What Should Your Airbnb Cancellation Policy Be?

11 May What Should Your Airbnb Cancellation Policy Be?

Posted at 15:00h in Airbnb by nestrs 0 Comments

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Depending on when you’re reading this post -cancellation policies may or may not be a hot topic for you.

At the time of this writing, we are in the middle of the COVID-19 pandemic. Things have been nuts for STR Hosts.

The great thing about putting your property on Airbnb.com is that they do all the marketing for you, take care of the actual transaction, refunds, and they, for the most part, put you in charge of your own destiny. You choose when you can Host and when you can’t, how much your nightly rate is, and ….what your cancellation policy is.

Unless we are in a pandemic…then they’ll give your guests a refund without consulting you first.

To be fair to Airbnb, no one was expecting a global pandemic. There are arguments that maybe we should have been -but we weren’t. And so when events started to get cancelled and stay-at-home orders were issued by our states, guests felt trapped that they couldn’t get refunds from Airbnbs they booked with moderate or strict cancellation policies (more on what those are later) and Hosts just wanted to hang on to whatever reservation funds they could!

However, I’d like to think pandemics are more of a once-in-a-lifetime event. We may have another stay-at-home order in our near future but, otherwise, during normal circumstances, I wanted to outline and explain each of the cancelation policies Airbnb offers for you to select from and my take on which one you should implement and why.

What you should know about Airbnb’s cancellation policies

You can set your cancellation policy under “Booking Settings”. Then, scroll down to the bottom to “Policies” and select “Edit”. This is where you can edit your check-in time, check-out time, and set your cancellation policy.

Airbnb offers you six policies to choose from. You can change them at any time but, remember, guests who booked under a certain policy will continue to have that policy through the remainder of their reservation with you.

If you’re not sure what policy they have with you, go to any confirmed reservation and scroll to the bottom. It will state it for you there:

If you want to choose a policy and stick to it, it’s a good idea to restate the policy in your pre-booking message. This is the message that gets shown to guests riiiiight before they book. I take this opportunity to remind them of any quirks about the property or its location and the cancellation policy and check-in/check-out times.

You can locate the “Pre-booking message feature under “Booking Settings” and then “Guest Requirements”. You’ll have to press the “Edit” button to create the message.

Learn more about Airbnb cancellation policy with Nestrs

The six Airbnb cancellation policy options

Alright, let’s get into the meat and potatoes. Airbnb gives us 6 choices when it comes to cancellation policies.

1. Flexible:

Think about it- when you are booking travel in advance your mind is put at ease if you know you can back out or cancel with very little financial loss. Airbnb’s Flexible Cancellation Policy states that guests can receive a full refund, minus Airbnb’s service fee -although that may change in the future- 24 hours before their check-in time.

If you live and Host in an area like mine -it’s urban and you attract business travelers and families who are in town visiting I recommend the flexible policy. So many hotels have policies that are super flexible and it truly is what our client/guests want. I haven’t received many cancellations

2. Moderate:

If you’re not comfortable with allowing guests to cancel up to 24-hours before their check-in time you can subscribe to Airbnb’s Moderate Cancellation Policy. Guests can get a full refund, minus Airbnb fees, up to 5 days prior to their check-in.

3. Strict

With the Strict Cancellation Policy guests can get a 50% refund up to 1-week prior to their check-in date and time.

4. Super Strict 30 Days

Guests get a 50% refund up to 30 days before their check-in date and time.

5. Super Strict 60 Days

Airbnb’s Super Strict Cancellation policy basically says -only book if you’re 1,000% certain you’re going to need this reservation! Get a 50% refund, minus fees, up to 60 days before a guest’s check-in date and time.

6. Long Term

The Long-term cancellation policy is automatically applied to any reservation that is 28 nights or longer. Pre pandemic, long-term stays weren’t popular at all in my market -but I’ve seen them pop up more frequently. A guest must cancel 48 hours after deciding to book to get a full refund -minus the first 30 days! This is great -if you get a 45 day booking you’re guaranteed the first 30 days and then you should have plenty of time to rebook those last 15 days.

Policies With a Twist

You can also choose to offer Flexible, Moderate, or Strict policies and give your guest the opportunity to choose the Flexible, Moderate, or Strict policy OR a Non-Refundable policy and get an immediate 10% discount:

I’ve chosen to do this for a few of my listings and have noticed that about 80% of guests who reserve these properties choose the 10% off discount! Which is surprising to me! This might change post pandemic, but it’s a nice option to give the guest.

Which policy is right for you?

As I stated above, if you’re in a secondary urban market or suburban market, or even a rural market, I’d stick to the Flexible Cancellation Policy.

Over my past 8 years of Hosting I haven’t experienced much in the way of cancellations. Even when I did, I was able to rebook most of the nights I would have otherwise lost out on.

I’ve Hosted 1,280 stays so far in my hosting journey and, not including the cancellations I received during the pandemic because…hello once in a lifetime event…I’ve only had 120 cancellations. That’s right around 10% -not too shabby! And that’s with a Flexible Cancellation Policy in place.

If you want to check out what your past cancellation history looks like, head to the “Reservations” tab at the top of your Airbnb Hosting page. You can see how many reservations you’ve had and how many of those reservations were cancellations.

If being Flexible makes you uncomfortable and you’re a more experienced host, go ahead and implement the Moderate Cancellation policy. Guests will love that you have a positive track record and might not worry that they’ll have a little less time to cancel before receiving a refund.

However, if you’re new, earn your stars and your status before tightening the belt on cancellations.

If your Airbnb is in an area that has a strict season -meaning you really rely on guests who book, lets say from May to September, finding a place will probably be more competitive for your guests and therefore you can have a tighter cancellation policy.

What to do in case of a dispute

While Airbnb does allow Hosts to choose our own cancellation policy, if there is a dispute that you cannot work out with your guest, Airbnb has the right to mediate the dispute and decide on the outcome -which may supercede your cancellation policy. I mean, at the end of the day we are putting our listing on someone else’s platform.

This doesn’t happen often. This hadn’t happened to me or anyone in my close circle of Host friends until the 2020 pandemic.

If a guest does reach out to dispute your cancellation policy remember, they are your ‘client’. They are your customers. Hear them out, acknowledge that you hear them and understand where they are coming from. Then, if you want to attempt to stick to your guns, keep everything via the messaging system on the Airbnb platform and craft your response carefully. You want to keep the conversation on the app so that you have written documentation of the conversation. Remember, however, that intention can sometimes get lost when people can’t see or hear the tone of your voice. Make sure that tone is evident is as clear as possible in your responses. If for nothing else, it will help your case should it escalate to Airbnb mediation.

Airbnb Guest Refund Policy

If you’re going to list your property on Airbnb you need to understand what you’re agreeing to -and that means understanding their Guest Refund Policy; because their Guest Refund Policy is YOUR Guest Refund Policy.

Guests might have the following travel issues that might grant them a refund under Airbnb’s Guest Refund Policy:

Inaccurate Listing Details- If you advertise 2 bathrooms and a guest arrives and there is only 1, that’s a problem. Or it’s becoming more and more common for Hosts to advertise one property but then send guests to another property because the other one is overbooked. Don’t do that.
Health and Safety Concerns- If the unit hasn’t been cleaned or if there are major safety concerns, a guest could win the right to a full refund.
Inability to Access the Accommodation- If a guest did not receive the proper door code or the key was not given to the guest in order for them to access the Airbnb they have the right to demand a refund.

Need help with Airbnb guest refund policy? Nestrs can give you some tips and tricks

Conclusion

If you’d like to check out Airbnb’s cancellation policies on their website, visit this link. I wouldn’t be surprised if in the coming months/immediate future Airbnb does more to make guests even more comfortable booking Airbnbs by continuing to promote flexible booking and cancellation policies.

Which can be frustrating for Hosts but, think of it this way: the more we can make our guests and potential guests happy and excited to use Airbnb the more we can continue to rely on them to come to Airbnb to book their short-term stays.

I always preach to “think like a guest” and to “anticipate their needs”. I think the need for flexibility is stronger than ever. Flexibility on how we live and how we travel is a hot commodity. People want to travel and they want interesting experiences -they want to stay with us! But if we try to get them to commit we might lose them. It’s once they check-in that we are presented with the opportunity to rave about their experience with us and want to come back and/or want to sing our praises in the form of a 5-Star review. And that’s where the money is.

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