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You’ve just listed your vacation rental property, bookings are rolling in, and then life happens – a guest cancels on you.
Who knows? Maybe it’s a sandstorm, a global event, or the guest’s flight got canceled. Anything could’ve happened — and this is exactly why you need a rock-solid cancellation policy – so your rental income doesn’t suffer.
In this blog, you’ll learn the best cancellation policies for short term rentals, and exactly how to choose the best one.
Let’s goooooo!
Choosing the right cancellation policy isn’t always straightforward. Like picking the perfect location for your Airbnb, your policy needs to balance protecting your income while staying attractive to guests.
Let’s break down the different types of cancellation policies and see which one fits your property best.
Flexible vacation rental cancellation policies are the most guest-friendly option, typically offering full refunds up until 24-48 hours before check-in. These are the “cool aunts” of cancellation policies and they’re perfect if you’re just starting out or operating in a competitive area. But don’t mistake flexibility for weakness – these policies can actually boost your bookings in the right market.
Flexible vacation rental cancellation policies are best suited for:
Photo by: Antoni Shkraba
Moderate holiday homes cancellation policies strike a balance between host protection and guest flexibility, usually requiring 5-7 days notice for full refunds. These cancellation policies are not too strict, not too lenient. They strike the perfect balance between protecting your interests and keeping guests happy.
Moderate holiday homes cancellation policies are best suited for:
Strict vacation rental cancellation policies offer the most protection for hosts but may impact booking volumes. These policies typically require 14-30 days notice for any refund. It’s like your property’s bouncer – keeping your calendar protected but might scare away some potential guests.
Strict short rental cancellation policies are best suited for:
The cancellation policy for your holiday home should align with your property type, location, and target market to maximize bookings while protecting your interests.
Photo by Thirdman
Here’s a comprehensive breakdown of what influences your vacation rental cancellation policy decision:
If you’re in prime tourist areas like Downtown or Palm Jumeirah, you can afford to be stricter with your terms.
The consistently high demand means you’ll still attract bookings, and the premium rate will also justify stronger booking protection. Plus, the steady year-round flow of tourists means you’re less impacted by cancellations.
However, if your property sits in secondary locations like JVC or Sports City, you’ll want to take a more flexible approach. These areas often need more competitive pricing strategies, and your cancellation policy should match this flexibility to attract bookings. Since these locations tend to be more affected by seasonal fluctuations, you’ll also need to adapt your policy throughout the year to maintain a healthy booking rate.
Different guest types require different cancellation approaches.
During Dubai’s peak season from October through March, you can afford to implement stricter cancellation policies.
Vacation rental guests expect and generally accept firmer terms during these busy months, while higher nightly rates naturally justify stronger booking protection. The limited availability across the city, especially during major events and holidays, means you can maintain a firm stance without losing bookings.
The off-peak season from April to September tells a different story. As temperatures rise and tourism slows, you can loosen those strict policies to encourage more bookings. However, keep in mind that summer bookings typically carry a higher cancellation risk due to Dubai’s extreme heat, so structure your policy to protect against last-minute changes while remaining guest-friendly.
Each short term rental platform has its unique approach to cancellation policies, and knowing these differences is crucial for managing your property effectively.
Photo by cottonbro studio
Airbnb leads the pack with the most versatile cancellation policy options, offering six distinct choices that can match any hosting style. Here’s what you need to know:
For short stays (under 28 nights), Airbnb hosts can choose from four standard policies:
For long stays ( 28+ nights), Airbnb hosts can choose from two standard policies:
Booking.com gives short term rental hosts two main cancellation options.
VRBO also offers two distinct cancellation policies for holiday homes.
On Airbnb, focus on selecting policies that match your local market. Use Super Strict terms for luxury properties. But always remember to adjust your approach seasonally and keep guests informed of any changes.
For Booking.com, success comes from offering a mix. Combine flexible and non-refundable options based on demand. Keep an eye on what your competitors are doing as well and adjust accordingly.
On VRBO, tailor your policy to your property type and typical booking patterns. If guests usually book six months ahead, your cancellation window should reflect this. Like other platforms, stay flexible with seasonal changes and regularly check if your policies align with similar properties in your area.
Photo by fauxels
Ready to set up your vacation rental guest cancellation policy? Let’s break it down into simple, actionable steps that’ll protect both you and your guests.
Step 1 — Pick Your Platform Settings: Choose ‘Strict’ or ‘Flexible’ on Airbnb and Booking.com. For VRBO, you’ll need to select between their 14-day and 60-day options.
Step 2 — Write Clear Rules: Think about how you’d explain your policy to a friend. If they can understand it easily, your guests will too. Keep it simple and clear, e.g “Cancel 30 days before check-in for a full refund. Cancel 14 days before for 50% back. No refund after that.” Don’t complicate it.
Step 3 — Double-Check Local Rules: If your vacation rental is in Dubai, make sure your policy follows Dubai Tourism’s guidelines – as the government updates these pretty often.
Dubai’s seasons are super distinct, and your cancellation policy should reflect these changes. Let’s break down your seasonal strategy.
During these golden months, your property is in high demand. Here’s how to protect your bookings:
Homevy Tip: Keep your peak season policies strict but fair. Remember, you’re not trying to punish guests – you’re protecting your business during your most profitable months.
Reduce your cancellation notice period to 3-5 days to encourage more bookings in slower months. You can also offer free cancellation if temperatures exceed 45°C during booked dates – this shows you understand guest concerns.
For guests booking 14+ nights, give them flexible terms to helping maintain occupancy during quiet periods.
A vacation rental guest cancellation policy is a set of rules that define how and when guests can cancel their bookings, and what refunds they’re entitled to receive. Think of it as your property’s insurance policy – it protects both you and your guests from unexpected circumstances while setting clear expectations from the start.
Your holiday homes cancellation policy directly affects:
The perfect policy isn’t about being the strictest or the most flexible – it’s about finding what works for your property and your guests. Whether you’re managing a luxury penthouse in Downtown Dubai or a studio apartment in JVC, your cancellation policy should protect your interests and keep your bookings flowing.
Keep testing, keep adapting, and most importantly, keep listening to your guests’ feedback.
And if you’re still unsure…just contact Homevy, we’ve got you – always.
Get access to our 5-day training course on managing your vacation rental property in Dubai.
Learn More