When handling guest cancellations and refunds for short-term rentals in Dubai, it's essential to strike a balance between protecting your income and providing flexibility for guests. Here are the best practices to follow:

1. Choose the Right Cancellation Policy

   Cancellation policies can range from flexible to strict. Each has its advantages depending on your property type and booking trends:

   • Flexible Policy: Offers full refunds up to 24-48 hours before check-in. This policy tends to attract more bookings, particularly during off-peak seasons when guests are unsure of their plans. However, it puts you at risk of last-minute cancellations​.

   • Moderate Policy: Guests can cancel up to five days before check-in for a full refund, and cancellations within 24-48 hours before check-in may result in partial refunds. This is a balanced approach that gives you time to rebook your property while offering some guest flexibility​.

   • Strict Policy: Provides maximum protection for you as a host. Guests must cancel at least 30 days in advance to receive a full refund. Cancellations within 7-14 days may result in a 50% refund, and no refunds are given for cancellations within a week. This is ideal for high-demand properties but may deter some bookings​.

   
   

2. Clearly Communicate Your Policy

   Make sure your cancellation and refund policies are clearly displayed during the booking process, and send guests a confirmation including this information. This reduces confusion and ensures guests are aware of the terms upfront​.

   
   

3. Offer Refunds for Force Majeure Events

   For events outside the guest's control, such as natural disasters or serious illness (often classified as force majeure), consider offering a full refund. While not legally required in all cases, doing so can help maintain good relations and protect your reputation​.

   
   

4. Use a Non-Refundable Option for Discounted Rates

   To protect against last-minute cancellations while still offering lower rates, you can offer a non-refundable option. Guests pay a reduced price but agree that they won't receive a refund if they cancel. This approach appeals to budget-conscious travelers​.

   
   

5. Encourage Travel Insurance

   If you have a strict cancellation policy, recommend that guests purchase travel insurance to cover unforeseen changes in their plans. This helps alleviate concerns about potential losses if they need to cancel at the last minute​.

By carefully choosing the right cancellation policy, clearly communicating it to guests, and offering flexibility in exceptional circumstances, you can protect your income while still offering great service to your guests.