12 reasons travel should care about autonomous vehicles

When I first wrote about the impact of autonomous vehicles on tourism and hospitality, the tech was very much in the future issues column. Then COVID hit, and board teams had other distractions, so it hasn't been a travel industry discussion point recently.

But since then the tech has become a reality. Waymo (Alphabet/Google) is now operating and testing robotaxis in three cities in the United States - Phoenix, San Francisco and Los Angeles - including testing airport transfers in Phoenix.

Cruise (GM/Honda/Microsoft) plans to operate robotaxis in three U.S. cities by the end of this year (San Francisco, Phoenix, Austin). Motional (Hyundai) is tied in with Uber and making steady progress including availability today in Las Vegas, while Amazon's Zoox is launching their public facing services in the coming year or two. Globally, companies like Baidu's Apollo or Intel's Mobileye are also making significant progress and may or may not be ahead of the U.S. leaders.

The tech is here, as a travel and hospitality industry we just now need to work out what to do with it.

For example, are personally-owned autonomous vehicles such as proposed by Tesla and others the way forward? Or transit focused autonomous shuttles? Or robotaxis that compete with existing ground transport options? Or autonomous campervans? Or hotel branded experience delivery vehicles? And what about business models?

The automotive sector understands the existential threat posed by this technology, but for most in the travel and hospitality sector this is an opportunity, not a threat. Of course, for some players such as urban sightseeing tour bus operators, this tech is plainly an existential threat. But for most, it is not.

This reality impacts judgements you have to make as a sector startup founder. When a new tech is an existential threat to potential partners, you can go B2B as you have a prospective client base who will pay to be helped. When it is a consumer experience opportunity, you have to take investor funding and go the B2C route. Not a simple decision, not least because B2C travel startups are a graveyard, so as a founder in today's climate, if you can find a B2B path forward, you take it.

Now is a good time to recap why this tech matters to airlines and airports, hotels, sightseeing operators and retailers. Here are my top three issues for these top four tourism sectors:

Airlines and airports

• When autonomous vehicles are combined with eVTOL, we will likely see a shift from large hub airports to smaller local vertiports connected to smaller international airports. e.g. no more long standing jokes about Ryanair landing 50 miles outside of a city, that will become an acceptable norm when eVTOL and autonomous vehicles handle the last 50 miles to the hotel.
• Airport transfers will be disrupted. Waymo is already testing airport transfers at Phoenix Airport (available to the public in their beta test program – the group they refer to as Trusted Testers). Airports will need to consider how to architect the pickup/dropoff zones to handle that travelers will be using robotaxis rather than human drivers. For example where will the robotaxis wait? As they don’t have human drivers, they don’t have to wait exactly nearby, and need no special facilities (beyond basic security).
• Autonomous vehicles are likely to be designed and marketed as a short haul flight replacement. e.g. Gen.Travel from Volkswagen has been specifically designed as a concept car with this ambition. This isn’t going to happen anytime soon, but over the next decade, absolutely expect the automotive industry to have more tries at removing the need for a flight at all.

Hotels

• With improved mobility from shared autonomous vehicles (such as robotaxis), expect hotel location to become less important than it is today. As location is currently one of the most important (consumer) factors when selecting a hotel, any change to how important consumers regard location could have far reaching impacts.
• Hotels can use autonomous vehicles to extend the brand experience into the city. For example, Accor is already looking at various ideas (at the concept stage).
• Architectural adjustments may be needed - as in more pickup/set down areas, less hotel guest car parking.

Experiences

• New experiences enabled by autonomous vehicles come in at a lower price point for perhaps a similar or even better customer experience versus today’s shared tour bus options. Think of this as YouTube vs live theatre. Yes, we can all acknowledge live theatre is better, same as human tour guides are today versus basic audio tours, but YouTube is on demand, free (to the consumer at point of consumption) and is more about going down the long tail (around peoples’ passions).
• The enablers of these new experiences are now Amazon (Zoox) and Alphabet/Google (Waymo). This has the high chance of turning the sightseeing industry upside down. These larger digital players are what we expect at the start of the consumer discovery phase, referring people to products and services in return for advertising revenue, rather than acting as the product provider themselves. Going to get messy!
• After the initial robotaxi scaleup phase, when it is possible to buy privately-owned autonomous vehicles (assume coming after 2027 at the earliest), the sector disruption picks up a gear. When vehicles are more readily available for personal ownership, they also become more readily available for local businesses to own. At that stage a tourist will be able to hire an autonomous vehicle for four hours from the local car hire company (or their hotel). No robotaxis, no tour buses. The sightseeing industry should be relieved that Tesla hasn’t completely delivered on their “full self driving” mission as when they or a personally-owned autonomous vehicle competitor does, this will be an accelerant for the transition to digital tour operating. Luckily we get a few years to prepare for that inevitable moment, using robotaxis.

Retailers and online travel agents

• The majority of these experiences are free (beyond the cost of hiring the vehicle). What business model can retailers use to promote free experiences? Google Things to Do handles this well, sightseeing retailers including the leading online travel agents do not.
• There is an opportunity to use these vehicles to operate branded experiences, indeed may be the only scalable way to do so. The key is not to think about the brand as a big brand (e.g. Manchester United or similar), but the brand could be a local attraction operating experiences incorporating tickets to their venue. Or it could be an outbound travel agent (e.g. a travel agent in the U.K.) incorporating experiences in San Francisco operated in the travel agency brand. This is something that is enabled through digital tour operating where brands can be changed instantly.
• There is a large technology transition required to become a digital experience platform rather than an online travel agent. Only a few incumbent players will make the cut as the tech burden is high.

Summary

To summarize, this tech is here and scaling. My one call to action for the wider industry is get on the field of play. The tourism sector doesn't learn anything by watching the automotive industry, and leading digital players like Alphabet, Amazon, Baidu and soon Apple etc. take the lead on this.

My startup business is today operating early trial hospitality experiences using robotaxis in three to four U.S. cities. This hasn't been easy, but it shows it can be done even with limited resources. At the very least, everyone has to take this tech seriously, and no longer talk about it in the future tense. This tech now needs to be included within many companies core strategic vision for the mid- and long-term (and in some locations, near-term).

The automotive and digital advertising platform sectors have done the $100 billion heavy lifting, investing to make this tech fundamentally work. It is now down to the travel and hospitality sectors to commercialize it by scaling the consumer facing experience layer. There is a lot of work to be done!