@Lisa723 Thanks for the response. The issue is not that she did not want to leave. She wanted to get refund of three nights by altering the checkout date today. This leaves me with no time for the rest three days to be booked.
According to my cancellation policy, I asked her to cancel the booking instead of altering it. I did not decline her alteration either, which may further irritate her. Just wonder if I leave her changing request pending by doing nothing, what kind of result will I get.
Just as hosts like to have guests to give chance of correction of any issues after check-in, I also give guests chance to correct their rule breaking behavior instead of cancelling their stay due to their rule breaking. When I pointed out to her about bringing extra guest, she did promise to change and asked her friend to leave before 9pm.
As @Jeff158 mentioned that I will get a bad review either ways, my thinking is why I have to take the financial loss while I gain nothing. My previous experience had a guest canceling two hours after check-in by claiming 71F was too hot. I did tell Airbnb to refund him unused night. But I still got 1 star review across all categories.