How to Avoid Choice Paralysis: A Guide to Airbnb Cancellation Policies
Congratulations! You have a property listed on Airbnb. As you customize your listing, you’ll have to determine the nightly rate, say yay or nay to instant booking, and eventually, choose one of several policies in the event that guests cancel their reservation with you. Given today’s cautious state of travel, it’s important to find a policy that allows you, as a host, to align with your guests while avoiding financial loss.
Airbnb’s cancellation policy options vary by type of listing (i.e., short-term or long-term), in some cases, the geographical location of your listing, and several other factors. There are also some cancellation policies that are available to a limited number of hosts: by “invitation-only” or when Airbnb is testing new policies.
If you’re feeling lost about which cancellation policy is best for you and your listing, don’t fret. As the leading holistic management platform for short-term rentals, Guesty For Hosts is here to break down each of the cancellation policy options that Airbnb offers and highlight the pros and cons of each. Our vast knowledge in the hospitality space enables us to streamline the most important factors when considering and choosing the right cancellation policy for you.
Airbnb’s Cancellation Policies for Short-Term Bookings (28 days or less)
Airbnb has a number of options of cancellation policies for short-term bookings. Obviously, policies that favor guests are riskier for hosts and vice versa. Hosts need to consider the value of a flexible policy that will attract more potential bookings, against the financial impact last-minute cancellations and loss of income will have on their overall budget. Here we will present the options in order from the most flexible to the most strict policies.
Airbnb’s Flexible Cancellation Policy
The flexible guest cancellation policy is the most relaxed cancellation policy for guests on Airbnb. This gives guests free cancellation up to 24 hours before check-in, which means they receive a full refund, and you, the host, will not be paid. If a guest cancels after the 24-hour mark, hosts will be paid for each night of the guest’s stay, plus one additional night.
The flexible policy is great for guests, giving them peace of mind that they will not be penalized if their plans change last-minute, which is a huge bonus for booking risk-free. However, their peace of mind equates to your lack thereof because until 24 hours before check-in, you will not know whether or not you’ll be paid, and at that point, it’s likely too late for you to fill the booking. If your property is in high demand and you can afford to gamble with losing a few nights’ pay from last-minute cancellations, this policy could boost your ratings and fill your calendar.
Airbnb’s Moderate Cancellation Policy
With this cancellation policy, guests can cancel up to 5 days prior to check-in to receive a full refund and like the flexible policy, the host will not be paid. If guests cancel after the 5-day mark, you’ll be paid for each night of the guest’s stay at your listing, plus one extra night, plus 50% for all unspent nights.
The moderate policy gives guests relative flexibility to change their plans while also giving you, the host, time to accept a replacement booking should they cancel. Out of all the policies, this is the closest to a win-win situation.
Airbnb’s Firm Cancellation Policy
The firm cancellation policy gives you, as the host, more security than the flexible and moderate policies. Guests must cancel 30 days prior to their reservation to receive a full refund, allowing you ample time to find a replacement booking. If guests cancel between 30 and 7 days prior to their reservation, you will be paid 50% of the booking rate. Should guests cancel after the 7-day mark, all of the payment stays with you.
If guests cancel within 48 hours of booking their stay, they will receive a full refund, as long as the cancellation occurs 14 days or more before check-in.
The benefit of this policy lies in the 30-7 days prior to the reservation. Not only do you receive 50% payment for the canceled reservation, you also have the opportunity to find another booking, and be paid for that as well. If your property is located in a more remote area or doesn’t see many visitors, it may be worth going with this policy, but keep in mind that its lack of flexibility could deter potential guests.
Airbnb’s Strict Cancellation Policy
One step above the firm policy is the strict cancellation policy: Guests are only able to receive a full refund if the cancellation occurs within 48 hours of booking and at least 14 days before their check-in. Cancellations between 14 and 7 days before check-in will result in a 50% refund (meaning you keep the other 50%), and if they cancel anytime in the last week before their reservation, you will keep 100% of the payment.
The strict policy ensures for you, as the host, maximum protection and minimal risk. However, like the firm policy, guests may be deterred from booking with you due to the lack of flexibility. If you are deciding between a firm and strict cancellation policy, consider your financial circumstances– if you can afford to give guests some room for cancellation, you may see more bookings for your listing.
Airbnb’s Non-Refundable Cancellation Policy
The non-refundable cancellation policy is a great way to protect against cancellations while offering guests the value of a discounted booking price. Here’s how it works: when booking with you, guests have the option to select your chosen cancellation policy or to go with the non-refundable option. In return for selecting a non-refundable cancellation, guests receive a discount (which is yours to set, but typically 10% off of your base price).
If guests cancel, you will receive 100% of the payment (minus the cleaning fee if they have not yet checked in). This option is eligible only if the check-out date is within 60 days of booking and the reservation is not booked with a pre-approval or any special offers.
Airbnb’s Cancellation Policies for Long-Term Bookings
The following policies are relevant for bookings of 28 days or more. As you can see, Airbnb offers fewer options for cancellation with longer stays.
Flexible Long-Term Cancellation Policy
The flexible long-term cancellation policy works as follows – if guests cancel before 30 days of the check-in, they will receive a full refund. If they cancel anytime after those 30 days, you will receive 100% payment for any nights they stayed at your property, PLUS an additional 30 nights payment. And, if your guest cancels with less than 30 days left in their reservation, you will also be paid in full for those remaining nights.
Strict Long-Term Cancellation Policy
The strict long-term policy looks exactly like the flexible policy, with one difference. Guests must cancel within 48 hours of booking your property and at least 28 days before check-in to receive the full refund.
When choosing between the two long-term cancellation policies, consider if offering cancellation flexibility to your guests is an option. Having an option for the flexible policy can be the difference for a guest between booking your property or someone else’s and having a long-term booking is a great way to keep your calendar full.
Before you go, here are a couple of other things to note:
Be aware that Airbnb’s Extenuating Circumstances Policy protects guests from cancellation penalties in the event of natural disasters, war, and other events. If a guest has to cancel due to such circumstances it’s important to be aware of this policy.
Certain cancellation policies are available only in special circumstances and by invitation-only. You can read about those options to see if any would apply to you and your listing.
So many policies, so little time. When deciding which policy is right for you, consider your priorities: Is it more important for you to establish a good reputation among guests and attract more bookings by letting guests stay flexible, or do you need to receive guaranteed payments and reliable income? Once you’ve established this, you’ll be able to choose the best cancellation policy for you and your listing.
When making your decision it’s also important to consider the current trends in travel booking. The aftermath of Covid, coupled with the impending recession, has impacted travelers to be more cautious in committing to their plans. Travelers are booking closer to their travel dates and prefer flexible booking options to allow for cancellations. If you find that you are not getting booked with a more rigid policy, you might want to try a more flexible option to see if that makes a positive impact on your reservation calendar.