Via Deutsche Welle:
Experts call it "discrimination with a smile" when describing the practice of gently fobbing off those who don't typically look like they fit in. They might be given a paltry, but friendly excuse such as "the flat is no longer available," or "the restaurant is closed for to a private function" or "the hostel is fully booked."
But there is also the daily discrimination that is intended to be friendly. "Your German is pretty good," is actually an insult for many fully integrated Germans, born and raised in the country but deemed "pretty good" because they don't fit another person's definition of what a German looks like.