Airbnb cancellation policy for hosts: What is the best?

In this article, we discuss the best ways to approach the Airbnb cancellation policy for hosts. You want to be booked as fully as possible when you run a short-term rental. You want to be able to plan out your activities. You’re paying for a cleaning service. You have to match a lot of things.

The biggest headache hosts can have is when they get a cancellation at the last moment. Often happens that those dates stay unoccupied as it’s hard to find new guests in a short time. There are situations where hosts lose income. The question is how to make as many bookings as possible and keep the cancellations at a minimum.

What is the Airbnb Cancellation Policy for hosts?

Airbnb offers different cancellation policies.  They define the rights of guests and hosts when it comes to canceling bookings. The tricky question is: Which one is the best for me to scale my rental business?

Let’s look at what cancellation policies exist on Airbnb.

Airbnb cancellation policy all options

When you go to their website you see at least 8 different cancellation policies. It can be very confusing at first sight.

Actually, only three of them apply to short-term rentals (ok, it’s four, but two of them are almost the same so we can look at it as three options for the sake of simplicity).

To make it clear, short-term rentals refer to stays of up to 28 days.  Other policies fall under long-term renting and those reservations are approached in a different way. 

Guests are staying for a few days, all up to one month in a short-term situation.  As a host, you have three options on the table for short-term rentals.

  • Flexible cancellation policy

A flexible cancellation policy is very convenient for guests as they can cancel a reservation up to 24 hours prior to check-in and get a full refund.

  • Moderate cancellation policy

Guests can cancel until 5 days before check-in and get a full refund.

  • Firm and strict cancellation policy

With firm policy, the guest receives a full refund if he cancels 30 days before check-in.

With strict policy, the only way for a guest to receive a full refund is to cancel within 48 hours of booking, and the cancellation must occur at least 14 days before check-in. That means if 48 hours after the booking has passed, there is no way that guests receive a full refund even if they cancel two or three months earlier. 

Further, whether we talk about a firm or a strict policy the regulations are:

When a guest cancels between 7 and 30 days before check-in, it will be 50:50. Guest gets a 50 % refund and the host receives the same amount as well.

In less than 7 days hosts will be fully paid for all nights.

Non refundable Airbnb policy

This is an additional option a host can choose to add to existing cancellation policies. Non refundable Airbnb cancellation policy for hosts means that guests will get a discount of 10%. If they cancel they don’t get a refund.

It’s a convenience for guests who are sure about their plans and in this way they feel rewarded.
A host doesn’t have to feel he is offering this option for less money. It’s all about the way you set a pricing strategy. A host doesn’t have to think about this as a way to attract customers with discount offerings.

Look the other way around.

A non refundable rate should be the host’s basic price. That is the value he has to offer. And +10% is seen as an additional fee that buys flexibility to a guest.
Let’s say that a guest has a flexible policy, then adds non refundable. A guest will see two options during the reservation:

– full price
– discounted non refundable price

Overall, this is a good strategy to incentivize customers as well as protect your business.

Which Airbnb cancellation policy for hosts is the best?

It is not a one size fits all situation. That’s why we have so many cancellation policies.

To decide what serves you the best, think about these things

  • What is the location of your short-term rental? Is it a city that has a constant stream of tourists? Or a place that is the most crowded during the peaks of a season?
  • Do guests tend to receive at the last minute? Is it a “let’s go for a weekend”  thing or “ we plan our holiday months in advance”?
  • What does your competition do? That gives you a perspective. If all of them have a strict policy, maybe it is because guests book much time in advance, and canceling at the last minute would make it very hard to replace them. 

The general guideline to follow is  :

The more tourist turnover there is, the better is to go with a flexible policy. 

Airbnb guests want to have treatment like in hotels these days. It’s widely recommended that hosts opt for a flexible policy whenever possible. Flexibility will definitely bring a lot of bookings. As long as the cancellation rate is low and demand is strong, there’s no reason not to go with this policy.

A cancellation policy can be changed. A host can experiment with different ones until he finds out what works best.

Read more: How to solve double booking when managing vacation rentals

How to get around Airbnb’s long term cancellation policy

We talked about short-term stays regulations. What if you offer also medium or long-term stays? 

Airbnb gives the possibility to hosts to rent out their property on a medium-term lease. In this case, the guest stays at least 28 days. Medium-term rentals are regulated differently. Under the aspect of the law, they are regulated as long-term stays. 

Canceling two or three nights or the whole month is not the same thing. In the second case, hosts would face much greater consequences. If a guest cancels a few nights, there’s a great chance a host will be rebooked. The same can’t be said for long periods like moths.

OTSs like Airbnb acknowledge this and that’s why cancellation policies for long-term leases are always strict or firm.

  1. Strict long term

To receive a full refund, guests must cancel within 48 hours of booking, and the cancellation must occur at least 28 days before check-in

After that, a host will be paid 100% for all nights spent, plus 30 additional nights

  1. Firm long term

To receive a full refund, guests must cancel at least 30 days before check-in

If a guest cancels after that, a host will  be paid 100% for all nights spent, plus 30 additional nights

There are also Super Strict 30 days and Super strict 60 days, Airbnb labels them as  “invitation-only and available only to certain Hosts under special circumstances.”Read more on the Airbnb website.

Medium-term rentals are great ways to attract another type of customer like remote workers. read more about it here.

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