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I don’t feel like I should have to be returning the service fees to them however.
I’ve offered them a place in my new location, which like I mentioned is not far from my current location and still has all the amenities and accessibility that my current place does.
There is maybe a 5-10min longer ride time to the location he needs to get to, that’s the only difference.
You were lucky. You, the host, made the material change in the stay, not the guest. For some, ten minutes longer away is a big deal. The guest should not be made to eat the cancellation fee or penalty because you, the host, made a change to the original booking.
That said, the resolution center or alteration feature is a good way to resolve these things.
Unfortunately since you changed the location it’s up to the guest to deside now. Since you offered them a refund it should be FULL refund not partial. You still need to refund them their fees. That’s why they want you to cancell bcs they don’t want to loose their fee money . Same as you don’t want to pay your cancelation fees