Managing Bookings Cancellations

Understanding how to manage a canceled booking requires knowing that the process varies depending on the booking source. This guide will walk you through the steps of handling cancellations from three different sources:

Direct bookings
Airbnb bookings
Vrbo and Other Channels bookings

TABLE OF CONTENTS

Define cancellation policies

1. Direct bookings

2. Airbnb bookings

3.Vrbo and other channels bookings

Define financial allocation of cancellations

Managing transactions and financials for canceled bookings

Accessing canceled bookings

Handling refunds

1. Handling Cancellations for direct bookings

2. Handling Cancellations for Airbnb bookings

3. Handling Cancellations for other channels

How retained amounts are reflected in your financial reports

Define cancellation policies

When setting up cancellation policies for your bookings, it’s important to tailor them according to the source of the reservation. Different booking channels offer various levels of control and flexibility regarding how cancellations are handled.

1. Direct bookings

For direct bookings, you have complete control over your cancellation policies. To define your policies:

1. Go to Portfolio Management > Payment settings > Policies > Short-Stay Policies from the same menu in the top-right corner.

2. Here, you can set your cancellation policies and payment terms. These will be included in your rental agreement.

2. Airbnb bookings

Airbnb defines its own set of cancellations policies, which are illustrated below. When using Airbnb, you are required to choose one of these options:

Flexible cancellation policy: Guests can cancel up to 24 hours before check-in for a full refund, and you won’t be paid. If they cancel after that, you’ll be paid for each night they stay, plus 1 additional night.
Moderate cancellation policy: Guests can cancel up to 5 days before check-in for a full refund, and you won’t be paid. If they cancel after that, you’ll be paid for each night they stay, plus 1 additional night and 50% for all unspent nights.
Firm cancellation policy: To receive a full refund, guests must cancel at least 30 days before check-in. They can also get a full refund within 48 hours of booking if the cancellation occurs at least 14 days before check-in. If they cancel between 7 and 30 days before check-in, you’ll be paid 50% for all nights. If they cancel less than 7 days before check-in, you’ll be paid 100% for all nights.
Strict cancellation policy: To receive a full refund, guests must cancel within 48 hours of booking and the cancellation must occur at least 14 days before check-in. If they cancel between 7 and 14 days before check-in, you’ll be paid 50% for all nights. If they cancel after that, you’ll be paid 100% for all nights

Note: If Airbnb grants you eligibility, we can also activate the “Super Strict Cancellation Policy” for you.

3. Vrbo and other channels bookings

When dealing with bookings from channel managers like Vrbo or Booking.com, you can also set your cancellation policies, fully integrated with these channels.

You can specify your cancellation terms based on how close to the arrival date the cancellation occurs. For example, you might choose to offer no refunds for cancellations made 0 to 30 days prior to arrival.

Click on “Add Policy +” to input multiple cancellation policies.
To delete a policy, click the “x” next to it.

These policies will apply to cancellations made through the channels.

Define financial allocation of cancellations

In all of the above situations, you’re essentially defining how much you will retain based on when a booking is canceled. For example, if a cancellation occurs within 0 to 30 days before arrival, none of the payment may be refundable. However, Airbnb allows you to select from their predefined policies, which will apply to Airbnb bookings. For direct bookings, there is no automation – everything is manual, and you have the flexibility to set your own policies.

When handling cancellations, the amount retained can either go to you as the property manager or be allocated to the property owner’s fund, depending on your settings. If you choose to allocate the funds to the owner, you can apply a commission to the retained amount, similar to how you apply it to confirmed bookings.

My funds: If you choose for the cancellation amount to be kept by your company, it will contribute to your profit.
Owner funds: If the funds are designated for the property owner, the cancellation fees will be reflected in the owner’s statement minus any commissions.

Managing transactions and financials for canceled bookings

When dealing with canceled bookings, it’s important to know where to find and manage these transactions effectively. The process can vary depending on the source of the booking—whether it’s a direct booking, a channel manager booking, or an Airbnb reservation. This guide will help you navigate these different scenarios and ensure that financials are accurately updated.

Accessing canceled bookings

To track and review canceled bookings, there are several places you can check:

Inbox and Archive Folder: Start by looking in your inbox and the archive folder for any records related to canceled bookings. This is a quick way to find specific transactions that may need further attention.
Reports: For a more comprehensive view, head to the Reports section.
- Go to the top right corner menu and select Business Management > Reports.
- Select the Bookings tab.
- Under Booking type, apply the filter for “Canceled” status to see all canceled bookings.
- Click on Filter. Canceled bookings will be displayed in gray, making them easy to identify.

Payment Manager: In the Payment Manager, you can also filter to show only canceled bookings. This allows you to focus on these transactions separately from other reservations.
- Go to the top right corner menu and select Business Management > Payment manager.

- In the Status filter, choose the “Canceled” option only.

Owner Statements: If the canceled bookings are marked as “Owner funds” they will also flow into the Owner’s Statement.
- Go to the top right corner menu and select Owner management > Owner Statements. This section will show both confirmed and canceled bookings.

- Canceled bookings will appear grayed out, and you will see the retained amount instead of the full booking total. This section also shows any applicable commissions that will be deducted and sent to the owner.

Handling refunds

The process for managing refunds differs based on the booking source. Below are the steps for handling cancellations from three distinct sources:

1. Handling Cancellations for direct bookings

If you need to cancel a booking and issue a refund, it’s crucial to follow these steps in the correct order, as listed below, to ensure everything is processed properly:

Check Received Payments: Before canceling a booking, review the payments you have received through the Manage payments option, in the Communications Manager.

This helps you confirm the exact amount that was collected.

Process Refunds:
- If the payment is received by credit card, process the refund directly to the guest’s credit card.

- If you don’t have a credit card on file, request bank transfer details from the guest and transfer them the refund.
Update Retained Funds: Make sure to update the refunded amount in the system to reflect the correct figures.
- Enter the retained amount into the system and save your changes.

- The system will prompt you to confirm the cancellation.

- Once you click on Send, the booking will be canceled, and the financial records will be updated.

2. Handling Cancellations for Airbnb bookings

Airbnb bookings follow a different procedure for cancellations:

If the guest cancels, the booking is automatically canceled in 365Villas, and the retained amount and channel fee are updated automatically.
If as the host cancels, the booking is automatically canceled in 365Villas, and the retained amount and channel fee are updated automatically.

Note: If after the cancellations you come with a different agreement with your guest, for example, even if you had the right to retain a certain amount you decide to process a full refund, you must update both the retained amount and the channel fee in 365Villas: 365Villas will in fact automatically get the updated retained amount and channel fee only at the moment of cancellations. Any further refunds done in Airbnb after the cancellations will not be sent to 365Villas automatically.

3. Handling Cancellations for other channels

When dealing with cancellations from other channels, such as Vrbo or Booking.com, keep these points in mind:

Automatic Cancellations: If a guest cancels a booking through a channel, the cancellation is processed automatically. However, channels may not always send updated information about the retained amount.
Update Information: Follow the same steps explained at point 1: “1. Booking cancellation in 365Villas”. In addition to the retained amount, you will also need to update the channel fee.

Therefore, if necessary, you can adjust the retained funds amount here, as well as the channel fee. Failing to update these figures could result in inaccurate information on your profit and loss statement, and more importantly, on your owner’s statement if you are sharing the retained funds with them.

How retained amounts are reflected in your financial reports

Profit and Loss Statement:

The retained amount from canceled bookings will appear in your profit and loss statement under the Business Management > Integrated Accounting > Tools/Reports > Profit & Loss section.
You can view the revenue you’ve generated, particularly from cancellations, and adjust it as needed in the booking editor if you’ve chosen to allocate the retained amount to the property owner.

We covered how to manage booking cancellations in 365Villas. As usual, you have maximum control over direct bookings, though there’s slightly less flexibility but more automation when it comes to channel bookings, particularly with Airbnb.