How Flexible Cancellation Policies are Driving Success for Vacation Rentals in 2025

When it comes to setting cancellation policies, many vacation rental property managers lean towards strictness, believing it will protect their bookings and allow for precise planning. But recent data from Vrbo, presented at the , turns this traditional logic on its head.

As Senior Connectivity Account Manager at Vrbo Sam Asgar says, “People are looking for flexibility. They’re not looking to cancel.”

In this article we look at the data about cancellation policies, examine the reasons for why stricter cancellation policies can decrease your listing’s conversion rate and what you can give your guests the flexibility they are seeking while still protecting your vacation rental property and business.

The Surprising Truth About Flexible Cancellation Policies

Property managers often assume that implementing strict cancellation rules will discourage cancellations, ensuring stable occupancy. But Vrbo’s insights tell a different story. According to Vrbo’s extensive market analysis — based on 70+ petabytes of first-party data — flexible cancellation policies significantly outperform strict ones in driving bookings without notably increasing the cancellation rate.

In fact, Vrbo data shows that two of the top four factors influencing booking decisions on the platform are:

• Ability to get a full refund

• Flexible policies to change bookings

How Flexible Cancellation Policies Drive Listing Success

Vrbo’s data offers compelling proof of the benefits of adopting a flexible policy.

1. Flexibility increases visibility

Flexible cancellation policies don’t just make your property more attractive; they actively boost visibility. Vrbo receives an impressive 1 billion searches per month with 10 million daily visitors. Properties with flexible cancellation terms benefit from this extensive reach by appearing more prominently in search results, leveraging algorithmic preferences to attract potential guests.

2. Flexibility matches traveler expectations

Vrbo travelers book an average of 89 days in advance and spend 58% more overall compared to other platforms. Implementing flexible policies aligns perfectly with these high-value travelers’ booking behaviors, further boosting revenue potential.

3. Flexibility boosts conversions

Listings featuring relaxed cancellation policies have almost double the conversion rates compared to those with strict policies, significantly outperforming firm, strict and no-refund options.

4. Flexibility doesn’t increase cancellations

Perhaps even more crucially, flexible cancellation policies do not lead to a substantial increase in cancellations. Despite a large proportion of listings adopting relaxed policies, traveler cancellation rates remain relatively low and manageable. This challenges the conventional wisdom that flexibility inherently risks higher cancellations.

5. Flexibility improves revenue

Guests are looking for flexible options, whether that is relaxed or moderate cancellation policies or the ability to book instantly. And listings that don’t offer the option get filtered before they even get a chance to be considered leaving opportunities for revenue on the table.

How to Implement a Flexible Cancellation Policy

If you’re considering shifting to more flexible cancellation policies, here are some practical steps to do so:

• Offer a "relaxed" policy that allows penalty-free cancellations up to a defined window before arrival.

• Clearly communicate your flexible policy to prospective guests in listings, emphasizing peace of mind.

• Leverage automated booking and management tools from Hostaway, which offers AI-driven insights and automation features to streamline communication and effectively manage cancellations or re-bookings.

How to Protect Your Property with a Flexible Policy

Offering flexibility doesn’t mean leaving your property or your vacation rental business exposed. As Hostaway’s Chief Customer Officer Josh Loe says, “There are other options to make sure the right people come stay at your property. There are other ways to be secure rather than add a strict cancellation policy.”

Here are strategies to safeguard your property and revenue while adopting relaxed cancellation policies and Instant Book:

Screen your guests

Use Vrbo’s built-in verification features and require ID checks where possible. You can also opt to use guest screening software for a more comprehensive verification process.

Leverage Hostaway Insurance

Pair flexibility with financial protection through Hostaway Insurance powered by Safely. File a claim in minutes — no guest or OTA interaction required— and get paid within 24 hours.

Set clear house rules

Allowing guests to book instantly doesn’t mean losing control. Define strict house rules — no parties, no unapproved pets or guests and quiet hours — and require guests to accept these before booking.

Use security deposits

Implement refundable security deposits to encourage better guest behavior and additional peace of mind.

Automate communication

Automate guest communication with Hostaway to ensure you’re sending out clear instructions at the right timing and reducing risks tied to last-minute changes.

Bottom Line: Flexibility Pays Off

The evidence is clear: Property managers who offer flexible cancellation policies are not only meeting the changing preferences of today’s travelers — they're also enhancing their booking performance and revenue potential.

Still think flexible policies are risky? Think again. The real risk lies in clinging to outdated practices when data clearly demonstrates the value and profitability of flexibility.

Embrace flexible cancellation policies today and watch your bookings grow.