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What is Moderate Cancellation?
A moderate cancellation policy is a set of rules that dictates the financial consequences of a guest canceling their reservation. It is a middle-ground option between flexible and strict policies.
Typically, it allows for a full refund if the guest cancels well in advance of their stay (e.g., 5, 14, or 30 days prior). Cancellations made after this cutoff point result in a partial or no refund, protecting the host from revenue loss due to last-minute changes.
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How it works
A host selects or defines a moderate cancellation policy within their property management system or on an Online Travel Agency (OTA) listing. The terms are then automatically displayed to potential guests during the booking process.
When a guest requests a cancellation, the platform evaluates the request against the policy's timeline. If the cancellation is made before the specified deadline, a full refund is processed.
If it occurs after the deadline, the platform withholds the payment according to the policy terms and releases it to the host.
Why it matters
This policy is significant because it provides a compromise that can benefit both guests and hosts. It makes a listing more appealing than one with a strict policy by offering guests a reasonable window to cancel without penalty.
For hosts, it offers more security than a flexible policy by protecting them from lost income if a guest cancels too close to the check-in date, when it is difficult to find a replacement booking.
Examples
- A guest books a lakeside cabin with a moderate cancellation policy that offers a full refund for cancellations made at least 14 days before check-in. When their plans change a month before the trip, they cancel and receive a full refund.
- A couple books a city apartment for a weekend. The property has a moderate policy with a 5-day cutoff for a full refund. Two days before their arrival, they must cancel due to a work emergency. Under the policy, they are not entitled to a refund.
- A property manager on Vrbo uses a moderate policy for her portfolio: guests receive a 100% refund if they cancel at least 30 days before check-in, and a 50% refund for cancellations made 14-29 days before. A guest who cancels 20 days prior receives a 50% refund.
- An Airbnb host's moderate policy states guests can cancel up to 5 days before check-in for a full refund. A guest cancels 6 days before their stay and receives their money back for the accommodation, though the Airbnb service fee may not be refunded depending on the platform's rules.
Frequently asked questions
What is the difference between a moderate and a flexible cancellation policy?+
Does a moderate cancellation policy apply to the service fee?+
Can I set my own moderate cancellation policy on my direct booking website?+
Related terms
Cancellation Policy
A set of rules defining the penalties a guest incurs for canceling a reservation and the conditions under which they may receive a refund.
Flexible Cancellation
A flexible cancellation policy is a booking term that allows guests to cancel their reservation for a full refund up until a short period before their…
Cancellation Fee
A cancellation fee is a charge levied against a guest who cancels their reservation within a specified timeframe, as outlined in the property's cancellation…
Rental Agreement
A rental agreement is a legally binding contract between a property owner or manager and a guest. It outlines the terms, conditions, and rules for a short-term…