January 11, 2018

Guide to Setting a Guest Cancellation Policy

Working with the various short-term rental property platforms can get a little overwhelming. There are many similarities, but also a number of differences, that can cause confusion and potentially cost you money.

 

For the purposes of this article we will be dealing with the two major ones: Airbnb and HomeAway/VRBO.

 

The first thing you need to be aware of is that there are different levels of the cancellation policy. So, let’s look at Airbnb first, as many newer property owners have started to use the platform to rent their rooms or entire properties.

 

Airbnb Cancellation Policy Levels

 

Airbnb has 7 levels of cancellation policy.

 

1.      Flexible

2.      Moderate

3.      Strict (grace period)

4.      Strict

5.      Super Strict 30 days

6.      Super Strict 60 days

7.      Long Term

 

As they note, the “Super Strict” cancellation policies apply to special circumstances and are by invitation only. Generally, Airbnb allows hosts to choose from the three standard cancellation policies (Flexible, Moderate, and Strict) that according to Airbnb “…we will enforce to protect both guest and host alike. The Long-Term cancellation policy applies to all reservations of 28 nights or more.” 

 

Property owners choose these policies when setting up their rental details for each listing. They can be found on the left-hand side of your listing.

 

Airbnb Flexible Cancellations

 

Flexible cancellation policy means if a guest cancels more than 24 hours before your check-in time they will not be charged and will receive a full refund. You will not receive any payment. If the cancellation comes prior to the arrival time but within less than 24 hours, you will be paid for the first night minus the cleaning fees as the place should already be clean and unused. If the guest is already at the property but has to cut his trip short you receive full payment for up to 6 days remaining in the booking. Obviously cleaning fees would be paid.

 

Flexible bookings are preferred by many regular users as they like the ability to possibly change dates if things come up. This is something to consider if you are in an area that has a lot of available properties.

 

Airbnb Moderate Cancellations

 

The Moderate policy allows guests to cancel up to 5 full days prior to the booking and receive a full refund. If the guest cancels before arrival but within 5 days, you receive the first night and 50% of the remaining days, but not the cleaning fees. If a guest arrives and stays for part of the days and then cancels, you receive 100% of the fees that cover 24 hours from the cancellation – in other words if your checkout time is noon and the guest cancels at 2pm then you receive that night as well as the following day. All other days you receive 50% of the payment.

 

Airbnb Strict Cancellations

 

Strict policy is just that – however as mentioned above you do run the risk of having fewer bookings because of that setting. If a guest cancels up to seven full days prior to arrival you will receive 50% of the entire cost minus the cleaning fees. If under 7 days or during their stay you receive 100% of the booking, though if they did not arrive you do not get the cleaning fees.

 

The Super Strict does the same but the cancellation period is either 30 or 60 days prior to booking – 50% if before the deadline and no refund if less than the deadline. Cleaning fees again are only charged if the guest uses the property.

 

Airbnb Long Term Cancellations

 

Long term or bookings over 28 days have different refund levels. If the guest makes a long-term booking and decides to cancel prior to arrival the first 30 days are not refunded except for cleaning fees. If the guest cancels during the visit the property owner will receive payment for 30 days from the time of cancellation.

 

Warning: If you are asked to “change” the reservation to reduced days, you will not receive any of the payment for those days. So, unless you have spoken to the guest and want to be a “gracious” host this should not be done as you will NOT receive payment for those days.

 

HomeAway/VRBO Cancellation Policy Levels

 

HomeAway has 5 cancellation policy levels.

 

1.      Relaxed

2.      Moderate

3.      Firm

4.      Strict

5.      No Refund

 

HomeAway Relaxed Cancellations

 

Guests can cancel up to 14 days prior to arrival and receive a full refund. The property owner will not be charged any fees nor receive any payment. If the cancellation is up to 7 days prior to arrival the guest gets a 50% refund and the property owner is charged the appropriate fees for that payment. Anything under 7 days there is no refund.

 

HomeAway Moderate Cancellations

 

For bookings canceled more than 30 days prior to arrival a full refund is issued. A 50% refund is given for cancellations made between 29 and 14 days prior to arrival and any cancellation less than 14 days does not get a refund.

 

HomeAway Firm Cancellations

 

If a guest cancels 60 days prior to arrival there is a 100% refund given. Cancellations between 59 and 30 days receive a 50% refund, and for those under 30 days there is no refund.

 

HomeAway Strict Cancellations

 

Only cancellations done 60 days prior to arrival receive a refund which is 100%. Any cancellations after that period do not qualify for a refund.

 

HomeAway No Refund Cancellation

 

As the policy clearly states, once a booking has been made no refund is given if canceled.

 

To set your cancellation policy in HomeAway, go to Settings, then Rental Agreement, and click Cancellation Policies.

 

As with Airbnb cancellation policies, bookings can be influenced by the policy chosen. When picking the policy, how you will enforce it should be considered against the number of available properties and other factors.

 

Cancellation polices can be changed, though they would only be applied to future bookings not to any guests who already booked under the old policy. Keeping up on demand within your area and upcoming events is a good factor to consider when choosing the cancellation policy.

 

If you have any further questions or would like one of our property marketing team to contact you please use our contact form here

Chang Kim

My name is Chang and I manage operations at Voyajoy. I've been in the short-term rental space for the last four years and have an operations career dating back 20+ years. I've learned about vacation rental management the hard way and have seen how quickly this industry has changed in a very short time. My objective is to use this experience and knowledge to give our valued clients big competitive advantages.

Tags
Airbnb
Rental Management
San Francisco
Vacation Rentals

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