Cancellation Policy: More or Less Bookings?

[Michael2496]

Hey Everyone,

Was curious if anyone has done any "A/B testing" with cancellation policies and what the outcome was? Did you find you had more bookings with a more flexible or with a stricter policy?

I initially had it this setting on 'Flexible' as my logic was that I would be giving my guests the biggest freedom of choice and last minute cancellations. However, then a friend I spoke to (from a guest perspective) told me she always searches for places with a strict cancellation policy because she doesnt want the host cancelling on her at the last minute. (eg: on Flexible, the guest gets a full refund, 1 day prior to arrival - similarly, if I were to cancel as the Host from the Host side - I would be allowed to cancel 1 day prior to arrival?)

I think her understanding of the cancellation policy is wrong and its not like that - but back to the original question as the focus of this conversation...

Thanks in advance!

[Francesco1366]

Hi @Michael2496,

I think that even if someone did a test it would not be valid, unless he have many, many and many rooms and apartments. Each of us is too small to reach significant numbers for a valid test.

At least for Italy, the flexible policy refers only to the guest's cancellation policy. I am convinced that this is everywhere. The host maintains the same policy and cannot choose it.

For this reason, I have no doubt that with the more flexible cancellation policies (if the guests understand them well and I believe they do in most cases) the ad has a greater potential for receiving bookings. But even if you put the price at 0.

[Naomi208]

Hi @Michael2496

That’s very interesting question . From my understanding and experience it’s hard to predict what works well for this industry,

since l started 2017 l have been on strict to avoid unnecessary cancellation. However we had CLs summit recently, we were advised to use firm.  It’s hard to know what works well for hosts.

l always hope for the best!

[Anna9170]

Now is a time when nobody is sure about tomorrow, and "strict cancellation rules" can be applied to a very specific type of housing. If we are talking about a more or less standard type of accommodation, all guests are looking for moderate return rules. Nobody wants to risk losing their money because of the strange situation in the world.

[Francesco1366]

It also depends a lot on where the booking comes from, the workers more or less always have guaranteed mobility. Or even those who live nearby. I agree with you, I don't believe in "nobody". Maybe I'm too positive!

Then I think that the cancellation policies are so important for those who rent a single room or a little more. It may be worth not receiving reservations here unless under certain conditions. Not that one can cancel the day before leaving with absolutely nothing. Better to search through other channels for workers or very close vacationers for longer periods. But obviously it is not always possible and each case is different.

@Anna9170 

[Debra300]

@Michael2496,

I originally had a strict, but now have a moderate cancellation policy for my Atlanta apartment.  I really don't see that much difference in the advance notice of the bookings.  My guests still seem to book between 2 and 10 days before scheduled arrival.  I prefer this, because with a flexible cancellation policy, you could potentially have your calendar booked for months, and then have a cancellation shortly before the date of arrival.  Leaving you little to no opportunity to get a replacement booking.

[Sarah977]

Your friend is indeed incorrect about the cancellation policy having any bearing on the host if it's a host-end cancellation. Any host can cancel any booking at any time- the penalties they receive have nothing to do with the cancellation policy.

What a lot of seasoned Airbnb guests, (especially those who are also hosts, so understand how it works) say though, is that they tend to choose Superhost listings, since they know that hosts will lose that status if they cancel a reservation, so Superhosts who are concerned about maintaining that status are unlikely to cancel a guest booking.

@Michael2496 

[Anonymous]

@Michael2496  As @Sarah977 pointed out, the host's cancellation policy has absolutely nothing to do with what policy applies if the host cancels. It's not a 2-way street.

I can't really back up the thing about only booking with Superhosts - a few hours in these forums and you'll see that little badge next to the unhinged rants of some shockingly crass and ignorant people who I wouldn't trust to make a coffee, let alone entrust with my holiday plans. And there's no way to know whether a host takes that thing seriously enough to be concerned about keeping it.

I don't know how the "Cancellation Flexibility" binary filter has impacted bookings since it was implemented. But most guests whom I've talked to about the different policies have been unaware of how they work and find Airbnb's verbiage confusing. I would say, though, that if your location doesn't get a lot of last-minute bookings, a cancellation under Flexible terms has a real and tangible cost to you, whereas a noncommittal guest choosing not to book because of the inflexibility leaves the door open for a more desirable outcome.

[Sarah977]

I can't see any advantage for a host to have a flexible policy unless they have the type and location of listing that means they are pretty much always assured of getting last minute bookings to fill the space, or they just don't care much because Airbnb is basically a small sideline for them. 

I wouldn't want to clean and prepare the place for a guest only to have them cancel last-minute.

I've always used moderate. If I were a guest, I wouldn't want to book a place with a Strict policy myself and as a host I wouldn't want to have to deal with guests raging about having to pay 50% for a booking they cancelled well in advance.

I don't think most guests, unless they are seasoned Airbnbers, or quite thorough people who read everything, really pay much attention to the cancellation policy, and even if they do, they often find it confusing, as evidenced by many guest posts here on the forum who are enraged that they don't get a full refund for a booking they cancelled. 

@Michael2496

[Inna22]

@Michael2496 I did test this out. I had two listings for one of my properties. One of the listings offered a lot more amenities than the other (full daily breakfast etc) one but I only opened availability at the last minute to fill empty dates. When Covid started Airbnb stated they would promote listings with flexible policy. I opened both calendars for same time frame and made the listing with more amenities flexible. No difference in the number of reservations. Only in the number of cancellations. Most on flexible cancelled and got full refund. I am back to strict

[Jm16]

I just did over a 6 months period with 3 units being strict vs 3 units being moderate.

Strict beats moderate in terms of revenue, hands down. I even had some d*cks cancel slighly before the grace period ended to rebook the same unit at a lower rate because the dynamic pricing would lower the rate to try to fill last minute.

Switched everything back to strict tonight.