A stricter policy does not always generate more profit. A more flexible one does not guarantee more bookings either. The right decision depends on lead time, demand, resale capacity, average stay, and margin.
Airbnb maintains different policies for standard stays and also allows offering a non-refundable option with a discount. In this option, the host sets the discount — Airbnb indicates that it is usually 10% outside of China — and the guest can choose between the standard rate or the non-refundable one.
The Mistake: Choosing a Policy Only Out of Fear of Cancellations
If a cancellation occurs 40 days in advance and your market can easily resell, a very strict policy may be protecting a small risk at the cost of conversion. If it happens 48 hours before during peak season and you cannot resell, the loss is different.
What You Should Compare
| Variable | Question | Financial Impact |
|---|---|---|
| Average Lead Time | How many days in advance do they book? | Defines how much time you will have to resell |
| Average Cancellation | When do they actually cancel? | The later it is, the more risk of a gap |
| Pickup | Are nights sold last minute? | A market with high pickup absorbs cancellations better |
| ADR | What is the value of each lost night? | Multiply the cost of the cancellation |
| Margin | What is the net amount per booking? | Avoid confusing lost revenue with lost profit |
Flexible: When It May Make Sense
It can fit in highly competitive markets, for dates with high resale capacity, or when you need to reduce purchase friction. But you must measure if it attracts lower quality bookings or more cancellations.
Moderate: Balance Between Conversion and Protection
The moderate policy can work when the guest needs some peace of mind and you still have room to resell. Airbnb places its applicable cancellation window a few days before arrival depending on the specific policy in effect.
Firm or Strict: When It Best Protects Cash Flow
It can be useful on non-repeatable dates, events, large villas, Christmas, or high-value stays where a late cancellation is very difficult to replace. Its potential cost is reducing conversion compared to a more flexible option.
Non-Refundable: Selling Certainty in Exchange for a Discount
The non-refundable option is financially interesting because it separates two profiles:
- guest who pays more for flexibility;
- guest who accepts less flexibility in exchange for a discount.
Standard rate: €1,000.
Non-refundable rate with a 10% discount: €900.
If the historical probability of a cancellation that you cannot resell exceeds approximately 10% of the expected value, the non-refundable option can improve income stability. If your cancellations are almost always resold, you may be giving away margin.
Do Not Compare Policies by Bookings, Compare Them by Expected Income
A flexible policy may generate 12 bookings and a firm one 10. That is not enough to decide.
Expected Income = bookings × average net income × probability of finally collecting the stay.
Significant disruptive events and other exceptions from Airbnb may allow refunds even when the host has a specific policy. The policy does not eliminate all risks.
How to Test It for 30 Days
- Measure cancellations by booking date and cancellation date.
- Mark if the canceled night was resold.
- Calculate the net income finally recovered.
- Compare flexible/moderate/firm/non-refundable by segment or season.
- Do not change all your dates at once.
The best policy is the one that maximizes expected income, not the one that “sounds safer”.
In markets with high resale, flexibility may convert better. On high-value dates with little possibility of replacement, protecting cash flow weighs more. And the non-refundable option can serve to offer both at the same time.
Frequently Asked Questions
Does the non-refundable rate always have a 10% discount?
No. Airbnb indicates that the host sets the discount and that it is usually 10% outside of China.
Does a firm policy eliminate cancellations?
No. It reduces certain refunds based on conditions, but exceptions and events covered by Airbnb policies still exist.
What metric should I look at?
Net income finally collected per available booking, in addition to cancellation rate and percentage of nights resold.
Sources and Methodology
Airbnb Help Center: cancellation policies. Source.
Airbnb Help Center: non-refundable option with discount. Source.
The examples are Gatavia scenarios, not universal statistics.
Gatavia · More clarity. More time. More life.