If you’ve been an Airbnb host for any amount of time, you’ve probably noticed that Airbnb really wants you to have a flexible cancellation policy.
That’s because a more flexible policy is better for guests. And, in theory, can result in more bookings for hosts.
But in reality, is a flexible policy truly the best for Airbnb hosts?
To find out, I tried several different Airbnb cancellation policy options.
In this post, I’m sharing what I learned and which policy I now use as an Airbnb Superhost.
Note: All information referenced in this post is up to date as of 2/27/2022. For the most up-to-date information, please refer directly to the Airbnb website and specific web pages linked throughout this post.
- Airbnb Cancellation Policy Overview
- Penalties for Cancelling
- Instant Book Exceptions
- Extenuating Circumstances
- Exceptions for Unauthorized Parties
- The Best Airbnb Cancellation Policy for Hosts
- The Non-Refundable Option
- What to Do if a Guest Asks for an Exception
- What Happens if a Guest Cancels
- WATCH OUT: Don’t Be Tricked by “Guest Requests That You Cancel”
Airbnb Cancellation Policy Overview
Airbnb offers several different cancellation policies for hosts including flexible, moderate, firm, and strict. With each of these policies, you can choose to offer a non-refundable option.
Additionally, Airbnb has a separate cancellation policy for long-term stays (28+ days). It also tests out other, invitation-only, policies from time to time.
Be sure to check out Airbnb’s cancellation policy page for a full list of current policies and the details of each.
If you’re wondering how to change your cancellation policy, check out Airbnb’s how-to guide.
In this post, we’ll focus on the most common policies: flexible, moderate, firm, and strict. I’ll also share my experience with Airbnb’s non-refundable option.
Here’s a quick summary of each:
- Guests can cancel for a full refund until 24 hours before check-in
- Guests can cancel for a full refund until 5 days before check-in
- Guests can cancel for a full refund until 30 days before check-in. Additionally, guests can cancel for a full refund if they do so within 48 hours of booking and at least 14 days before check-in
- With this option, the only way guests receive a full refund is if they cancel within 48 hours of booking and at least 14 days before check-in
- With each of these policies, you can choose to offer a non-refundable option. If guests choose this option, they won’t get a refund if they cancel. In exchange, they receive a small discount when booking.
Airbnb Hosting Tip: Note that a “full refund” includes the nightly rate only. You won’t be paid the cleaning fee if your guest cancels before check-in. Learn more about refunds for cancellations and Airbnb’s guest refund policy.
Penalties for Cancelling
Airbnb really doesn’t want hosts to cancel existing reservations. (Makes sense, since that would be a poor guest experience.) So, there are some pretty serious penalties for hosts if they do.
Host penalties for canceling a reservation can include a cancellation fee, a block on your calendar for those dates, a public review from Airbnb, account suspension, and/or risk of losing Superhost status.
Airbnb Hosting Tip: It’s important to know that if a host cancels on or after the day of check-in, your guest will have the option to leave a public review on your listing.
Instant Book Exceptions
If you have Instant Book turned on, you might be pretty frustrated by all these cancellation penalties. (Because, heck, if you screened guests before booking, it’s less likely you’d ever need to cancel!)
Thankfully, Airbnb accounts for that by allowing certain exceptions for reservations made with Instant Book.
These exceptions include: guests making it clear that they’ll break your house rules, your listing not fitting “the needs of the guest”, or a guest having multiple unfavorable reviews.
Additionally, under Instant Book settings, Airbnb states, “You can cancel 100% penalty-free if you’re ever uncomfortable with a reservation.”
And, you can add certain requirements for Instant Book guests, including:
- Require the booking guest submits a government ID to Airbnb
- Require the guest to be recommended by other hosts
- Require guests to respond to a pre-booking message
Airbnb Hosting Tip: You can set certain requirements for Instant Book guests. If a guest doesn’t meet one of your requirements, they can send you a booking request instead.
Another time Airbnb makes exceptions to its cancellation policy is if there’s an “extenuating circumstance”.
To learn what qualifies as an extenuating circumstance, be sure to read Airbnb’s extenuating circumstances policy.
If a cancellation is due to an event covered in this policy, then a guest or host can cancel without penalty.
(In my experience, if a booking is granted a full refund under this policy, hosts will not receive that payout. Also, Airbnb can and does approve exceptions to their policy, without notifying hosts or telling them why an exception was made…in my experience.)
The Best Airbnb Cancellation Policy for Hosts
Now that we’ve got those basics out of the way, let’s chat about what you should know before deciding on the Airbnb cancellation policy for your listing.
My Experience with Airbnb’s Strict Cancellation Policy
You might’ve heard that as a new Airbnb host, having a strict cancellation policy will prevent bookings. The idea is that, since your listing doesn’t have many reviews, you should incentivize more bookings by offering a more flexible policy.
When I first started my Airbnb, I didn’t follow that rule at all. I chose the strict cancellation policy.
And guess what?
Bookings came flooding in.
I had 97% occupancy my first month hosting and earned $16,000+ in revenue!
My cancellation rate was just 19%. And, those guests that did cancel didn’t get a refund (per my cancellation policy).
On top of that, those bookings were usually filled right away by new guests. Meaning I earned twice as much when a booking was canceled.
Airbnb Hosting Tip: One huge reason my first month was so successful was because I listed my property before high season. Get all of my tips to increase your Airbnb revenue here.
All that’s to say, having a strict cancellation policy did not prevent bookings.
Unfortunately, after high season my Airbnb hit a dry spell.
During off-season, I got very few (if any) bookings for several months in a row. Typical low occupancy for this time of year was compounded by wildfires in the area, which prevented travel.
So, what did I do?
Switched to a flexible cancellation policy.
And it was a disaster.
My Experience with Airbnb’s Flexible Cancellation Policy
As wildfire season ended and we started heading into high season again, my bookings picked up.
Unfortunately, because of my new flexible cancellation policy, so did my cancellation rate.
When I switched to a flexible policy, my cancellation rate jumped up to 50%!
Half of the bookings I received eventually got canceled.
And I wasn’t paid for a single one of them.
Moreover, the bookings that eventually got canceled took up precious time when another guest could have booked instead.
In the most extreme instance, one guest booked my Airbnb over Christmas four months in advance. That guest then canceled two weeks before check-in.
This guest booked one of my most profitable nights, restricted any other guests from booking for four months, and then canceled just before check-in and was fully reimbursed.
What’s worse is that, at the time, I had Airbnb Smart Pricing turned on.
This automated pricing tool immediately dropped the price on those nights to a rate half of what the initial guest committed to.
Because that’s what Smart Pricing predicted it should be, despite the fact that those nights had already been booked at a much higher rate.
Before using any automated pricing tool, be sure to read my honest review here.
What should have been one of my most profitable bookings turned into my least profitable.
Even after that disaster, I still kept the flexible cancellation policy. I was convinced that the increase in bookings would outweigh any losses in revenue.
After 5 months, I didn’t notice any increase in revenue directly related to having a more flexible Airbnb cancellation policy.
What I did notice was that I couldn’t actually count on having the revenue of any upcoming bookings.
I started to expect that all of my bookings would get canceled and need to be filled at the last minute (if I was lucky enough to get them filled at all).
The stress and unpredictability weren’t worth it.
I eventually switched back to a strict cancellation policy. I haven’t noticed any decrease in bookings as a result.
Wondering what happens to your Airbnb host fee guests cancel? Check out this blog post to learn all about how Airbnb host fees work.
The Non-Refundable Option
Similarly, I tried out Airbnb’s “non-refundable” option. And then promptly turned it off after one guest made a non-refundable booking.
That’s because I didn’t feel like I was getting any additional bookings from it.
Instead, I was giving a discount to guests who were already very likely to book AND very unlikely to cancel their reservation.
What to Do if a Guest Asks for an Exception
If you opt for the moderate or strict Airbnb cancellation policy, you’re bound to get requests asking you to make an exception. Guests will message you explaining why they need to cancel and why they deserve a full refund.
Whether or not you choose to grant this exception is totally up to you.
That said, it might help to remind yourself that you’re running a business. Your guest agreed to a policy when booking, and you have every right to uphold that policy.
Those guests, if they choose, can request Airbnb reimburse them directly.
Alternatively, rather than giving a flat-out yes or no, you could consider proposing a compromise.
That’s exactly what I did during wildfire season at my Airbnb. When wildfires in the area made it unsafe to travel, I had several guests request that I give them a full refund on their bookings. You can get the full story here.
What Happens if a Guest Cancels
If a guest cancels, those dates on your calendar automatically open up and you receive any applicable payout.
WATCH OUT: Don’t Be Tricked by “Guest Requests That You Cancel”
Guests are smart. They know Airbnb’s policies and will do their best to make them work in their favor (can you blame ’em?).
According to this Community Center thread, some hosts have received notifications stating, “guest requests that you cancel” with two options for you to select: cancel or keep the reservation.
Don’t fall for it!
Selecting ‘cancel’ will result in a host cancellation, with all of the penalties covered above.
Guests don’t need your consent or approval to cancel a reservation.
When it comes to determining your Airbnb cancellation policy, you have a lot of options.
I hope sharing my experience with multiple Airbnb cancellation policies helps you make an informed decision.
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