Rate fencing

Why is it important to use rate fencing in hotels?

Rate fencing is important because it allows a hotel to offer differentiated prices to different customers without compromising the perceived value of public rates.

This way, demand is segmented based on willingness to pay, discounts are granted only to those who accept specific conditions, and the hotel can protect both ADR and its positioning, while avoiding possible dissatisfaction among guests who paid different rates.

Examples of restrictions in rate fencing:

• Date restrictions: Rates available only on specific days of the week or during low season.
• Minimum length of stay: Discounted price accessible only if booking at least 2 or 3 consecutive nights.
• Booking channel: Offers reserved for those booking only through the official website, avoiding OTAs.
• Login or membership access: Rates visible only to registered users or loyalty program members.
• Promotional codes: Discounted price available only by entering a special code (e.g., from a newsletter or campaign).
• Customer type: Rates reserved for corporate clients, agencies, associations, or specific categories (e.g. over 65, local residents).
• Cancellation limitations: Non-refundable or non-modifiable rates in exchange for a discount on the standard price.
• Limited flexibility: Offers that do not allow changes after booking (e.g., date change, name change).