Moving Forward: The Future of Mobility in Business Travel
Hello and welcome! My name is Nikolai Koster and I’m here to talk to you about one of my favorite subjects — the future of mobility, and specifically how the future of mobility matters to the corporate traveler. Let's get right into it.
We’ll start today by taking a look at the present and why mobility currently matters to corporate travel. Then we'll take a step back and look out into the future and have a bit of fun predicting some of the exciting stuff, some of the exciting technologies that are coming and how they have this pretty amazing opportunity to solve some of the big problems that we have, for people, mobility and the planet.
Why does mobility matter? Mobility’s impact on cost, duty of care, sustainability and user experience
First of all, I'd like to just talk a bit about why mobility matters. It turns out that mobility has more touch points than any other mode in the corporate travel journey. The issue is that almost all of these modes, bar a couple of exceptions, are consumer tools. So when you think of Uber, when you think of Lyft, when you think of the different e-bikes, the different E-Scooters as well, when you navigate around cities using Apple maps or Google Maps, these are all consumer tools; distinct apps that sit on your iPhone or in your Android phone.
And you, as we say, punch out to them. That means that you basically leave the online booking tool and you open up these apps on your phone and you use them, and then you have to expense them afterwards. That means that in the world of mobility, more than 80% of the mobility transactions we see are actually booked off-platform, and only 20% are really booked in the online booking tool.
Let's look at why that matters. What does that then mean if everything or the majority of these mobility bookings are actually done off-platform? Well, mobility actually has an opportunity to solve some very key pain points and problems. The first one is cost. When we ask travel managers what's most important to them, they say cost and cost control is at the absolute top.
If you have off-platform bookings, it reduces the visibility and the ability for the travel manager to have cost control. The second one is duty of care. This is again the same principle. If it's booked off-platform, you don't know about it, so you don't know what tools the employee is using.
You don't understand where they have been in the world until that journey is complete and the employee has expensed where they were and also what type of mobility mode that they used. As a travel manager, you can’t influence that if it doesn't sit in your OBT.
Next up is sustainability. I think we all appreciate that and know that if we don't have mobility built into an OBT, as a corporate travel manager, we can't push or nudge for sustainable mobility modes. Finding a sustainable option is something that the traveler themselves have to figure out, and especially when you start looking at different mobility modes and trying to sort of compare pricing, a lot of more sustainable options are still more expensive. So it can be hard to figure out if I, as a traveler or an employee, am allowed to pick a mode that's that sustainable.
The other concept that is worth discussing is mode substitution. That’s when you can take, let's say, a train instead of a plane; that's you substituting one mode for another. You're choosing a mode that's more sustainable than the other. But it's hard to plan because, ultimately, you need to accomplish getting from A to B and you need to make sure you get there in time.
There's a lot of planning around different modes of mobility. And when you start as an employee having to juggle both the cost component, the duty of care component and the sustainability component, it can be a lot.
The last piece is the user experience, and that's a summation of everything I’ve mentioned so far. Using all these different distinct consumer tools that sit on your phone can be a lot because you're punching out to different apps and you have to expense afterwards. You're going very rogue as you're trying to navigate the world. It's hard when you don't have all of these different mobility modes sitting inside of the OBT.
That was a speed through the present. Let’s take a step back and then we'll try to look out into the future.
I want this to be a bit of a positive story around some of these future technologies that actually have the opportunity to solve big problems and also make it a lot more convenient, a lot lower costs, a lot safer and a lot more sustainable for all of us to travel around the world, both as consumers, but especially also as corporate travelers.
The problem with car ownership
Let's try to look at some of these, as I call them, big ticket mobility problems. It actually starts with car ownership. The car was really conceived as this freedom device, if you will, and it's amazing at that. RWe own a car and we can basically choose to go almost anywhere we want, within drivability restrictions. We own a car, it's in our garage and we can go shopping, commute to work, go on vacation, go on weekend trips, and so on.
The state of the world today as it pertains to vehicle ownership is that we have some 1.4 billion cars in the world. If you look at some of the Western countries like the US, there is actually an average of two cars per household. That's how we've conceived of solving this personal freedom of moving around. But I think it's important to think about for a second that this personal car ownership is actually just me solving mobility problems for myself. Then my neighbor does the same thing and the next neighbor does the same thing. It's not a system. It doesn't operate together. There's no efficiency there. So what does that even mean? Well, first of all, it gives us some really big problems. The average vehicle is actually only used 5% of the time, and 95% of the time it's parked.
Why is that a problem? We live in cities and cities don't have a lot of space. And cities should be hopefully used for people walking around, being able to enjoy the city parks, recreational areas and so on. But cities today are very much geared around traffic and around the cost of driving around.
If you take an average city of 500,000 people, half a million people, it turns out that if you map up the parking spaces in that city, it's more than 300 football fields. That’s more than 300 football fields that we could use for something far better than parking congestion.
Let’s take New York City, for example. New York City is in a bit of a bad state. From a traffic speed perspective, if you take a car in midtown Manhattan, the average speed right now is around five miles an hour. The walking pace of an adult human is between three and four miles an hour. That basically means a brisk walking speed is equivalent to driving your vehicle in Manhattan. It's a huge productivity problem.
The average American spends some 54 hours a year stuck in traffic. And that time, at least right now, is a time you need to concentrate, you need to operate the vehicle and you can't really do anything else. You can listen to podcasts and maybe be on the phone, but you still need to be alert and make sure everything goes well as you're driving among a lot of other vehicles on the street.
Another big issue is emissions. If we look at transportation as a whole to not just cars, but transportation as a whole. About 25% of all carbon emissions come from transportation, and private car ownership has a big share of that. The vast majority of vehicles today are ICE vehicles or internal combustion engine vehicles, which means they burn fossil fuel. So, what's the opportunity here? What can we do about it? For these 1.4 billion costs, we really want to change them into 1.4 billion electric cars or maybe even fewer cars in general.
The last piece is safety. The average human is not the safest operator of a vehicle. And it actually turns out that 94% of all accidents in the world, on average, are caused by humans.
The mobility solutions of the future: Robotaxis
Let's look at what then one of the possible solutions can be for all of this. We're going to talk about robotaxis. We're talking about autonomous vehicles.
Now, that is not the only solution to this problem. In fact, one of the big solutions to this problem is really public transportation, mass transit. We won't dive into that today, but the way that we see it is that the personal freedom of owning a vehicle, the ability for your family to go out and do what they want, isn’t possible with public transportation. You can only use public transportation for some applications, for some for some use cases, and the rest is really where we use a car.
Now, the interesting thing about autonomous vehicles is that they have this opportunity to go in and largely replace personal car ownership. When I now talk about robotaxis, I talk about them as a fleet. So think of this as a fleet of ride hail vehicles that don't have a human driver inside of them and they transport you from A to B. You were able to summon them from an app.
You press a button, it picks you up and drops you off again. One of the main principles of how this will work in the future is that they will be shared. This is an interesting component because the way that we use cars today is that we sit inside of them ourselves. And if you look at sort of the ride hail market, it is still largely single passenger rides, too.
In the future, what we'll probably see is that there will be a push from cities and governments to say, if we deploy these robotaxi fleets, if we invite them into our cities, we have to make sure that they don't make traffic worse. A way to do that is make them basically into a kind of hybrid mass transit, like hybrid public transportation type systems, by saying we have to have multiple passengers inside of these cars.
The way that I look at this is to point to the things we do everyday as we move around the world using things that we don't own. We don't own the restaurants that we go to, but we sit next to other folks. When we fly into San Diego, we do that on a commercial airline and we sit next to other folks as well. So think of robotaxis as a nice place to be where you can sit next to other folks in, in a different type of vehicle that probably doesn't look entirely like a car.
And of course, they’ll be electric. One of the beautiful things about that is that when the robotaxi runs out of battery charge, it's just going to drive off and it's going to charge itself and it's going to come back to work and then pick up passengers again. Then it runs out of juice again, and goes back again. Rinse, repeat. And it won't take up space because the vehicle will park itself when it needs to park. When it's not transporting passengers, it doesn't need to park in the city.
The last and arguably most important piece is the self-driving piece. Let’s unpack what that means. First of all, self-driving equals the potential to be extremely safe. Robots, as opposed to humans, do not get tired. They don't need to sleep. They don't need to eat, they don't need to chat with anyone in the car. They don't get distracted. Humans have two cameras and they point sort of straight out in front of us. We can obviously turn side to side, but we only have two cameras. A robotaxi has cameras all the way around. Additionally, humans aren’t the best at driving at night. A robotaxi has no problem with seeing what's in the street and what goes on at night. And they'll be zero emissions, all-electric and very efficient in the space that they take up.
The last piece of this, which is something that I think is super exciting, is the accessibility of these robotaxi fleets. This means that when you remove the human driver, you also make the robotaxi operation very efficient by always having passengers in them. By reducing the amount of miles driven where the vehicle's empty, you drive up the utilization rate and lower the cost of operation, you can essentially pass that enormous cost saving on to the consumer.
I pulled a couple of numbers from this McKinsey report on the prediction costs and ran a calculation of what a ride in a robotaxi costs. The first line item here you'll iis the private car. The dark blue bar represents the lower range of a private car cost. You have an upper range if you have a more expensive car. Let's try to compare that to a taxi or even ride hail.
It's almost the same price. This is why I can't use a taxi or an Uber type service for all my mobility needs. It's simply too expensive, and it would probably be the same for most people in the world. None of us really use or can use ride hail multiple times a day for everything that we do from grocery shopping to commuting. So what can we use?
What is a very low cost? Well, public transportation is extremely low cost, but it sits at the opposite end of the convenience spectrum. Public transportation is amazing at moving a lot of people at it with only taking up very little space. But then on the other end, it's not that convenient. And then on the other end you have this extremely convenient car ownership or ride hail.
But the problem is ride hails or taxis are more expensive. So what happens when you introduce robotaxis? This is the last line item. It's the same price as public transportation, which is pretty insane to think about.
The definition of that is that it's shared. If you were to only set yourself in the robotaxi, the price would be higher. But if we assume that we have multiple people sitting inside of a high occupancy vehicle that's autonomous, we can bring the price of that down all the way to a bus ticket.
It's a complete, separate conversation. Cities have to make sure that these robotaxi systems operate in unison with the public transportation system so that we don't take passengers out of public transportation.
The new mobility: when will robotaxis arrive?
So the last thing we'll do to tie a bow around this whole thing is try to look in the crystal ball and ask, when are these robotaxis arriving?
I think most of you have seen stories about robotaxis. And to me, I kind of feel like the arrival robotaxis is an elusive moving goalpost target in front of us. We've been told for many years that they will arrive in one year or two years or three years.
And they’re still not here. McKinsey surveyed 75 executives from the automotive, transportation and software companies that are working across the world on these autonomous systems and operations. They were asked, “In your estimation, what is the rollout timeline, which means the commercial availability of vehicle service, for a robotaxi service?” What's the rollout timeline of this for autonomous driving across use cases in your region (use cases here meaning the ability to call and be picked up by a robotaxi)? The average response was 2028 in North America, which still a bit out into the future.
But I want to leave you with this because I'm a bit more optimistic on when this actually will arrive. I think what's important is that this question refers to mass deployment in a region. If we instead assume this will begin more at a local level, this may change. There’s probably no better place to look out and see where it might actually start than in California and especially in the Bay Area.
I'm based in San Francisco and I see them all the time. A bunch of different companies have been for many years testing out autonomous vehicles in the streets of San Francisco. Interestingly enough, one of them, a General Motors Autonomous Division called Cruise, actually got the license to operate to the public. This means they can both charge a price for the robotaxi ride and transport passengers from A to B in the public domain here in San Francisco. They got that license in June 2022. So it's still on an invite-only basis. To me, this is fascinating. You literally have vehicles driving themselves. And granted that some of them have safety drivers in them, but many do not. They top out at a certain top speed. They only drive at certain points of time, usually at night. But they're expanding the coverage area in San Francisco and at the times in which they operate. So, when are robotaxis arriving? They are actually already here and you can join a waitlist. I think they'll be here a lot sooner than most of us think.
That was the last I had for you today. If you made it all this way. I hope you enjoyed it, I hope you had some fun and I hope you learn some new stuff around this. As you can see, I love talking about this. And this is a big passion of mine.
If you want to engage with us at Deem and hear more about what we're doing around this and how we're thinking about mobility in the corporate space, feel free to reach out. My name is Nikolai Koster and you can find me on LinkedIn. Thank you so much.