Three years ago when I approached Uber about potential collaboration, they informed me that they considered any form of transportation, even public transit and trains, to be competition.
At the time I thought it was a bit ridiculous: unless Uber was going to start boring their own tunnels and running trains underground, I thought it would be wise to embrace the fact that transportation would ultimately be an ecosystem, a combination of private and public entities, and many companies.
But Uber seemed intent on owning it all.
When Dara Khosrowshahi took the Uber CEO position many people theorized about what that could mean for Uber’s notorious inability to “play nice with others.” I hoped that it would lead to an embrace of the wider ecosystem as their new leader came from Expedia, an aggregator.
With a recent interview (https://www.pymnts.com/news/ridesharing/2018/ceo-dara-khosrowshahi-envisions-ubers-future-as-a-transportation-platform/) and the expansion into bikeshare through the acquisition of Jump in San Francisco, it is clear that Dara is doing exactly that with a focus on making Uber a platform for all Urban mobility, not just Uber-run forms of transportation.
Now, I’m sure there is a limit to Uber’s evolution to “platform”: I don’t see them putting Lyft side by side in their app anytime soon. And I’m sure Uber will stay the focus of their user experience.
But it marks a paradigm shift in the way we need to start thinking about Urban mobility and its intersection with the travel industry.
Urban Mobility Apps are the new OTAs.
For those not familiar, OTA stands for Online Travel Agencies, like Expedia or Priceline, that sell a wide variety of content for travelers on their trips. They pay an exorbitant amount for user acquisition (Booking.com and Expedia spend billions per year on Adwords), and then monetize every step of the trip. Flights are often a loss-leader, Hotels are the cash-cow, but ancillary revenue opportunities like car rental, tours and activities, ground transportation and insurance are all sold as the travel websites diversify to every step of the traveler’s journey.
Maximizing revenue by selling everything allows these brands to pay increasingly higher CPCs, leaving their competition in the dust and making it exceedingly hard to compete.
The beginning of this journey happened decades ago when Lufthansa, Air France, Iberia, SAS created Amadeus in 1987. American Airlines created Sabre even earlier than that, finally spinning it out in 2000. Galileo, now part of Travelport, was formed by British Airways, KLM, Alitalia, Swissair, Aer Lingus and others.
Airlines realized there was a need to sort through all the fragmentation they had created, and the creation of these systems was perhaps, a realization that none of them would own the entire world’s air travel, and so some level of collaboration was necessary.
I think the urban mobility space is having a similar Come-to-Jesus moment as fragmentation increases and more and more money gets poured into urban mobility.
Mozio is one of these middle layer systems in the ground transportation world, but we’re not the only one. Google’s Sidewalk Lab’s recently spun out Coord, whose mission is to be the “API layer for Urban Transportation.” HERE Mobility has a similar ambition, and Ford recently launched it’s mobility cloud.
There have been three major ways consumer apps have approached this challenge, and you are starting to see them all collide.
Transit/Navigation/Mapping apps like Moovit, Waze, Transit App, Citymapper, Google Maps, Apple Maps, Here, Mapquest have all taken an information-first approach, and are just starting to add booking and reservation capability, Google Map’s integration of Uber & Lyft being the most prominent example of that, but CityMapper has launched their own bus-line as an experiment and Moovit and Waze has experimented with carpooling.
Rideshare Apps like Uber and Didi’s integration of dockless bikeshare, and Uber’s stated intentions to sell all forms of transportation seem to be an admission that they will never take over a cities entire transportation network themselves, so if they don’t do some aggregation, someone else will and they’ll end up in a weaker position.
Bikeshare apps like Ofo, Mobike, Limebike, Jump etc haven’t yet tried to sell other content in their flow, but seem to be willing to be aggregated, and I think it’s only a matter of time before they realize they either need to become the destination, or become commoditized and lose control of the customer.
The success of these rideshare and bikeshare brands attempts to aggregate depends on their ability to spend money to acquire users and drive reservations to other services. Accor had a short-lived attempt to be an OTA and let independent hotels live beside Accor owned properties, only to discontinue the program two years later for lack of uptake. (https://skift.com/2017/11/09/accorhotels-ends-its-quest-to-be-a-booking-engine-for-independent-hotels/)
So what does this mean for travel technology? Well, nothing if they just want to ignore it, but we feel it’s a golden opportunity for OTAs to get involved in a related business.
Priceline has recognized that their core competency is aggregating fragmented data, bringing off-line online, outside more than just the traditional flights, hotels and car rentals with their acquisition of OpenTable.
We feel that every OTA should be thinking about an urban mobility strategy, and how segue their massive customer base into an opportunity to own an adjacent business.
