I'm sorry you ended up in this situation - what a nightmare to have something break down on the day of check-in!
Here's my input - trying to see it from the guests' point of view (hope you don't take this the wrong way):
- You were able to offer them somewhere else to stay, great! :-). You also offered them the options to cancel, and to stay without hot water.
- But when you think of it, they really did not have any real options. Going back home was probably not an option, finding somewhere else suitable with just a couple of hours' notice might have been difficult, and staying without hot water unacceptable (or at least very uncomfortable). So there really was only one option; the other cabin. Which I'm sure was great, too. I'm just saying they did not have many options.
- You offered them an extra night for free. Which they declined because it did not work for them, or they did not want to stay another night. Which I think would be the case for 95 % of guests. Either because they might have flights booked, or they need to be back/somewhere else at a certain date.
- They paid full price (I think?) for the other cabin - lower price than for the one they booked, but lower for a reason (smaller, not as close to the village, no pool table - maybe the pool table was important?). You say "the rate was lower, so that was good for them". But it probably wasn't good for them. If they wanted the lower rate, they would probably have booked the other cabin from the start...
- So basically, they did not get to stay at the cabin they booked, and they received no compensation for this.
- Should they have told you if they were not happy with the offer of an extra night, and asked for another type of compensation? Absolutely. Me, I would have.
- But people are different. Maybe they were not comfortable asking for anything. Or maybe they just preferred to take what was offered, and sulk. And maybe they are now in contact with Airbnb to ask for a partial refund.
- Or maybe, just maybe, they were perfectly happy with the other cabin. And they were just not the very communicative type, or too busy to communicate. (I had a guest like that this weekend.)
It is what it is, they wrote a review, and you have no idea what they wrote, as you don't know if they were happy or not.
Here's what I would do:
- Send them a message, saying you are sorry for the way things turned out, but it was out of your hands...
- ...and you hope they were still able to enjoy their stay, even if it was not in the cabin they booked
- As they were not able to utilize the extra night you offered, you would instead like to offer them a refund for one night
If they accept, and if it is correct that they can change their review until you post yours (?), then try to find a good way of letting them know this option exists, without being too obvious. You want them to feel you are doing this mainly for them, not for the review.
And if they don't reply, and/or if the review is still bad, then you can at least mention when you comment on their review (which you should), that you offered this compensation.
Good luck!