As I understand it, this is the math behind revenue management. When rates are high, you make them higher. When rates are low, you make them higher.

They are also very busy because this month is Formula 1 (Sept 23-25 in case you want to come and I can offer you my homestay even though I am not listed under Airbnb) and this town is going to be one HOT party town – for three days. There are two new clubs opening – Pangaea and Avalon – at the Crystal Pavilion at Marina Bay Sands, both of whom use adjectives like unique, one-of-a-kind, extraordinary and very, very special.

Both are Hollywood-pedigrees and now want to be Singawood-celebrities presumably because all the celebrities back home have been Botoxed beyond recognition.

My friend’s hotel, like most establishments in town, will be full over the F1 weekend, even though he is nowhere near the race track. He is not offering any minimum-stay package because he tells me, “Strange, they all leave on a Sunday.”

This goes to prove no one cares what goes on the tracks, they’re just here for off-track activity where they hope to be rubbing shoulders with other hangers-on of the F1 circus of fame and debauchery.

Because there’s a big event coming up where it’s almost guaranteed to be full house, my hotelier friend decided to try a little experiment. He switched off the OTA channel for a week. He wanted to see if business would be diverted to his direct website channel. Apparently this is something hoteliers who practise revenue management do too – they switch from tap to tap as you and I switch games on our iPads. 

Did it work? Nope.

Let me give you some background. This hotel does almost 50% of its business on the web – 55% direct, 45% indirect. That’s already a high percentage of online business but his corporate people obviously want him to boost the direct channel because then, it’s all straight to the bottomline because there’s no need to pay commissions to the OTAs. That’s another thing I know about revenue management. Cut out middlemen, more for me. 

What he found was that traffic to the branded website did not increase during the week the OTA channel was switched off, and consequently there was no increase in bookings. In fact, he suspects that he may have lost customers who may have been searching out there on the OTAs for hotels in Singapore.

After a week of sweating and watching his website traffic, which can be more stressful than being in the back of a bus in Thailand, he switched it back on. 

And now he is relaxed again and hence, able to enjoy his lunch with me.

“What do you think that proves?” I asked him.

“That we still need the OTAs – they are the ones customers want to use because they think they have the best rates even though we in the industry know about rate parity but the customers don’t.”

This is what I know about rate parity. It’s as fluffy a theory as chapatti.

“And besides,” he continued, “it’s the OTAs who have the money to spend on search, they know how to drive traffic to their sites, they give customers choice and they get customer behaviour online. 

“And besides,” he continued, obviously on a roll, “what’s wrong with paying commissions to intermediaries – we have been doing that since the beginning of time. We pay traditional tour operators and these are the people who still use static rates while OTAs have dynamic rates.”

This is one thing I know about static vs dynamic rates. One’s fixed, the other changes.

And that’s all I know about this subject so I am going to shut up and go back to yielding my coffee machine.

* The name of the hotelier has been withheld to protect my future lunches with him. This is also why I love the Internet – you can write nonsense without attributing it to anyone.