What you need to know about Airbnb’s Cancellation And Refund Policy

It’s easy to get bogged down by logistics when you’re setting up your Airbnb listing. You need photographs, catchy titles and detailed descriptions, house rules, payout methods tax information, AND you have to set up a cancellation policy. I know when I set mine initially I didn’t understand them or give it much thought at all. However, settings like these have a large impact on your hosting, and how you manage guest reservation change requests and cancellations.

What is an Airbnb cancellation policy?

A cancellation policy is a set of rules that Airbnb hosts create to control how they manage guest refunds when they cancel their booking. A good cancellation policy will allow you to maximize the chances of being booked and help guests feel comfortable with their decision to book your listing. As an Airbnb host, it’s important to understand that flexible cancellation policies are prioritized by Airbnb’s search algorithm.

This means that guests who use Airbnb’s search feature will see your listing before listings with stricter cancellation policies. In other words, a more flexible cancellation policy = a higher ranking in Airbnb search results. However, this may not be the best choice for everyone.

For example, if you live in a popular tourist destination where people book Airbnb stays far in advance, a short cancellation period might mean an empty calendar with no one waiting to book the vacancies in your calendar.

When setting up your Airbnb listing’s cancellation policy, there are many cancellation options to choose from:

Flexible cancellation policy:

A full refund (minus Airbnb fees) 1 day prior to arrival date

Moderate cancellation policy:

A full refund (minus Airbnb fees) 5 days before arrival date

Strict cancellation policy:

Guests must cancel within 48 hours of making their reservation.

Strict long-term cancellation policy:

Guests must cancel long-term reservations within 48 hours to receive a refund.

Firm Long term cancellation policy:

This applies to reservations greater than 28 days.

Super strict 30 days cancellation policy:

These are only available by invitation and only in certain cases.

Super strict 60 days cancellation policy:

Same case as the super strict 30, These are only available by invitation and only in certain cases.

Each of these policies has some nuances to them so head over to Airbnb’s cancellation policy page for some more details.

What are the risks of the different Airbnb cancellation policies

All of these policies have unique risks to consider before selecting one of them for your property. You have the chance that your Airbnb client can cancel in less than 2 business days and leaves you without time to find another customer for the same or the income that they were hoping to generate. If you implement a firm cancellation policy or stipulated cancellation policy then it could mean that you lose all the potential guests that want more protection from Airbnb cancellations.

Airbnb Extenuating Circumstances Policy: What It Means For The Cancellation Policy

Airbnb’s Extenuating Circumstances Policy provides an exception to the cancellation policy that you choose. This means that Airbnb will automatically refund the guest if a flight is canceled, or a natural disaster strikes, or other unpredictable circumstances. Airbnb hosts need to be aware of this policy, as it could significantly impact their business.

How do I cancel a guest’s reservation, and what are the consequences for doing so?

As an Airbnb host, you have the option of canceling a guest’s reservation. This can be done through the Cancellation button on your dashboard. If you decide to cancel a booking, it is important to note that there will be consequences for doing so. You will likely be charged as little as $100 but as much as $1,000 for canceling a guest’s reservation. Your calendar will also remain blocked for the period you are canceling, so you won’t be able to accept another reservation. If a guest asks you to cancel their reservation it is best to have them call Airbnb support directly or cancel their own reservation from their traveling dashboard.

If a guest decides to cancel their reservation, am I entitled to any sort of compensation from Airbnb?

Yes. Airbnb does offer hosts limited compensation for cancellations depending on the host’s specific cancellation policy. When Airbnb guests cancel their reservations, hosts will be entitled to some kind of reimbursement from Airbnb.

How can I make sure that my guests are well-informed of my cancellation policy before they book with me?

As an Airbnb host, you should make sure that your guests are fully informed about the cancellation policy before they book with you. This can be done by including a detailed description of your cancellation policy in both your listing description and house rules sections. Guests can also see information about your cancellation policy before they confirm their reservation. Your Airbnb listing does most of the hard work on this end.

What do I do if a guest doesn’t show up or cancels last minute?

Let your cancellation policy do the hard work here. A guest has made a reservation and paid for it. If they don’t show up for it and your space is available to them you have fulfilled your obligation to host them.

Choosing the right policy for Your Listing

Choosing the right cancellation policy for your Airbnb listing is an important part of being a successful host. Consider the location, lifestyle, and goals that you have while hosting on Airbnb to determine what type of cancellation policy best suits your needs. Flexible policies will help bring more guests to your listing, while stricter policies could provide extra security in case of last-minute cancellations.

There is no “one-size-fits-all” in selecting a cancelation policy

For my Airbnb’s in Durham, NC I lean towards flexible and moderate, and for our places in the Outerbanks a lean more towards firm/strict. People plan trips to the coast much farther in advance than to the cities in the center of the state. One is also typically for pure vacation and the other could be for work, medical, and family visits.

Conclusion

Choosing the right cancellation policy for your Airbnb listing is an important part of being a successful Airbnb host. Consider your location, lifestyle, and goals when selecting which type of cancellation policy best suits you. Flexible policies will help bring more guests to your listing while stricter policies provide extra security in case of last-minute cancellations. Keep in mind that Airbnb’s Extenuating Circumstances Policy provides an exception to any cancellation policy that you choose, meaning that if certain unpredictable circumstances arise there could be a significant impact on your business. Be sure to inform all potential guests about the details of your cancellation policy so they know what to expect should something happen outside their control. With careful consideration and understanding of these principles, Airbnb hosts can use their chosen cancelation policy as a tool for success!