notitur.com August 24, 2026

Marketing and CRO

Rate fence

A rate fence is the condition that separates a cheap fare from an expensive one so each customer pays what they are willing to. Non-refundable, book in advance or members only are fences that justify a lower price without giving it to everyone. It is the tool that makes charging different prices for the same room possible.

Example The cheap rate requires paying today and no cancellation, a fence the flexible guest will not want to cross.

Related terms

Operations

Non-refundable rate

The non-refundable rate is paid upfront and is not returned if the guest cancels or fails to show. In...

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BAR

The best available rate is the public, flexible price a hotel offers at any moment for a date, with no...

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Dynamic pricing

Dynamic pricing adjusts rates in real time based on demand, competition, lead time and other factors. Instead...

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Loyalty program

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FAQ

What is a rate fence?
A rate fence is a condition or restriction that a hotel imposes to segment prices and offer a lower rate only to guests who meet certain requirements, such as non-refundability, advance booking, or loyalty membership. For example, a non-refundable rate is often 20% cheaper than a flexible one.
How does a rate fence work?
It works by applying an automatic rule in the booking system that checks whether the guest meets the condition (e.g., booking 14 days in advance) and, if so, displays the restricted lower rate, otherwise, it shows the standard higher rate. This allows charging different prices for the same room without requiring negotiation.
What is the purpose of a rate fence and how does it differ from a general discount?
Its purpose is to maximize revenue by price-discriminating based on each customer segment's willingness to pay, without selling cheap to someone who would pay more. Unlike a general discount (which lowers the price for everyone), a rate fence restricts access to the low rate through a condition, thereby protecting the high price for those who do not meet it.

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