Microsoft Invests in OYO: Strategic Partnership for Travel & Hospitality

Microsoft and Oyo Forge Strategic Alliance

A “multi-year strategic alliance” has been established between Microsoft and Oyo, focusing on the collaborative development of advanced travel and hospitality technologies.

This partnership, revealed on Thursday, validates a report from late July published by TechCrunch. The earlier report detailed discussions regarding potential Microsoft investment and the exploration of technology provisions for the Indian startup.

Strategic Investment Details

Microsoft has confirmed a strategic equity investment in Oyo, though the specific financial amount remains undisclosed. Recent regulatory filings indicate a $5 million investment by the Windows-maker, valuing Oyo at $9.6 billion.

Oyo will transition its cloud infrastructure to Microsoft Azure. This move will facilitate the co-creation of solutions designed to enhance the operations of small and medium-sized hotels and home-based accommodations.

Innovative Solutions Planned

The collaboration aims to introduce “Smart Room” experiences for travelers utilizing the OYO platform. These experiences will include personalized and premium in-room features for guests.

Leveraging Microsoft’s Azure IoT, these smart rooms will incorporate functionalities such as self-check-in via a digital register, self-managed KYC processes, IoT-enabled smart locks, and virtual assistance.

Statements from Leadership

Anant Maheshwari, president of Microsoft India, stated that combining Azure’s capabilities with Oyo’s existing technology stack will accelerate innovation within the travel and hospitality sectors.

He further emphasized Microsoft’s commitment to empowering digital natives like OYO, enabling them to drive industry transformation and capitalize on opportunities arising from the post-pandemic landscape.

Oyo’s Global Presence and Past Challenges

Oyo has grown into one of the world’s largest hotel chains, maintaining a presence in India, Southeast Asia, Europe, and the United States.

However, the company’s rapid expansion has been marked by challenges, including concerns regarding its internal “toxic culture,” governance issues, and strained relationships with hotel owners.

Impact of the Pandemic

Just as Oyo was working to improve its relationships with hotel owners, the COVID-19 pandemic emerged.

In response, Oyo curtailed its growth trajectory and implemented widespread layoffs globally earlier this year due to pandemic-related lockdowns.

Financial Status and Recovery Efforts

CEO Ritesh Agarwal described the pandemic’s impact as a “cyclone,” noting a 60% decline in business within 30 days, in an interview with Bloomberg TV in July.

Agarwal also indicated that the company had paused considerations for an initial public offering.

Oyo reportedly held between $780 million and $800 million in cash reserves and has reduced its monthly operational expenses to $4 million to $5 million, down from $1 billion in December 2020.

In July, Oyo secured $660 million in debt financing, which was used to refinance existing debt obligations.