Microsoft and Oyo have entered into a multiyear strategic alliance to collaborate on next-generation hospitality and travel products and tech.
Thursday's announcement confirmed a TechCrunch report from July. TechCrunch reported that Microsoft was in discussions to invest in Oyo, and was looking at ways to offer its technologies to the Indian startup. Oyo is one of South Asia's most valuable markets.
Microsoft stated in a press release that it had also made a strategic equity capital investment in Oyo. However, the amount was not disclosed. Last month, a regulatory filing revealed that Microsoft had made a $5 million investment in Oyo. Oyo was valued at $9.6 billion.
According to the companies, Oyo will move to Microsoft Azure to meet its cloud-based requirements and work with Microsoft to develop solutions for patrons of small and medium-sized hotels and home stores. OYO will create Smart Room experiences on its OYO platform for travelers, including premium and personalized in-room experiences. The experience will be powered by Microsoft's Azure IoT and include self-check in, a digital register of arrivals, departures, self-Know Your Customer (KYC), smart locks, and virtual assistance.
In a statement, Anant Maheshwari (President of Microsoft India), said that by combining the power of Azure and the tech and product stack created by OYO, we look forward to driving innovation in travel and tourism. It's inspiring to see the Microsoft cloud empowering digital natives such as OYO to accelerate industry change and innovation, turning the challenges of a post pandemic era into opportunities.
Oyo is now one of the most prominent hotel chains worldwide, with locations in India, Southeast Asia and Europe. However, Oyo's failures to expand aggressively and its toxic culture, poor governance and relationships with many hotel owners have hampered its growth.
The pandemic struck just as Oyo was promising to improve its relationships with hotel owners. Oyo responded by slowing its growth and laying off thousands of workers globally as countries around the globe imposed lockdowns.
Ritesh Agarwal, CEO of the startup, said that the pandemic struck the seven-year old startup like a cyclone in July. It took us so long to build something, and it only took 30 days for it to drop by more than 60%. He added that the firm hadn't made any decision about exploring the public markets.
Agarwal stated that Oyo, which was backed by Airbnb, had $780 million to $800 millions in its bank. He also said that it had reduced its monthly spend across all businesses to $4M to $5M. The startup had approximately $1 billion in bank assets as of December 2020.
Oyo announced that it had taken $660 million in debt after Agarwal's speech at the conference. According to someone familiar with the matter, that debt was used for the repayment of previous debt.
Microsoft's latest strategic investment in Oyo is one of many it made in the country. A handful of startups have been supported by the firm in South Asia, including DailyHunt (news aggregator and short-video platform), Flipkart (e-commerce giant), and FarEye (logistics SaaS company).
