Hi @Merlin0,
You should have had the guest cancel. If you cancel for the guest, you are penalized in several ways. Your listing is blocked from anyone booking for the dates you cancelled. You are likely charge a fee and there will be an automatic review in your reviews posted saying that you cancelled a reservation which will not look good to future guests looking at your listing.
As you state the guest wanted to cancel the reservation, I would contact Airbnb with the communication you had with the guest indicating this and explain that you were trying to help the guest and did not know the penalties for cancelling for a guest.
Below are the penalties for cancelling:
Host Cancelling Reservations
David
Superhost Ambassador ~ Host Club Community Leader ~ Experienced Co-Host