Why a cancellation and refund policy is important for holiday home owners


Holiday home cancellations
It is very important that your cancellation and refund policies are clearly outlined in your booking contract.

For holiday home and homestay owners it is very important to have a cancellation and refund policy so that it does away with any kind of ambiguity or misunderstanding between you and the guest later on.

As the owner of a holiday home/ homestay the ideal refund policy is to give travelers limited flexibility in case of cancellation. However you must ensure that it does not hurt your business. Invariably, all terms and conditions or the cancellation and refund policy should be inserted in the rental agreement.

The normal cancellation policy to follow is:

If the guest cancels 10 days before the date of check-in, the entire amount should be returned. But if the guest cancels between the 10th and 3rd day before check-in, a cancellation fee can be charged. Ideally a $ 50 (about Rs 2,700) should be deducted from the rental paid by the guest. However if the guest cancels 3 days before the check-in date, only 25 percent of the booking amount should be refunded. Please refer the table below:

Days until arrival Refund
Before 10 days Full booking deposit
10-3 days Deduct USD 50 
3-1 days  25 percent 
0 (Check-in day) Nothing refunded

Why have a cancellation and refund policy:

When a guest makes a booking and the payment is made, you update your availability calendar. You have to make the arrangements at the holiday home accordingly – cleaning the property, calling the caretaker, the cook or the cleaning person to be stationed on those dates. But when a guest cannot make it on the check-in date, there are very slim chances that you will get a new booking, unless he cancels weeks before the check-in date. It goes without saying that you need to ensure that you are protected in case of cancellations.

So unless you have a strict written cancellation and refund policy which has been agreed upon and signed by the guest, you not only stand to lose financially, but you are also leaving scope of unnecessary argument with the guest. So when a guest books and makes a payment, make sure that he has agreed upon the terms of cancellation and refund.

For guests too, they need to remember that by cancelling hours before the check-in date, the owner of the holiday home/ homestay stands to lose a lot. So before you book an accommodation, make sure that you have discussed the dates with your family or friends (with whom you intent to holiday). This will help you to protect your payments. If you wish to know more on how to go about it you can read our FAQs on the same.