@Kris3109 It sounds like you have a moderate cancellation policy. So the guest will get 50% back at this point minus the Airbnb service fee.
Do not engage with guests about this, other than to tell them to go ahead and cancel, and that Airbnb handles the refunds after he has cancelled. There's nothing for you to do re cancelling.
You will likely get a message through Airbnb asking if you will refund in full. Decline it. Say no. Don't be afraid to do this- we hosts have cancellation policies for a reason- don't let yourself be intimidated into waiving the terms of your policy.
And if you get a message saying the guest wants to cancel, asking you to accept or decline, you need to decline that. If you accept, it is registered as a host cancellation and you will receive penalties.
When a guest wants to cancel, the host shouldn't have to be involved at all- the guest simply cancels on their own. Anything else will be to your disadvantage.