already a member or business partner of HopRocket, we’d love to hear from you.

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