Choosing the Right Airbnb Cancellation Policy for You

Updated: Aug 27, 2021

Many hosts and property managers, particularly those just getting started, are unsure whether the Airbnb cancellation policy is ideal for their business. There are numerous choices available, and you must understand how each policy works before accepting your first bookings.


Different Airbnb Cancellation Policies: Pros and Cons


1. Flexible


Starting with the most lenient of all the Airbnb cancellation policies, Flexible gives guests the most flexibility. If the guest cancels 24 hours before the planned check-in, they are entitled to a full refund. Meanwhile, the first night and the Airbnb service charge are non-refundable if the guest cancels less than 24 hours before check-in.


Pros

  • Higher search engine rankings for Airbnb.

  • You'll be able to make more appointments and keep your calendar full.

  • Guests will have more options.

  • Guests are not forced to make any commitments.

Cons

  • Hosts are not covered in the event of cancellations.

  • There's a higher possibility of losing money.

  • All of the risks are assumed by the hosts.


2. Moderate


If guests cancel at least five days before check-in, they will receive a full refund on the moderate policy. The first night is non-refundable if the guest cancels fewer than five days before check-in. The remaining nights will be refunded at a 50 percent discount. If guests wish to depart early, they will only receive a 50 percent refund for the remaining nights 24 hours following check-in.


Pros

  • Guests cannot cancel their reservations at the last minute without incurring financial penalties.

  • Hosts are more protected against losses due to cancellations.

  • This cancellation policy is more likely to weed out unsure customers.

Cons

  • Within a week of the reservation, hosts are still vulnerable to cancellations.

  • The cancellation reimbursement will still be less than the initial booking charge for hosts.

  • After the cancellation, it may not be easy to locate another booking to replace the dates.

3. Firm


Guests can obtain a full refund if they cancel up to 30 days before check-in. Guests can then cancel up to 7 days before check-in and receive a 50 percent refund on the nightly fee for all nights. There will be no refunds after. If guests cancel within 48 hours after booking, they will receive a full refund if the cancellation is made at least 14 days before check-in.


Pros

  • Discourages cancellation but keeps your listing attractive to guests.

  • You have more leeway to receive another booking when someone cancels.

  • Excellent policy for high-demand stays.


Cons

  • May discourage bookings in a low-demand season.

  • Lower visibility compared to more flexible options.


4. Strict


Guests who book under the Strict policy can cancel up to 48 hours after making the reservation, as long as the check-in date is not within 14 days. Guests must cancel 7 full days before the local check-in time to receive a 50 percent discount. There will be no reimbursement if the guest cancels within seven days of check-in.


Pros

  • Guests are less likely to cancel a reservation owing to financial loss.

  • For canceled dates, hosts have extra time to secure a replacement booking.

  • Cancellations are less likely to result in revenue loss.


Cons

  • Guests may be hesitant to reserve a home that has this policy in place.

  • In the Airbnb search results, you'll have lower visibility.

  • This may result in a reduced overall booking rate.


Conclusion


Airbnb wants you to have the most flexible cancellation policy possible, and they'll reward you with a higher search position if you do so. People require flexibility when it comes to travel; therefore, if you set it too strictly, you won't receive as many advanced bookings. As a result, the majority of hotels now provide free cancellation. Our recommendation is to keep it as flexible or moderate as possible.


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