@Lawrence0
It sounds to me like you have already decided what you want to do, and just need some moral support in that decision. I back your feeling that you should not refund this guest over and above the amount they would get through your cancellation policy, which in this case, would be just the refund of any cleaning fee, since you have strict policy.
What many hosts do, is they will offer a cancelling guest an additional refund if and only if the host is able to rebook the nights that the guest has cancelled, in proportion to the number of nights rebooked, perhaps less an administrative fee for the time involved to do this extra work. So if your guest booked 5 nights, and you manage to rebook 2 of those nights, you could give the guest a 2/5 refund of what you were paid for that guests' reservation, less any administrative fee you might want to charge for the your time. You dont' need to offer this, but many hosts find it is a good compromise, because it can lead to a "win-win" situation where neither side loses out completely.
Of course, guests have to understand when they book that they are held to the cancellation policy they book under, but in practice what hosts find is that some guests are happy with any cancellation policy, as long as it does not really apply to them! Once they find that the rules/policies they agreed to, do ACTUALLY apply to them, some guests get bent out of shape. It can be helpful for hosts to recommend that guests purchase travelers' insurance, which will compensate them if they need to cancel their trip.
