I don’t agree that just because it’s out of Host’s control that it is out of the Host’s responsibility. Hosts are required to provide services as described; if they can’t (for whatever reason), then there should be some accommodation based on the severity. Extended Water or Power outage, Broken AC, Egress (a tree blocking a road) are examples of items out of the control of a host, yet if either of those impacted my guest, I’d feel responsible to do something for the guest.
Internet Access has different impact on guests; Someone who is expecting to do work may be tremendously impacted. Someone who is occasionally checking email, has other options (i.e. phone, Starbucks, etc) and has less impact. And I’m of the mindset that I don’t think $50 is an unreasonable discount for someone “not being able to watch Netflix” when they’ve spent a lot of money for a luxury “villa” to enjoy their vacation however they want, and how advertised. $50 would seem to be 25% to 30% of one night (for the luxury villa), not the 50% of the whole stay that ABNB is suggesting to you.
I think 50% is extreme but is dependent on what your rate is, how long their stay is and what real impact it had on them. You offered them a full refund should they want to leave, advising them that it could not be fixed for several days. They elected to stay. In my opinion, that reduces any type of discount that you should offer. BUT you should consider the $ amount of that initial offer, as a benchmark of what might be fair to refund → Had you refunded them fully for the first night, you’d be out a set amount, Right?
Whatever you do I would communicate with them your efforts, status, and apologies. Going out of your way to show your concern may help you with the review. My own experience is in the attached link. Despite the situation I still managed to obtain 5 stars. Good luck!