Rate Fencing
Rate Fencing refers to criteria, terms, or conditions that a customer must satisfy to qualify for a discounted room tariff, preventing higher-paying guests from buying lower rate plans.
Why It Matters for Independent Operators
Fences protect rate integrity and prevent margin dilution. They allow hotels to offer lower prices to price-sensitive travellers without cannibalizing full-rate demand from corporate or last-minute guests.
Practical Scenario & Calculation
[Illustrative Scenario] A non-refundable advance purchase discount of 15% requires booking 14 days ahead with 100% non-refundable payment. Business travellers needing flexibility continue paying full BAR.
How Operators Can Apply This Concept
Create fences using booking window (advance purchase), stay length (minimum 3 nights), refundability (non-refundable), or distribution fences (member-only login).
Common Misunderstanding to Avoid
Discounting without fences trains the market to wait for price drops, depressing average daily rates across all guest segments.