@Linda182 I have a strict policy and in the past when I have given full refunds before the people arrived, meaning Airbnb still held their money, I was always given an option (after the guest had cancelled), to click a button to refund the full amount to the guest. Not sure if that is available anymore. However, that does not include Airbnb fees, only it can decide whether to return that amount.
p.s. If they send an alteration request, for example change the dates to a one night stay and you accept, that may be a way to get them pretty much all their money back because it would include removing Airbnb fees from all nights bar that one night. And if your policy is flexible it should be easy for them to cancel the one night and receive all monies back (except the fee for the one night that Airbnb may refuse to refund).