People commonly associate revenue management with offering discounts,
but discounting is only one part of a revenue management program.
When price is used as a tool of revenue management,
managers must think beyond discounts and develop
methods for offering differential prices that
make sense for the demand level at a given
time. Hotels and airlines use various rules,
sometimes known as rate fences, to offer differential
prices on inventory that might otherwise
not be sold at all to customers who
might otherwise not purchase—while at the
same time preventing customers who were
going to buy anyway from taking advantage
of a discount that they did not actively seek.
The room rates in a hotel might vary according
to the time of the reservation, the days
that the individual is staying, and group or
company affiliations that the guest might
have. For airlines, the Saturday stay over was
a well-known rate fence to separate business
travelers from leisure customers. The rate
fence can comprise almost any set of rules as
long as they somehow make sense to the
customer.