The guests booked for 4 days with nightly rate of 160GBP. As February is a low season, we offered a discount to encourage more bookings. Guests can stay for one night free if they book for more than three days. Therefore, the guests pay 480GBP for a four night stay.
Everything was fine for the first three days. However, during their last night stay, the water pipe of the apartment upstairs was broken due to bad weather in UK, and hence water was coming down from other apartment to my room. We re-accommodated the guests to another place immediately and issued one night refund (160GBP), even though the last night was already free. Airbnb said they contacted the guests, and the guests accepted the refund.
However, the guests contacted me today and said they were disappointed because they were expecting a full refund (480GBP) as the water leak made them very stressful. She said my insurance would cover my loss, but actually there was no insurance to cover my loss. I am still chasing the owner of the apartment upstairs for the damage of my beds and carpet. I understand her point, but I feel a full refund would be too much. What do you guys think? How do I reply?