Cancelled guests & rebooked nights. How do you calculate extra refunds?

[Huma0]

Hello, I host long term guests (covered by long term cancellation policy) or occasionally slightly shorter stays (with a Strict policy). I usually offer to refund the guest extra for nights that get rebooked.

However, how do you go about deciding what this amount should be, as I am not sure that it's always straightforward.

Example 1:

Guest books long term, cancels after any grace period or and has to pay for the first month. Another guest books 14 nights of that first month. I would refund the first guest for 14 nights x accommodation fees, excluding any Airbnb fees. This seems quite straightforward.

Example 2:

Guest books for 13 nights and cancels more than 7 days ahead of the stay, so gets back 50% of the accommodation fees. Another guest books 6 of those nights. Not so straightforward.

Do I 

1. Refund the full accommodation fee for the 6 nights, seeing as I should be getting paid in full for those specific nights, even though the other nights remain unbooked?

2. Refund 50% of the fee for 6 nights, seeing as the guest has already been refunded 50%?

3. Look at the income/loss for the whole 13 nights, i.e. only refund any extra I would receive or nothing if I am still making a loss compared to the original booking?

Hope I've explained it clearly!

[Huma0]

PS, I know that it's best to wait to refund the guest until I have received the payment for the second booking from Airbnb.

[Pat271]

I don’t typically offer to refund rebooked days, because for all I know, the guest may have trip insurance, reimbursement from his place of employment, etc. and will be refunded his/her out-of-pocket costs anyway. I consider any payout of a cancelled reservation as more of a fee, rather than rent received.

Having said that, I can certainly understand having more of a “sharing the burden” philosophy, whereby the host shares gains and losses of future rebookings with the guest. Looking at it that way, I’d take each day separately.

If the cancellation policy says no accommodation charges are reimbursed to the guest, then I would refund the guest 1 night for each night rebooked.

If the cancellation policy says 50% of the accommodation charges are reimbursed, then I would refund the guest 50% of each night rebooked.

There is also the question of the Airbnb host fee. Some hosts have chosen to pay all of the guest and host Airbnb fees, which can amount to as much as 17% of the accommodation charges. I would feel compelled to eat whatever host Airbnb fee is in force, as there was never an expectation that the guest would have to contribute to this fee.

I would tend not to think of subsequent rebookings as trying to “make myself whole”, as some of your options suggest. As the host, I know very well the consequences of the policy I myself have set, and that includes the possibility that I may have cancellations that cause a reduction in my payout. If I’m able to rebook, that’s great. If not, that’s too bad, but I expect and accept that from time to time with the policy I have set.

[Huma0]

@Pat271 

Thanks for your detailed response. By your theory, option 2 would be the way to go.

However, just to be clear on the point RE "making myself whole", I also know very well the consequences of the policy I set and have no issue with the 50% refund given to the guest. But, on that basis, the guest is not entitled to any further refund.

Any additional refund is a good will gesture on my part. His trip was not cancelled because of me, my listing or because something unexpected happened. He changed his mind.

The guest booked a 13 night stay well in advance during a holiday season. This tied up my calendar for those dates preventing other guests booking. I most likely would have gotten 100% payment for those dates judging by the interest in my other rooms (he booked my most popular room).

So, when deciding what additional refund he gets, I think that is very relevant to factor in the loses of the dates that did not get rebooked. His change of mind cost me money (and cost him money, but it was HIS change of mind and the cancellation policy was clear when he booked). 

Maybe I should just not offer these kinds of additional refunds (it's just goodwill on my side as this guest can't review me anyway), but the idea is to not profit twice by being paid twice for the same booking. If the new booking does not cover the cost of the previous one, there is no profit, so there should, in theory, be no refund...

Had all the nights been rebooked, that would be a totally different matter. I would then refund the remaining 50% of the stay.

[Pat271]

@Huma0  Just to be clear, I, personally, do not offer reimbursement for nights rebooked, because of all of the reasons you just mentioned. 

[Kelly149]

I’d vote for no extra to the first cancelling guest until you’ve gone over and above what their payout would have been and even then I’d account for some admin/annoyance factor for processing/communicating about the res & then later the cancellation. 

and I only talk about “undue” refunds if I’m pushing the cancellation for reasons of my own. If they cancelled all on their own, then they get what they get. 

[Huma0]

@Kelly149 

Yes, that makes sense. I don't know why I sometimes feel 'guilty' about keeping a guest's money when their cancellation has nothing to do with me. 

However, I think you have the right idea. That is how it should work. I would definitely suggest some kind of incentive to get a bad guest out, but if they leaving anyway because of a change of plans, there is no need. And, yes, the time spent on the reservation (this particular example involved a lot of research and communication on my behalf as the guest had many questions about his New Year's plans, what was open etc.)

The problem is partly that I don't trust Airbnb not to erroneously refund them anyway, maybe even in full, overriding my cancellation policy, when there are no extenuating circumstances if the guest then goes to Airbnb trying to get more money back. It has happened far too often in the past couple of years especially.

It seemed wiser to let the guests know that I could and would refund them more if the nights were rebooked so that they understood straight off they were not automatically entitled to a full refund outside of the cancellation policy. These days, people assume because there's a pandemic that they'll just get their money back, whatever the actual reason for cancellation.