Managers Do you have a cancellation policy? Is it clearly stated on your website, on your Terms and Conditions, and in your Rental Agreement? Do you know what you will do when a guest with a confirmed booking, calls and asks for their money back because an event has occurred and they need to cancel?If your answer is ‘no’ to any of these questions, take a look at the following scenarios and think about how you would deal with getting an email from a guest to say they cannot proceed with their vacation because a family member has died/fallen ill/lost their job/become pregnant and cannot travel etc., etc.Guest A arrives at the property and stays two days, then calls to say they have to leave because her father has been taken ill and they have to get back to their family.Guest B emails three weeks before the vacation to let you know she has developed an allergic reaction and has to go into hospital for tests over the period of the stay at your property.Guest C wishes to cancel and get her money back because her daughter failed her school year and will be going into summer school over the period of the holiday.Guest D has lost his job unexpectedly and can no longer pay the final balance of the vacation due next week.It can be very challenging to manage these situations. You want to be sympathetic to your guests’ plight and help them out in their time of difficulty, yet on the other hand, you’re aware of the potential financial impact of a late stage cancellation. How can you know if the situation is genuine, or whether you’ve been fed a well-crafted story designed to pull on your emotions?If you have good systems in place to deal with the unexpected and they are clearly stated on your website and in contractual agreements, you’ll have a good foundation for handling each situation.Recommend that guests take out travel insurance. Have some links on your site to a good travel policy and write a short page on the importance of getting insurance. Include some examples of things that could happen and the risks they are taking if they choose to travel uninsured.Create a policy that deals with cancellation at different times in the booking process. How you deal with cancellation and refunds is entirely your choice, but make your policy clear and simply phrased so there is no doubt as to the procedure you will follow if they wish to cancel. Make your policy easy to find on your website and guide your potential guests to it from a Booking Conditions page.Decide on what is acceptable to you, then stick with it. Some owners are OK with refunding a deposit in full before the final payment is made, or a percentage of it; others will only make a refund if the rental period, or a portion of it, can be rebooked.Dealing with cancellation issues is never pleasant, particularly when your guests may be experiencing an emotional situation beyond their control. It is easier when your policies are clearly laid out and simple to understand; when they have signed an agreement with a cancellation clause, and are fully aware of the consequences of uninsured travel.