If you’re hosting an Airbnb rental property, then it’s probably very important for you to know all about the Airbnb host cancellation policy and the guest cancellation policy as they can greatly affect your finances and the performance of your short-term rental.
So, in this article, I want to talk about the Airbnb cancellation policy for hosts and guests, the different types of cancellation properties that you can choose from as a host, and the pros and cons of each.
Airbnb’s Policy for Cancellations
When Airbnb first started its operations, there weren’t that many hosts who were using it. This meant that Airbnb had to provide services and policies that focused on benefiting hosts in order to attract them to the platform.
Of course, since cancellations can be a major headache when it comes to short-term rentals, Airbnb had to have a solid Airbnb host cancellation policy that would make hosts feel confident when it comes to renting out through Airbnb.
However, as Airbnb became more popular and widespread, and as more and more hosts joined the platform, the company’s policies shifted to provide more guest-friendly options.
This led to what we currently have when it comes to Airbnb cancellation policy, which is a simple yet effective set of Airbnb host cancellation policy terms, and a much wider and more diverse selection of Airbnb guest cancellation policy options.
Airbnb Host Cancellation Policy
The Airbnb cancellation policy for hosts was put in place to protect guests against hosts canceling or changing their reservations right before or after the guest checks in.
To prevent this from occurring, an Airbnb cancellation fee has been imposed depending on when and why Airbnb hosts cancel.
The main measures that make up the Airbnb host cancellation policy are:
- If an Airbnb host cancels a reservation more than a week prior to the guest’s check-in date, then $50 will be deducted from the host’s next payroll by Airbnb.
- If an Airbnb host cancels a reservation with a week of the guest’s check-in date, they will be charged $100 by Airbnb.
- Hosts who cancel multiple reservations within the period of 6 months will be charged $50 per cancellation.
- Airbnb will always leave an automatic review on the listing’s profile on Airbnb’s platform which mentions that the host has canceled their reservation.
- When a host cancels a reservation, the original reservation’s dates will be blocked on the calendar, making the property unavailable for renting to a different guest even though the previous reservation was canceled.
All of these measures make up the Airbnb host cancellation policy, which helps to protect guests from sudden cancellations by the host.
While some might believe that the Airbnb cancellation fee that’s imposed on the host isn’t significant enough to prevent hosts from canceling, it’s important to keep in mind that the combination of the above measures together can drastically impact the performance of an Airbnb property and reduce the number of guests who are trying to reserve it.
This means that the Airbnb host cancellation policy is a good measure for ensuring that hosts won’t be canceling reservations, which is great for guests as they won’t have to worry about their reservations being canceled last minute.
Airbnb Guest Cancellation Policy
While the Airbnb host cancellation policy is straightforward and simple, the guest cancellation policy is more elaborate and offers several options that affect both hosts and guests alike.
As an Airbnb host, you can choose from these options when it comes to Airbnb cancellation policy. This means that the host is the one who controls which guest cancellation policy applies to their Airbnb rental property.
However, as a host, you need to keep in mind that guests also have preferences when it comes to the Airbnb guest cancellation policy options, and they’re more likely to choose properties that have flexible cancellation policies that favor the guest rather than the host.
Each of the guest cancellation policy options that Airbnb provides has its own pros and cons, but the options vary between favoring the host or the guest based on the time period during which a guest can cancel their reservation and receive a full or a partial refund.
So, here are the Airbnb guest cancellation policy options that are offered by Airbnb:
Flexible Policy – Full Refund Up to 24hrs Before Check-In
The Airbnb flexible cancellation policy is the most popular option among guests searching for rentals on Airbnb.
This is because, as the name suggests, this is the most flexible option offered by Airbnb, and it allows guests to get a full refund if they cancel their reservation up to 24 hours before check-in.
Additionally, with this policy, guests who check out early will also be entitled to a full refund for the remaining nights based on their original reservation.
Here are the pros and cons of this option:
- Airbnb listings using the flexible cancellation policy have the highest level of visibility since it favors the guest more than the host.
- This translates into more bookings in general for your listing.
- This policy highly favors the guest while increasing the risk of last-minute cancellations by the guest.
- This leads to potential loss of profits due to last-minute cancellations that lead to vacancies.
- As a host, you don’t get compensated when a guest cancels their reservation.
So, why would you use this policy?
This is a great policy to use if you have a new Airbnb listing and you want to increase its visibility and rating on the platform.
Additionally, this policy is best used on smaller and modest properties with low nightly-rate to avoid losing large sums of money when a reservation gets canceled.
You should also avoid using this policy if your listing’s minimum nightly stay period is more than 2 nights.
Moderate Policy – Full Refund Up to 5 Days Before Check-In
While the flexible cancellation policy is the most popular among guests (when they’re searching for listings), the Airbnb moderate cancellation policy is the most popular among hosts.
This is because Airbnb’s moderate cancellation policy is a fairly balanced option that protects both the host and the guest.
The moderate cancellation policy allows guests to get a full refund if they cancel their reservation up to 5 days before their check-in date, and a 50% refund if they cancel less than 5 days before their check-in date.
Here are the pros and cons of using the moderate cancellation policy:
- This policy offers some flexibility to the guest, but they will be very hesitant to cancel last-minute knowing that they will only receive a 50% refund if they cancel less than 5 days before check-in.
- If a guest cancels last minute, the host will receive a compensation, greatly reducing the amount of money that they’re losing due to cancellation.
- This option is also very popular among guests, which means your listing will get more bookings and visibility.
- Guests won’t feel pressured to cancel their reservation early, and cancellations 1 or 2 weeks before check-in may mean that you don’t have enough time to find a new reservation for the property.
- Although hosts get compensated in the case of a last-minute cancellation, they will still be making considerably less money when cancellations happen.
So, why would you use this policy?
This policy is considered the baseline when it comes to Airbnb host cancellation policy, and most average listings will be using it.
Similar to the flexible policy, the moderate policy is best used on listings that have a relatively cheap nightly rate and a short minimum nightly stay (3 nights or less).
Strict Policy – Full Refund Up to 14 Days Before Check-In
The strict cancellation policy is where the balance swings back in favor of the host.
The strict Airbnb host cancellation policy only allows guests to get a full refund on their reservation if they cancel more than 2 weeks ahead of their check-in date.
This gives ample time for the host to get another booking on their Airbnb listing, which greatly reduces the financial risk associated with last-minute cancellations.
If a guest cancels their reservation 7 to 14 days before their check-in date, they will be entitled to a 50% refund on their reservation.
However, and this is where the policy shines for hosts, if the guest cancels their reservation 7 days or less before the check-in date, or after checking in, they will not be refunded at all.
- This policy is considered the fairest for all parties, as it offers a great amount of protection from cancellation to the host without being too strict on the guest.
- The policy provides a balance that allows the host to have enough time to find a new reservation, and the less time they have to do so the more likely they are to be financially compensated for the cancellation.
- This policy allows for relative financial stability, and it’s easier to manage and include in your financial planning.
- Strict policy listings receive less bookings and exposure on Airbnb.
- It can be challenging to find a new booking when a cancellation happens.
So, why would you use this policy?
The strict cancellation policy is great for established and high-demand listings that have positive ratings.
It’s best used for premium listings that have a minimum nightly stay of 3 nights or more.
Super Strict Policy
In addition to the strict policy, there are two types of super strict cancellation policies that Airbnb offers.
The super strict cancellation policy comes in two variations: the 30 days and the 60 days.
The 30 day super strict policy allows the guest to receive a 50% refund up to 30 days before their check-in date, and no refund at all if they cancel within 30 days or after they check in.
The 60 days variation has the same terms but for 60 days instead of 30.
Unlike the previous policies, however, the super strict cancellation policy can only be used for specific types of listings that are considered premium and are expensive.
Additionally, the super strict policy can only be used for invitation bookings.
- Excellent for mitigating risk and avoiding financial losses.
- Peace of mind.
- Greatly reduced cancellation rate.
- Guests will be more hesitant to book a reservation due to the high sense of commitment.
So, why would you use this policy?
This policy is certainly not for everyone, and it’s only used for very expensive listings and luxurious homes.
If your listing has this Airbnb host cancellation policy option available, then you should probably use it, as cancellations on luxury homes of this category can lead to significant financial losses.
Other Airbnb Cancellation Policy Options
In addition to the ones mentioned, there are two more types of cancellation policies that Airbnb offers:
- Airbnb Firm Cancellation Policy
- Airbnb Long-Term Cancellation Policy
Firm Cancellation Policy
This is a newly introduced policy that offers increased flexibility to the guest while also providing strict-level protection to the host.
Under the firm policy, guests who book a listing far in advance will proportionally increase the period of time they have available to receive a full refund upon cancellation. However, this period cannot be less than 30 days before checking in.
What this means is that it encourages guests to book your property for their trips if they’re planning them several months in advance.
Long-Term Cancellation Policy
The Airbnb long-term cancellation policy is very similar to a traditional long-term rental lease.
This policy is only useable for listings that have a minimum nightly stay of 28 nights or more.
Under this policy, guests must give a 30-day notice for cancellation, and upon cancellation they will still have to pay for a month’s reservation.
If a guest wants to cancel after checking in, they will have to pay 30 days of reservation or the remainder of their reserved days.
Airbnb offers a wide selection of options when it comes to cancellation policies.
The great thing is that the host has control over the policy that they want to apply on their listing, and regardless of the type of listing that they have, there will be a policy that is good for it.
So, are you ready to take your hosting career to the next level? Why not buy a new Airbnb rental property and use it as a source of additional income?
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