What is an Opaque Fare?

Opaque fare is a lower cost for goods or services that hides information about the transaction until it is finished. It allows companies to sell their merchandise at hidden, lower prices. Opaque fare is a kind of price differentiation, with the target consumers buying a product or service based on the cost, not on the company’s reputation, etc.

Let’s take an example, a passenger uses a third-party booking portal that gives opaque pricing to look for rental cars. He then selects the car type, location, dates, etc but is unaware of the particular rental company until after making the reservation.

How does Opaque Fare Work?

Opaque pricing is often used in the travel industry and is very popular. It is used to sell unsold tickets, hotel rooms, rental cars, etc through websites such as Priceline and Hotwire. Consumers who want to benefit from an opaque pricing system go to a website that provides hidden rates and select their location, dates, and star rating for their hotels. The website will display the hotel's name after payment, but it does not allow cancellations, changes, or refunds.

Hotels generally profit from opaque pricing because it can help them to sell otherwise empty rooms without compromising the quality of their brand. Also, bookings once made cannot be changed.

What are the Benefits of Opaque Fare?

The seller doesn't really know what the buyer's maximum price is, even if it would be perfect for them to charge that amount. And as anyone who has negotiated with an agent knows, the buyer has no reason to inform.

To convince at least some customers to spend extra, sellers create divided offerings or say they split slab-wise. For instance, first-class seats are significantly more expensive per unit of space used by airlines; the buyer benefits from extra space and the status of first-class travel, while the airline receives an order with significantly higher income per customer for the same flight.

This also allows the supplier to reach the price-conscious consumers who are not in their target market.

If someone purchases any goods or services via the opaque pricing structure that can help him save a lot. Because they care more about money than quality or brand, buyers who are price-aware gain the most from opaque pricing.

Take, for instance, a person who would like to book a four-day hotel stay in Toronto. The person seeks a decent deal and isn't concerned with the hotel's specific name or reputation. Instead of paying a premium fee for a stay at a hotel with a marked name and amenities, an opaque pricing structure could help the individual take advantage of reduced hotel accommodation.

Conclusion

When used smartly it can benefit both, the passenger and the airline. So make sure you go through all the terms and conditions to avoid any obstacles during your flight or stay. Carefully evaluate your needs or priorities to make a well-informed decision.

FAQ about Opaque Fares

Question: Does opaque pricing give refunds?

Answer: No, after making a purchase refunds, cancellations, and changes are not allowed.

Question: What is an opaque fee?

Answer: This term is used to describe a pricing structure that a customer can’t see through.