Thank you ,Fred,for your advise.I did the cancellation over the phone with Airbnb staff as it was the first time I had ever done it and wanted to make sure it was all well.This helpful staff member was very positive in her response to my request and said it was ok as it was an instant booking and I had never cancelled before.Only later on did I see some other (not so positive) comments by other hosts in regards to cancellations and got a little worried.
Incidentally ,we just got our first enquiry for winter for this property so perhaps it was just a lull in the bookings department:).
Thanks again for your time to respond.
Kind regards,Sanna