Hi Annette,
Yes, I have been penalised. This was because a guest became confused, double-booked, changed the dates several times, and then asked me to cancel the booking. On my record, I have now got a penalty. It is there, in my rating, and I have received a warning from Airbnb that my listing was in peril because of this cancellation.
The reason why my instant booking is not on right now, is because I have JUST disabled it. The instant booking facility was on for several months without my being aware of it, and I could not understand why people were booking when I had not had any chance to vet them. By the time I was aware of their query, they had already paid and were starting to ask questions about bringing extra people, staying extra days, wanting things I was not prepared to offer. And by the way - there was absolutely no notification that the instant booking facility was on, and it took me a long time to find out how to disable it.
Yes, things are informal, because I prefer to correspond with a guest before they arrive. In our correspondence, we decide if we are good fit, and then people confirm their booking and they come to stay. This has worked very well in the past, and in these cases the guests have become friends and we have stayed in touch. When the instant booking was introduced - as I said, without my knowledge or consent - that is when the problems started as I had no way to vetting or checking the guests before the time. I would NEVER accept a booking until I had had a chance to engage with them.
So... I must challenge your last sentence. Things will fall into place once the instant booking facility is removed. I am not hosting people for the money, I am hosting because I would like to meet people from other places, and show them our city and our country. I would like them to feel that they are visiting a family, not an accommodation facility. I am happy to go the nth degree for the right people, not people looking for freebies or dodgy people wanting to take advantage of the service.