hello hello youtube this is richard
founder of short-term rental secrets
and also air B&B super hosts one of
the questions that I'm asked constantly
is there are three different
cancellation policies on Airbnb which
one is right for me as a host and I'm
going to give you a framework and a
methodology to think about it so you can
make that decision for yourself I'm also
going to suggest to you that probably
this doesn't matter at some point in the
future maybe as early as 12 months from
now but stay tuned and I'll tell you
about that towards the end of this video
with that said let's get started the
first one is called flexible and that
basically gives the guest all of their
money back if they cancel up to one day
before the trip so in other words if you
have somebody checking in on Saturday as
long as they cancel say Thursday or
depending on what time on Friday they're
going to get all of their money back
that's very guest friendly and probably
will increase your bookings because
people that are traveling a lot love
that flexibility but if you really rely
on that income and you need that money
to make rent or mortgage or car payments
or whatever you use the income for this
may not work because you'll probably
find more cancellations than you
anticipated not necessarily a lot more
but that flexibility comes in frequently
I've had people cancel on me and I use a
much stricter policy and we'll talk
about that in a second so the second
option that Airbnb has is called
moderate and it's exactly that is
between flexible and strict and
basically what it means is that the
guest has up to five days prior to the
trip to cancel to get a hundred percent
of a refund if they do that you get zero
and they get a hundred percent of their
money back if they cancel within that
five day period they get fifty percent
and you keep fifty percent so let's just
talk about what that means if the
check-in is on a Friday they have five
days when you look at a calendar that
would be on a sunday if they cancel
sunday or before they get a hundred
percent of their money back now you need
to understand from your perspective how
much people booked you know sort of last
minute within that five day period if
you're in a really popular place and
you've got great reviews and you often
book within five days this might be a
really good option because now you get
fifty percent of the cancellation plus
the likelihood of rebooking if you're in
a more remote area you only book you
know 30 days out advance this is
probably not a great option because now
getting a hundred percent using a
different policy that we'll talk about
next strict you're only going to get
fifty percent also when somebody gets a
refund you don't include the cleaning
costs because there's been no cleaning
so the question to ask yourself is how
frequently do i book my own property in
what time period and how much do I need
the income if you need the income to
make your mortgage payment or your car
payment or you know pay back student
loans this flexibility while it's great
for the guests may not work for you and
I don't think you're going to see that
many additional bookings in the moderate
I do think you'll see it on the flexible
but not so much in the moderate that
said it's clearly an option and probably
tens of thousands of users use the
moderate so while I personally don't see
value there must be some if you use it
and you like it you recommend it please
go ahead and leave comments on this
video so we all learn from you the third
policies called strict and it's just
that this is the one that I happen to
use and I'll explain to you why but
first the terms so a guest has up to
seven days in advance to get fifty
percent of their money back so instead
of five days in the moderate it's now
pushed to a full week if they cancel a
week in advance they get fifty percent
if they cancel within that seven days
they get zero now the reason that I use
it the reason that i recommend it is
unlike a hotel i only have one property
and i need the income for making
mortgage payments and the like and so if
somebody cancels i don't know with
certainty that i'm going to be able to
rebook that yet i do know with certainty
that i need the money so for me I would
rather have people that are like-minded
and are certain that they're coming and
they selected my place for the right
reasons and then they're coming I've had
so few cancellations seven days prior I
can't even think of any actually that's
not sure I had one but one out of
hundreds but believe it or not I've had
many people cancel either within that
seven-day period or even after they've
checked in and I've made other videos
about that too and in that particular
case it's super friendly and helpful to
me as the host that I've got the terms
and the policies on my side and at that
point I can decide whether I want to
refund something back to the guests are
not based on their circum
stances or whatever but the decision is
entirely in my court and air B&B is on
my side so I hinted at this in the
beginning of the video and here's my
prognostication of what I think is going
to happen going forward it's evident to
me that the biggest bottleneck and the
greatest frustration from a booking
perspective is that a guest looking to
book a trip somewhere let's just say
Florida is going to compete on expedia
with Marriott and Hilton and so on and
they're going to start to see homes
there's already seeing them on certain
platforms and Expedia just bought vrbo
and home away and so it's really hard to
compete with instant availability and
total flexibility in the cancellation
with wait 2-3 days for a host to get
back to you super strict cancellation
policy it just as an impediment to
actually completing the transaction so
my gut tells me it's going to move much
more guest friendly over time but
there's a couple considerations one
Airbnb and vrbo have the ability to
influence you and how you behave as a
host like they can charge fees or
greater fees I think there's an
experiment happening right now in Italy
so that if you're flexible the amount of
hosting fees that you pay as the host is
less if you're in the moderate it's a
little bit more and if you're in the
strict they'll let you play that game
but they're going to charge you much
more my gut tells me they're probably
going to roll this thing out everywhere
and try and force your hand into a more
flexible position which is more guest
friendly and more air B&B friendly
because they get more bookings now
that's the concept but here's what you
need to understand from your perspective
and the money in your pocket which is
really all I care about right when
you're the marriott hotel you have 273
rooms one or two last-minute
cancellations don't really affect your
revenue your quarter you know you've
already got the building there and it's
okay you're not going to get 273
cancellations you might get one or two
and it's a rounding error and it's built
into your revenue model it's very
different from you as a host and a
homeowner you have one property or maybe
two so the difference between a
last-minute cancellation and having a
hundred percent vacancy versus a strict
policy and having zero vacancy it's
binary it's 0 or 1 and that money if you
need it for your more
your education or whatever you're using
it for you can't have that variability
between zero and one so I personally
think that it's worth whatever fees if
you need the income to go towards a
strict policy if we move that way
they're just experimenting with it but
it's really clear the direction that
everything is going is towards guest
friendly in terms of instant booking and
flexible cancellation policies if you
think this is different please comment
if you have a difference of opinion
about how you use it or how you see the
world please share it with us so we can
all benefit and in the meantime I'm
going to sign off and thank you for your
time and interest like the video
subscribe to the channel we've got tons
more content coming your way with the
explicit goal of just putting more
revenue in your pocket and happy hosting
thanks so very much have a great day