Airbnb Cancellation Policy – A Host’s Dilemma [Recommendations Inside]

Airbnb cancellation policy

By Rowan Clifford

Author of Airbn’b’Smart and Smartbnb user

As a host, you want financial certainty and zero cancellations.  

Your guests, however, want maximum flexibility with the ability to cancel the last minute (without any penalties).

Interests aren’t exactly aligned at this point…

Research suggests guests are more likely to book listings with a more flexible cancellation policy, yet that exposes you (the host) to the overwhelming majority of financial risk of last-minute cancellations.

Is it a zero-sum game?

Or is there a happy medium you can reach that matches your risk to reward when it comes to selecting the right cancellation policy?

This post attempts to answer these questions and break down each of the six different cancellation policies in layman’s terms so that you can make informed decisions that best fit your risk thresholds. Keep in mind that these policies apply under normal conditions. Please review the special conditions in response to the Covid-19 pandemic.

Airbnb Cancellation Policy: The Rapid Breakdown

Airbnb has six different tiers of the cancellation policy.  

They are:

  • Flexible
  • Moderate
  • Strict
  • Super Strict (30 days)
  • Super-Super Strict (60 days)
  • Long-term

Each Airbnb cancellation policy has its own set of restrictions, penalties, and fees.

These policies are enforced to protect hosts and guests alike.

As this post is directed at Airbnb hosts, I’ll be discussing the merits of each cancellation tier and the pros and cons of choosing each one.

The Airbnb Guest Cancellation Policy Dilemma

Airbnb is a two-sided platform with hosts on one side, and guests on the other.  Both sides are important to the success of Airbnb, however, both sides are not equal.

When Airbnb first launched, the biggest problem was onboarding hosts that were willing to open their homes to complete strangers.  The more new hosts they could onboard, the more guests they could accommodate.

For that reason, hosts were very well protected with favorable cancellation terms and requirements.

Times have changed, however, and the value proposition has switched.

With Airbnb’s reach spreading around the globe, now operating in over 81,000 cities, providing more than 5 million unique places to stay, the question is no longer “How to onboard new hosts”, instead it’s “How to onboard new guests.”

For this reason, hosts are getting squeezed, and the incentives are becoming ever more aligned in the guests’ favor.

As a result, hosts are incentivized to take on more risk, and more exposure to late cancellations in exchange for preferable visibility in Airbnb’s search results pages.

Therein lies the hosts’ dilemma.

How much exposure to cancellations can you afford to take?

Airbnb Flexible Cancellation Policy: Full refund up to 24hrs before check-in.

Airbnb Flexible Cancellation Policy

The ‘Flexible’ policy gives maximum freedom to your guests.  

Your guests are entitled to a full refund up to 24 hours before check-in, and if your guest decides to leave early, the nightly rate for the nights not spent (24 hours after cancellation) are fully refunded.

You as a host are exposed to the cancellation whims of your guests, and you’re vulnerable to lost earnings without recourse.

On the flip-side, guests are more likely to book, safe in the knowledge they can cancel at any time (up to 24 hours prior).

This is what your guests will see when they book:

Airbnb Flexible Cancellation Policy Guest View

Pros

  • More Bookings
  • Better visibility in Airbnb’s search
  • More flexibility for your guests
  • No commitment needed for your guests

Cons

  • Exposed to last-minute cancellations
  • Potential loss of earnings
  • Little to no compensation
  • You take on all of the risk

Who this is suitable for:

Airbnb flexible cancellation policy is suitable for newer hosts looking to populate their calendars with maximum bookings.  It’s also better suited to smaller, cheaper listings with lower average nightly stays.  

Avoid the ‘Flexible’ policy if your minimum nightly stay is above three nights and if your listing is not a budget option.

Airbnb Moderate Cancellation Policy: Full refund up to 5 days before check-in

Airbnb Moderate Cancellation Policy

‘Moderate’ is the most popular cancellation policy.  It reduces a little of the exposure to last-minute cancellations for hosts and offers reasonable flexibility and peace of mind to guests.

As a host, you’ll receive a 50% refund (minus the first night’s stay and Airbnb’s service fee) for any booking cancellations five days before check-in.

For example:

A 7-night stay at $100 p/n would net a host $700.

If a guest cancels five days prior to check-in, the host will receive a $279 fee as a cancellation payout.

Your maximum potential loss would be $429.

The Airbnb moderate cancellation policy provides a little more financial certainty to hosts, although it still exposes them to substantial risk.

This is what your guests see when they book:

Airbnb Moderate Cancellation Policy Guest View

Pros

  • Guests can’t cancel last minute without recourse
  • More financial certainty
  • Less exposure to people abusing the system
  • Preferable cancellation terms for guests may result in more bookings

Cons

  • You still take on the majority of the risk
  • The cancellation rebate is considerably lower than what you’d have earned
  • May be hard to fill the calendar at late notice

Who this is suitable for:

‘Moderate’ is suitable for established hosts with budget listings and lower minimum nightly stays.  

Avoid ‘Moderate’ if your minimum nightly stay is over 3+ nights or if you have a premium listing.

Airbnb Strict Cancellation Policy: Full refund up to 14 days prior check-in

Airbnb Strict Cancellation Policy

‘Strict’ is where the ball starts to swing back into the hosts favor.

This is the first tier where you have protection over the full amount of your booking (up to 7 days before arrival), plus you’re also entitled to a 50% refund up to 14 days before arrival.

Although this policy is labeled ‘Strict,’ it’s my personal opinion that this is the fairest (for all parties involved).  

Guests have ample time to cancel and receive a full refund, and hosts have protection against last-minute cancellations, with adequate time to re-book the vacant dates.

This is what your guests see when they book:

Airbnb Strict Cancellation Policy Guest View

Pros

  • You’re entitled to a full refund
  • More time to re-book vacant dates
  • Less exposure to financial loss
  • More peace of mind
  • More financial certainty

Cons

  • Guests may be less inclined to book
  • Requires more upfront commitment/friction for guests
  • Could lead to reduced bookings
  • May lead to less visibility in search pages

Who this is suitable for:

Airbnb strict cancellation policy is suitable for established hosts that have accrued a number of positive reviews and have a listing that’s in high demand.

It’s also suitable for premium listings and listings with a minimum night stay of 3+.

Super Strict 30 Days: 50% refund up until 30 days prior to check-in.

Airbnb Super Strict Cancellation Policy

‘Super Strict 30 Day’ cancellation policy is only applicable in certain circumstances and is strictly by invitation only.

Access to this ‘Super Strict’ policy is generally reserved for premium listings, with big price tags.

If you’re not in this bracket, then this policy likely won’t apply to you.

*There have been cases where the Super Strict 30 Day policy has been granted to hosts who contacted Airbnb directly. Here’s a list of all Airbnb’s contact numbers.

This is what your guests see when they book:

Airbnb Super Strict 30 Day Cancellation policy guest view

Pros

  • Security against big financial losses
  • Increased financial certainty
  • Reduced cancellation rate

Cons

  • Added friction for guests looking to book
  • May result in fewer bookings

Who this is suitable for:

Suitable for hosts with premium listings upwards of $1000p/n that are exposed to considerable financial risk from late cancellations.

Super Strict 60 Days: 50% refund up until 60 days prior to check-in.

Airbnb Super Super Strict Cancellation Policy

Just like the ‘Super Strict 30 day’ policy, this one too is invite-only!

Once again, I’ve heard rumours of mid-priced listings being granted the 60-day policy, however, it’s mainly reserved for the mega-expensive listings that have the biggest risk.

This is what your guests see when they book:

Airbnb Super Super Strict 60 day Cancellation Policy Guest View

Pros

  • Peace of mind
  • Financial certainty
  • Ample time to re-book vacancies
  • Full control
  • Reduced cancellations

Cons

  • More risk for your guests
  • May reduce the number of bookings

Who this is suitable for:

‘Super-Super Strict 60 day’ policy is suitable for the ultra-high-end listings upwards of $2000p/n that are exposed to considerable financial risk from late cancellations.

Long Term: First month not refundable, 30-day notice for cancellation

Airbnb Long Term Cancellation Policy

The ‘Long-Term’ policy is applicable to any reservation over 28 nights.

The ‘Long-Term’ policy entitles you as host to a refund to the value of the first month’s reservation cost in full for any cancellations within 30 days or less.

Not all hosts are willing to open up their homes for long term guests, however, this cancellation policy ensures that if you do, you at least have a financial cushion to fall on.

This protection is given to hosts regardless of their previously selected guest cancellation policy.

Pros

  • Incentivized to take longer-term bookings
  • Ample time to re-book vacant dates
  • Financial certainty
  • Little exposure to risk

Cons

  • Long term guests may abuse your property more
  • Long term stays usually command a discounted rate, so you may make less overall

Who this is suitable for:

This policy is automatically enforced for all bookings over 28 days.  More appropriately, you must ask yourself whether you want to host long term guests in the first place?

So many things to keep in mind, huh?

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Airbnb Refund Policy

Speaking about Airbnb refund policy, there are two types of scenarios that justify a refund for a guest: a cancellation of the reservation (either on the part of the host or the traveler) or an unexpected incident that occurred during their travels. We have discussed different types of Airbnb cancelation policies, so let’s talk about a refund when a guest suffers a travel incident.

The Airbnb guest refund policy specifies travel issues that are eligible for a refund:

  • Inability to access the accommodation – a host cancels a reservation within 24 hours of check-in, changes a reservation to another listing without the guest’s consent, or does not provide the keys and/or security code.
  • Inaccurate listing details – critical features that were described to a guest at the time of booking are flawed or not available. This inaccuracy can be wrong size and number of rooms, location (proximity), or when promised amenities are not provided or don’t function, such as hot tubs, pools, electrical, heating, or air conditioning systems, major kitchen appliances, etc.
  • The place is not safe or clean, contains safety or health hazards that can adversely affect the guest’s stay, or there are pets in the accommodation, and the information about them was not disclosed in the listing.

If guests experience a travel issue, they should submit a claim to Airbnb, and it can intervene as a mediator. Airbnb has the final say in what happens and decides whether to reimburse or re-book a guest who suffers a travel issue. Guests need to provide photos, videos, and other documents to support the request. They are also required to provide proof that they tried to contact the host to solve the problem directly.

Airbnb Host Cancellation Policy

Airbnb host cancellation policy protects guests to ensure they have a pleasant experience. Airbnb has implemented a number of measures around cancellations:

  • If an Airbnb host cancels any reservation more than seven days before the guest’s check-in date, Airbnb deducts $50 from the host’s next payout.
  • If a host cancels any reservation within seven days of check-in, they will be charged a $100 fee.
  • And if hosts cancel more than one reservation within a six-month period, they will be charged $50 per cancellation.
  • If a host cancels before the check-in date, Airbnb leaves an automatic review on the listing profile mentioning the cancellation.

Besides, when you cancel a booking as a host, your calendar remains blocked for the canceled reservation’s dates, and you won’t be able to accept another booking for the same dates.

Conclusion

Ultimately, the cancellation policy you choose will depend upon your current circumstances as a host.  

However, now that you have a deeper understanding of what Airbnb’s cancellation policy is, the pros and cons, and how they can affect your bottom line, you should be able to make better decisions moving forward.

For what it’s worth, I operate with a ‘Strict’ policy (and have been for the past four years), and I don’t feel like it’s negatively impacted my booking rate, however, we’re all at different stages as hosts so this may not be appropriate for you.

It is worth remembering, though, that it is your property, and you call the shots, so make whatever the best decision is for you.

Happy hosting.

Rowan.

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