Revenue management, answered

Which cancellation policy should I use - moderate, firm or strict?

Default to Firm. It balances booking conversion against cancellation risk better than Moderate or Strict for most managed portfolios. Reserve Moderate for slow markets or shoulder season inventory, and Strict only for high-demand properties where you hold significant pricing power.

By Jack Murphy, Head of Revenue Management at UpRev. Running pricing for US vacation rental managers since 2017. Last updated September 1, 2026.

Why Firm Works for Most Managed Portfolios

Firm gives guests a 30-day full-refund window, which reduces friction at the booking decision point without leaving you exposed to last-minute cancellations. For properties in competitive markets, that refund window is often the difference between a confirmed booking and a browser abandonment. It also keeps your occupancy calendar cleaner than Moderate, since guests who book closer to arrival are less likely to cancel under Firm terms.

When to Shift Policies Across Your Portfolio

Move higher-demand units to Strict when you have consistent lead times over 60 days and strong repeat demand, typically peak-season beach or ski properties where you can re-book quickly even after a cancellation. Drop to Moderate on harder-to-fill inventory during shoulder periods to remove booking barriers and compete on more than just price. Review policy assignments quarterly alongside your pacing data, not just at onboarding, because demand conditions shift and a policy set in January may be costing you revenue by March.

Operational Consideration for Your Client Agreements

Make sure your property management agreements explicitly give you authority to set and change cancellation policies without owner approval each time. Owners often push for lenient policies thinking it drives bookings, but your job is to protect revenue per available night, not raw booking volume. When you brief owners, frame cancellation policy as a revenue protection tool, not a guest-relations decision.