The cancellation policy you select can have a big impact on a host’s ability to earn income since cancellations result in lost revenue and the potential for unfilled bookings.
In this article, we’ll review the policies offered by Airbnb. Obviously, you will want to read the specifics carefully before choosing the right option for your listing.
Airbnb Cancellation Policies
There are also specific, stricter policies for long-term rentals lasting more than 30 days which are offered to hosts by invitation only.
- Flexible: This policy allows guests to cancel up to 24 hours before check-in to receive a full refund. If they cancel after that, you’ll be paid for each night they stay plus one night.
- Moderate: This policy allows guests to cancel up to 5 days before check-in for a full refund. If they cancel after that, you’ll be paid for each night they stay, plus 1 additional night, and 50% for all unspent nights.
- Firm: To receive a full refund, guests must cancel at least 30 days before check-in. If they cancel between 7 and 30 days before check-in, you’ll be paid 50% for all nights reserved. If they cancel less than 7 days before check-in, you’ll be paid 100% for all nights reserved. Guests can also receive a full refund if they cancel within 48 hours of booking, if the cancellation occurs at least 14 days before check-in.
- Strict: To receive a full refund, guests must cancel within 48 hours of booking, and the cancellation must occur at least 14 days before check-in. If a guest cancels between 7 and 14 days before check-in, you’ll be paid 50% for all nights reserved. If they cancel after that, you’ll be paid 100% for all nights.
- Non-Refundable: Under this scheme, hosts must offer at least a 10% discount off of the base price. At checkout, guests select the standard rate subject to the chosen cancellation policy or the discounted, non-refundable rate. If a guest cancels after selecting the non-refundable rate, the host keeps the entire payout for all nights reserved but not the cleaning fee. Generally this applies to reservations with a checkout date taking place within the next 60 days as long as the reservation is not made with a pre-approval or special offer.
It is important to note that under each of the cancellation policies above, the Airbnb service fee is non-refundable.
A Blessing in Disguise
Consider also, how easy it is to fill gaps in your calendar. If you offer a smaller, more urban property, a last-minute cancellation can turn into a blessing in disguise. Suppose a guest cancels at the last minute. In that case, it’s an opportunity for you to raise the rate for those available nights by 20-30% since you will be one of the few remaining hosts with availability, especially during the high season for your area.
Which Approach Should I Take?
It’s important to choose a cancellation policy that balances the need to protect your revenue with a desire to attract bookings. A more lenient policy may be attractive but could result in more cancellations and lost revenue. A stricter policy could deter some bookings but can help protect revenue in case of cancellations.
You will want to read and understand the specifics carefully before choosing the right option for your listing and review the policies periodically since they are constantly being updated. Whatever policy you choose, make sure it’s clear on the booking platform so guests understand the cancellation constraints and be prepared to address requests from guests with extenuating circumstances.
Host2Host can’t be responsible for policy changes that may happen or any errors or omissions that might have occurred in the creation of this article. As one of my favorite marketing gurus says, “Y'all are grown folks and need to make your own decisions.”