Fenced rate – Meaning and use

Why is it important to use fenced rates in hotels?

Fenced rates allow the hotel to better segment demand and maximize revenue, offering lower rates only when truly necessary and only to guests who accept certain limitations.

This strategy helps to:

Attract more price-conscious guests without undervaluing rooms for everyone.
Limit access to discounts to protect the average daily rate (ADR).
Avoid conflicts between guests paying different prices for the same service.

Fenced rates are a fundamental tool in revenue management, as they enable intelligent price discrimination based on customer behavior.

What are the most common restrictions applied to fenced rates?

Here are some of the most frequently used barriers to limit access to discounted rates:

Advance booking: reservation made well in advance, usually non-refundable.
Minimum Stay (MinStay): a minimum number of nights required, for example 3 nights.
Closed to arrival (CTA): rate valid only if the stay does not begin on specific dates.
Limited cancellation: cancellation not allowed or with strict restrictions.
Restricted access: rates available only to loyalty program members or with a dedicated code.

Practical example:

Standard rate: 150e/night
Fenced rate: 120€/night
Condition: booking at least 30 days in advance, non-refundable

In this case, the hotel encourages early booking and reduces the risk of cancellations, offering a selective discount only to guests who accept the imposed condition.