Hi @Holly835
I agree with you that if the host is using smart pricing and the accommodation is near the coast, the January price will likely be more expensive now if the dates had to be re-booked. You can check the prices of unbooked January nights on the host's calendar.
Here's what I would do. Message the host:
Hi X, thank you for getting back to us about the cancellation. Before we cancel, we just wanted to get some feedback from experienced users in the Airbnb Community Center to decide how to proceed. I have therefore posted the following message (see below) and will wait for some replies and then get back to you [Paste the entire message that you posted here, in the message thread].
Hopefully when the host reads it the way you explain it and thinks from the perspective of an independent reader, they will re-think their position.