My listing is set for moderate cancellation settings. When guests cancel, there is a delayed partial payout that comes after a week or so. My hosting experience has been that before that cancellation payment is received, I have a reliable opportunity to win a replacement booking, but my chances depend on lowering my rates. I feel the rate reduction is necessary to adapt to the the smaller number of potential travellers who are "last-minute" bookings. It is my perception that these travellers are more likely to be "looking for steals". I'm totally fine with that, because I can count on the payout from the cancelled booking to make up for the lost remainder.
I'm not the kind of host who intends to "double dip" when a guest cancels, and is followed by a replacement guest for the same dates. That is, I would like to give at least some portion of a refund (beyond the automated refund of cleaning fees) to the cancelling guest. Today, evey bit of that equation is manual for me, and requires dialogue between myself and the cancelling guest (which could be potential for argument), calculations of difference in payouts between update rates, checking my bank to see if a payout posted.... It is too much work, just to try to keept it real, and keep it honest.
What I would like to see from the AirBnB software development team are some NEW FUNCTIONS for hosts using moderate or higher cancellation settings. These new functions would allow a host to automate refunds for the cancelling guest for whom the reservation is subsequently replaced. These functions should allow hosts to choose some common terms for that refund process. Some hosts would choose to double dip. Some hosts would choose to give a "set floor" refund; e.g. Cancelling travellers only get a 20$ refund per replaced booking date. Some hosts could select a percentage of the final payout amount. e.g. for each replaced booking date, a traveller gets 75% of the daily rate the host received. Some like myself would choose a "rate difference minus surcharge" amount. I want to be compensated for the work of the initial booking, engaging in dialogue about refunds, coordinating a replacement booking, tweaking the AirBnB software for a new rate. These are not free tasks. The "rate difference minus surcharge" would look at the replacement booking amount (regadless of cleaning fee) subtract this from the original cancelled booking amount (regardless of cleaning fee), then calculate the difference. The cancelling guest would receive this amount minus a surcharge specified by the host that compensates them for handling the replacemenbt booking, tweaking rates, engaging in dialogue with the cancelling guest.