About the color lines on the calendar... yes it's related to pricing. If your price is at or below Airbnb's suggested price (based on their algorythyms of supply and demand and other factors), the date will show as blue (blue-green). For our listing I typically see if it is above their suggested price but less than $20 more, it will show as yellow. If it is $20 or more above their suggested price, it will show as red (red-orange). Try changing the pricing on your calendar and see what happens.
The areas on your calendar that are grey (not available for new reservations or green (shows the specific dates a particular guest is booked) are helpful for you so can see your reservations at a glance.
The Airbnb algorythyms don't take into account the particular aspects of your listing that make it unique. Airbnb also doesn't know the special events in your city that might attract guests. Airbnb uses supply and demand data based on general information for your type of listing in your area and your reservation history. You are responsible for your own pricing. Lowering a price doesn't always generate more traffic and raising a price doesn't always bring you a higher quality of guest. Find your own comfort spot.
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FYI... What happens to the calendar when you cancel or decline.... bookings and requests and inquiries...
If a guest had a confirmed reservation and then you cancel it, the dates will no longer be available on your calendar for other guests.
If a guest requested a reservation and you declined the request, the dates will still show.
If a guest sends an inquiry and you respond, you don't have to pre-approve or decline. After your conversation with a potential guest, if you don't have enough information to feel comfortable about pre-approving, you don't need to decline. Instead you can go to your dashboard and "dismiss" the conversation, then you won't be prompted again to pre-approve or decline.
Remember if you decline too many reservation requests and/or inquiries, it will work against you. Airbnb knows guests don't feel good when their requests and inquiries are declined. So, if you decline often, it will affect your listing placement. Airbnb might even contact you to remove a listing if you decline too many guests (requests or inquiries). If you cancel someone who has a confirmed reservation, it is really bad and you will be heavily penalized for that.