Dealing with the Airbnb Cancellation Policy

The Airbnb cancellation policy differs from a standard hotel policy. As a host you want to understand exactly how Airbnb’s cancellation process works.

Below I outline all you need to know when setting your cancellation policy in Airbnb. I also discuss how to deal with guests when they make a cancellation and how to successfully navigate the Airbnb resolution center.

Airbnb Cancellation Policy Options

When you create your Airbnb listing you select one of three standard cancellation policies:

  • Flexible: Full refund 1 day prior to arrival, except fees
  • Moderate: Full refund 5 days prior to arrival, except fees
  • Strict: 50% refund up to 1 week prior to arrival, except fees

About 60% of all listings worldwide have a strict cancellation policy. Under this policy, even if a booking is cancelled a year in advance, you receive 50% of the total booking value. I’ve had a couple of perfectly planned months fall apart due to last minute Airbnb cancellations. Trying to fill your place at a week’s notice and at drastically reduced prices is no fun.

Many new hosts start with a flexible policy to encourage more bookings. They then move to a strict policy after a few successful rentals. Only 3% of experienced hosts have a flexible cancellation policy.

How To Handle Airbnb Cancellations

I recommend you select a strict policy, but be reasonable when you receive a cancellation. Stick to the values that this shared economy is built upon. Be fair, but don’t take significant money out of your own pocket unless there are extenuating circumstances.

Vacation rentals are a business and a last minute cancellation can kill profits. There is no downside to sticking to your guns about your cancellation policy. Guests are unable to leave reviews after they officially cancel.

However, there are situations where you want to be lenient. For example, I had two bookings cancelled due to a snowstorm that grounded flights across the eastern seaboard for two days. Because they had already paid and their trips were cancelled for reasons beyond their control, I offered my guests some options.

Airbnb Cancellation Offer 1

Offer to immediately re-list your property and refund them any amount that you receive for the days that overlap their reservation. Tell them that you’ll reduce the price to attract a new booking and try to get some of their money back. Let them know that they can check your calendar to see if the days get booked.

Airbnb Cancellation Offer 2

Offer them a significantly reduced fee for another stay in the future. Your guests will appreciate you trying to find a solution and in most cases will not take you up on the offer. You can also re-book your property and potentially make more money this way.

Note: when a guest cancels, Airbnb automatically issues a refund according to your selected cancellation policy. If you agree to issue your guest an additional refund you can do so by selecting “Issue Refund” from your reservation dashboard.

Reasons Airbnb will Cancel Your Booking After Guest Arrival

There are a few reasons why Airbnb will cancel and refund a guest after check-in.

Place is not as advertised

If your location is different than advertised, amenities such as parking are not available or number of beds is inaccurate then Airbnb can immediately cancel a reservation.

Guest can not access the unit

Airbnb will typically give you a few hours to respond to a guest that cannot get into your rental. If you do not respond, they will cancel the reservation and give a full refund.

Property is unsafe

Airbnb may also accept a cancellation after check-in if your property isn’t clean, is unsafe, or there’s an animal in the listing that wasn’t disclosed prior to booking.

Airbnb will not cancel reservations for general dissatisfaction or other minor issues.

Airbnb Resolution Center

The Airbnb Resolution Center handles situations where a host and guest can not reach an agreement on their own. Not every situation is cut and dry and the resolution team is their to mediate a fair compromise in special circumstances.

When Your Guest Needs to Cancel: The Airbnb Resolution Center has the authority to offer refunds that are in excess of what your policy indicates. Contact the resolution team early on with any issues to avoid your guest misrepresenting the situation. The resolution team may ask you to offer a higher refund than you are required to leave. Again, be reasonable but remember you’re running a business. The cancellation policy is there to protect you against these sorts of circumstances.

When You Need to Cancel: Make sure you provide a solid reason for cancelling a reservation. This may be a sudden sewage issue or a death in the family. This will help ensure Airbnb accepts your cancellation without the penalty of a poor review or a cash penalty. The typical cash penalty is $100 per cancellation within a week and $50 for reservations over 7 days out. Cancelling a booking can also negatively impact where your listing appears in Airbnb’s search results. If you do have an emergency with your property, the resolution center has the authority to remove the cancellation fee and any negative marks on your account.