Hotel Revenue Glossary · Pricing

Rate Fence

A qualification requirement that separates different rate levels. Examples include advance purchase requirements, non-refundable conditions, minimum length of stay, or membership in a loyalty program.

Why it matters: Rate fences allow hotels to offer different prices to different segments without cannibalizing higher-paying demand. A guest willing to commit to a non-refundable rate gets a lower price; a guest wanting flexibility pays the full BAR.

Worked example: The flexible BAR is A$239; the advance-purchase, non-refundable rate is A$203 - about 15% less - fenced at 14 days. A Tuesday sells 22 at A$239 and 18 at A$203: A$5,258 plus A$3,654 is A$8,912 across 40 rooms, an ADR of A$222.80. The fence pays only if most of those 18 would not have paid A$239. Move it to three days and you will find out the expensive way.

Common mistake: Building a fence a guest can simply walk around. A non-refundable rate your own reservations team will refund on request, or an advance-purchase rate still bookable at two in the afternoon on arrival day, is a discount wearing a costume. Try to break your own fences once a quarter.

All glossary terms BAR (Best Available Rate) Market Segment ADR (Average Daily Rate)