Time to get on the field of play: Autonomous vehicle sightseeing 2021 update

August 5th, 2021

Alex Bainbridge

Do you own a tour bus or several in a major US or EU city? This article explains why you should begin your planning for autonomous vehicle sightseeing transition now…… this article was inspired by a weekly editorial on Phocuswire suggesting that this is an imminent issue, but not quite yet an immediate issue.

At the Arival conference in 2018 in Las Vegas, I wore a t-shirt that offered to transition vehicle based sightseeing companies to autonomous vehicle sightseeing by 2025. I stand by that offer timeline for some EU / US cities but accept it won’t be globally available tech by then. But in the cities it will impact, it will impact significantly. You need to be ready to either use this technology in your tour business, or to compete against new companies using it.

One problem of stating a timeline back in 2018 was that some considered 2025 too soon, others felt that 2025 was a long way away still so a problem for “next year”. Then COVID happened. This article is my attempt to explain why 2025 is nearer than you think and planning (& execution) towards meeting that timeline must be started, if you are in an impacted city.

Some of this I have said before, some is new. For the first time since 2018 I have tried to pull all the relevant latest information into one place including for those coming to this issue for the first time. Yeap, this makes this article long.

What is an autonomous vehicle?

If you are new to the autonomous vehicle tech capability and you are wondering what this is all about and what it can do, watch this video:

Thats a 6 person Google / Waymo vehicle, taking paying customers today in Phoenix USA, and bookable via Google Maps, no non-Google travel industry involved. We call that a robotaxi. They are NOT amazing for sightseeing experience delivery as they are primarily designed for convenient local mobility, however they create cheap & easy transport options for tourists.

Or if buses are more your thing, this is a great video, 2nd half showing the customer experience in a new 10 seater in China, available from Yutong, the largest human driven bus manufacturer in the world with a current output of 60,000 high passenger capacity buses per year. Their vehicle is market ready.

This tech is here, its just not yet widely distributed. Over the coming years are you are either going to transition to using this technology in your tour business, or you are going to compete with it. Both approaches require positive action today.

Will these smaller vehicles compete on price vs efficient high capacity tour buses?

This is an unknown at this point but I expect they will, over time. Here for example is Uber’s autonomous vehicle partner (Aurora) recently talking about robotaxi prices down to 1 USD a mile (per vehicle not per person). (Their launch is 2024)

As we expand, our unit economics will increasingly allow for price-induced market growth. When the price/mile reaches $1 (imagine a $7 trip across San Francisco vs ~$25 today) we expect autonomous ride-hailing to become economically preferable to >70% of car ownership in the US.

More info

For a family of 4, 0.25 USD a mile (per person) seems competitive vs high capacity tour buses, if/when prices reach that point.

10 reasons why this tech is an immediate issue and you should start your transition planning now….

1 – Already in the financial impact window

Estimating the timings for the introduction of autonomous vehicle technology to cities is notoriously difficult. However it appears that we are already in the financial impact window:

Coaches have an expected commercial lifetime of 7 years / For hop on hop off buses its 15 years

Any new tour vehicle you buy today will not reach commercial use full term before autonomous vehicles are directly competing for the same consumer market share. e.g. if you bought a luxury coach in 2019 you expect to use that vehicle in a commercial setting until 2026, or 2034 for a hop on hop off bus.

I respect that the transition from diesel to electric & hydrogen is fabulous. The problem with this particular decarbonisation is that these vehicles still deliver the same consumer product as currently.

What autonomous vehicles gives us is a new consumer product, likely more attractive to consumers and potentially at lower or equal price point.

Ultimately will be down to consumers whether they prefer a high passenger capacity electric bus or a family sized electric autonomous vehicle delivering a personalised experience. i.e. it is wonderful that tour bus companies are changing to electric or hydrogen with human drivers but in the end, thats not where you need to get to.

2 – Inform your decision making about whether you need a new vehicle, or will operate on 3rd party vehicles

Easy to operate digital experiences that are free to consumers on vehicles you don’t own, such as robotaxis. Here is my Autoura tech that delivers a free bike / scooter tour using public shared vehicles.

Free bike & scooter tours are great, but learning how to operate revenue generating experiences is super hard, when you are incorporating a vehicle that you have no commercial or operational control over, so you can’t charge consumers for.

If after a year or two of this, you decide that this isn’t going to work for you, you need to work on a vehicle replacement that can both compete with robotaxis and that you can charge consumers for, if that is what you want to do. That’s a several year project – so if you start in two years time, you would be unlikely to have a solution this side of 2027. It is unlikely to look like your current fleet.

If you are thinking, “compete with robotaxis”, its not actually that, its compete with my Autoura experience platform (and others) using robotaxis….

i.e. either if you are going the non-vehicle operating route, or you want a new vehicle that can compete with robotaxis, you need to get on with thinking about that.

3 – Not just about autonomous vehicles – but about changes in urban mobility more generally

Regardless of the progress towards autonomous vehicles themselves, in the meantime we have:

  • electric scooters
  • bikes & e-bikes
  • other new forms of urban mobility

Their shared characteristic is that they are smaller than tour delivery vehicles today so you need to work out how to deliver an experience without a tour guide being physically present. Fundamentally the same problem as autonomous vehicle sightseeing.

4 – This is a big shift coming with timings set from outside of the tourism industry

There is no company within tourism that can slow this down…… its going to happen when it happens. Previous external tech that created seismic shifts in our sector include:

  • Web – Viator
  • Social – TripAdvisor (reviews) / Airbnb (P2P)
  • Mobile – Res tech (as forced OTAs to need live availability at the last minute so forced API connectivity)

The automotive companies are not requiring client companies (like bus owning tour operators) to buy their vehicles, they are funded to build their own fleets to operate in their own brands.

So even if every local tour bus owner decided to kick this can down the road again, perhaps due to limited financial resources or other priorities following COVID, that doesn’t change the timeline that the technology will be introduced on as the automotive companies continue to push ahead.

5 – This time around, as its digital, the OTAs, the GYGs & Airbnbs of the world, don’t need local tour operators to operate tours

Not every OTA sees that today, and those that do are keeping quiet as they are reliant on existing tour operators today so don’t want to rock that particular boat…. i.e. when the battle for consumer scale starts, the market is going to be super competitive. Start early.

6 – When you are big company, there are not that many projects or innovations that can move the needle

This is one of them. I describe this as being a digital operator, rather than a digital retailer. Completely new mindset required. Shifting mindset at an organisational level takes time. Start early.

7 – Digital operating is likely to be a winner takes all market (at least at a continent level), rather than a city by city market

Sure, winner takes all happened on the distribution & retail side before, but has not happened on the the operator / city side previously. Being an early mover doesn’t guarantee that outcome, but puts you on the field of play at least.

8 – Help set the new industry structure

e.g I have set that the majority of vehicle based urban sightseeing will be free to consumers. That is now set, but there are so many other areas that are yet to be locked down. I published my plan end of 2018 but I am yet to see anyone else’s plan publicly or privately. If you don’t set the structure, you will have to compete later within an industry structure that may not be to your liking…… get in early and you get to help define the future battleground late adopters will have to compete within!

9 – Automotive sector already started their transition and they are coming towards leisure & tourism

Not a given they will win…. Automotive has to pivot from private ownership to shared ownership (Shared doesn’t mean concurrent shared like a bus, can be sequential shared like a taxi). Tourism is a step ahead as already has shared ownership (a tour bus is concurrent shared), but tour operators don’t necessarily want to be local transport companies beyond sightseeing.

However, the automotive industry does have an advantage of size. For example one leading automotive sector software player is NASDAQ listed Cerence with 1900 digital tech employees (4 billion USD market cap). They are the automotive market leader with their voice & navigation technology in 52% of cars globally sold today.

Here is their version of a scooter sightseeing experience delivered by an AI tour guide, built in partnership with Tripadvisor.

They have lots to do on their execution – the important point is not the characterless quality of their product today but that significant automotive sector companies see digital delivery of vehicle based tourism experiences as a market they want to get involved with.

Although its not a slam dunk that the automotive sector will win, they certainly will win if they are left to create this new vehicle based experience market how they wish to. Currently the automotive sector is all investing in transitioning to new mobility but the vehicle based sightseeing sector has yet to plan or even widely acknowledge there is a problem that it needs to address.

The automotive sector has been gifted a head start, now it is time to catch up otherwise it may not be possible.

For more on the convergence of the automotive and the local vehicle based tourism industries, this article is a good read.

10 – The tech works for covid recovery too

Two places it can be used is to retain social distancing & to assist with the shift to local customers (from international tourists). With some neat execution you can do both covid recovery AND initial transition projects at the same time.

Another example is that one of the long term impacts of COVID appears to be the shift to out of city experiences. These are traditionally hard for high volume urban sightseeing operators as these out of city products are generally low volume products…….. Some forms of new independent tourist mobility can help address that current market opportunity.

COVID is not a reason to delay an autonomous vehicle transition project, instead its a reason to bring these future projects forward and apply that mindset to current issues & opportunities.

Summary

I hope these 10 points are sufficiently persuasive for you to get started with your transition planning. It doesn’t need major money at this point unless you want to jump immediately to a new vehicle design & build phase, which most vehicle based tour operators will never need to do. (But some will, otherwise they won’t retain their differentiation)

To boil it all down to the basics, I have two key questions for leading vehicle owning tour operators based in major US / EU cities:

Do you plan to remain a vehicle owner operator or will you transition to digital operating only, perhaps based on Google / Amazon / Microsoft or Baidu owned vehicles? (and others)

– If you are going to remain a vehicle owning operator, what are you going to put in your new or existing vehicles to differentiate them from ubiquitous robotaxis? e.g. Perhaps reduce passenger capacity and introduce high-end hologram tech that is too expensive for homes, or too expensive for robotaxis…… but what if that becomes common place? Do you need to operate your own low-capacity autonomous vehicles that are optimised for experience delivery rather than robotaxi services? What are you going to offer to consumers in your vehicles that is attractive vs the consumer selecting an Apple car with an Autoura experience?

These two key questions will need to be addressed by vehicle owning tour operators in every major US / EU city in the coming years. I suggest to begin to answer these questions sooner rather than later. If you want help defining or delivering your transition plans, please ask me. (I am actively looking for paid consulting work on this and tourist mobility topics. Hire me!)

Is this just crazy talk?

If this sounds too theoretical “you are totally crazy Alex, we will deal with that in the future, when we see it happening” consider this:

If you are based in Dubai you now know that Cruise / Microsoft will have 4000 robotaxis there by 2030, starting 2023. Do you shift your business to use these vehicles? What else can you do?

Or earlier than that in the US, Lyft is introducing 1000 robotaxis in Austin & Miami in the next few months. Local gig drivers are not happy.

Final thoughts

One underappreciated aspect about this shift to digital tour operating is that hotel chains, airlines, tourist boards, restaurants and other consumer brands involved in leisure or tourism experiences can now design and operate their own tours & experiences. Sightseeing will no longer be dominated by companies owning road vehicles or employing tour guides – the benefits from incumbent scale are evaporating, to be replaced by new digital network effects.

An entrepreneurial hotelier or restaurateur can now, using a digital experience platform, achieve in their destination as much as the incumbent vehicle operators as there is no need to own any vehicle assets to be a vehicle based operator.

This change is similar to what happened with the movie industry – individual creators and small companies can now publish & distribute video via Youtube, there is no longer any need for expensive Hollywood studios or cinema distribution agreements. Using the same analogy, autonomous vehicle experiences are not the same as tour guide lead experiences, just how Youtube videos are not Hollywood movies, however both compete for the same consumer attention. Extending the analogy even further, Youtube is free to consumers, while cinema consumers have to pay for their tickets, just how autonomous vehicle experiences are free and on-demand vs pre-booked tour bus experiences.

Online travel agents (OTAs) are not immune either to the changes coming with these new experience platforms. These new digital products are mainly zero priced and OTAs beyond Tripadvisor surprisingly don’t currently feature zero priced sightseeing (even though this is the dominant way that consumers experience destinations). Google is already directing consumers from Google Maps directly to Google owned autonomous vehicles, there is really no need for Google to send consumers Google > OTA > tour operator > Google vehicle….. that just doesn’t make sense to Google or the consumer. The impact on OTAs is a whole another blog post or two 😉

The opportunity is validated – Cerence, a 4 billion USD market cap company from outside of the sightseeing & experiences sector, has come out of the gates first with a novel sightseeing execution. If we accept general urban mobility change will create significant structural change to vehicle based sightseeing, we must accept that Cerence (in partnership with Tripadvisor) is leading the way. We are not far behind with Autoura, so game on!

P.S. If you like this blog (really!?) you may like my new Youtube show – “The Autoura Show

Photo: to the future by Solveig Osk (CC BY 2.0) (Source)

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