Hi Marin, read what kind of cancellation policy he has, you didn’t tell us when your trip is, but I assume this is more than a week in advance. This is the link that explains the cancellations www.airbnb.com/home/cancellation_policies
First let me tell you that I am so glad Airbnb changed its policy and now punish the hosts that wish to cancel. I got 9 cancelation by hosts last year during my vacation and it’s a horrible situation to be in, especially when you are already traveling and have to spend your vacation “fun and relaxing” time, looking for a new place, at a more expensive rate in areas that are not your first choice.
I think he is asking you to cancel since he will have pay a fine for canceling your booking, and lose his super host status, if he has one. I would advise you to have a second option in place, in case he decides to face the consequences of canceling himself. This link explains how host cancelations work:
www.airbnb.com/help/article/990/how-do-host-cancellation-penalties-work
If you agree to cancel yourself (even though you are not required to do so) the fees won’t be refunded to you, that’s why he is offering to pay for those. Something important to keep in mind is whether you book an entire place or a private room, you don’t want to be in a place where you are not welcome, even thought is not your fault. Also look if there are other places that fit your desired location are in the same price range, before making a decision.