Guest booked for 2 but later told me 3 were coming and wanted to have guests but both against house rules

[Ann31968]

Got an inquiry- guy had 0 reviews but he messaged me and I approved and he booked 2 people. We have a small guesthouse with 1 king bed. Then later that night he messaged that he didn’t thoroughly read the house rules and we wanting to have family/ friends come hang out. We offer a private patio/pool and live on the property in the main house. Then he also said they had planned to have their child stay there as well. Both of these items are clear in my house rules which is what I replied and that he could cancel the res and find other accommodations. 
he replied that it was his fault he didn’t read the rules and the space wouldn’t work for them and he would figure it out but he saw my cancellation policy is firm and he would lose $. 
I then emailed support and they called and basically asked “what do you want to do?” I said I’m not canceling it and being dined $ and penalized. I think you should call him and help him find another space and he suffers the fine from my policy. I asked what happens if he doesn’t cancel it but then shows up at the property trying to stay with the girlfriend and kid? I was told then call us. Also I don’t want those dates blocked if he does nothing. I’m a super host with 5.0 stars and no cancellations. Should I call and speak to someone else. This guy didn’t really seem to have a solution 

[Branka-and-Silvia0]

@Ann31968 

Dear xx, I am sorry that you didn't read our listing's description and house rules before booking and put yourself in this position. Please understand, your reservation is for 2 people, there is only one bed for 2 guests,  the price is calculated for 2 guests and our licence/insurance is for just 2 guests. Therefore, additional guests have nowhere to sleep and are not allowed to stay on the property and use the house, garden, or pool... as it would be trespassing and treated like one.

You two are welcome to stay alone or cancel your reservation. Unfortunately, there is no other choice.

OPTIONAL:

If you decide to cancel within the next 24 hours, out of goodwill I am willing to help you out and refund a cleaning fee of $xx and xx% of the nightly price. Please let me know if you agree.

[Kia272]

@Ann31968  Personally, I wouldn't penalize a guest who admitted his mistake and wants to cancel, particularly since this got figured out so soon after he booked. If you called customer service and agreed to HIS cancellation, they would probably give him a full refund, including AirBnB fees.

Think about if you were on the other side. What goes around comes around. It's a situation in which you can be kind, and you're not really suffering a loss, as this was a booking you didn't have 24 hours ago. 

My two cents. 

[Ann31968]

We agreed that he would cancel the reservation and I will refund him. I just wasn’t going to cancel and be penalized.