Of course, most of the time it works fine! But there's
no protection possible against situations like this, which in my view are what the guest's travel insurance is for, and cannot be insured against by the owner.
That's what is so bad about this situation. If this happened with one of my direct bookings, they would claim on their insurance. But if it's via AirBnB, the poor owner gets
nothing and no insurance is even needed by the guests! It's appalling.
It's good that it doesn't happen often. But it can, and with a property that sleeps ten, my chances of a last minute booking are effectively zero. I would lose over ten grand if someone pulled this trick on a two week peak season booking. It's just not worth the risk.
For smaller properties I think the greater level of bookings outweighs the possible disadvantages but I still would never put peak weeks on there. You have no protection at all for cancellations like this.
But again it's all down to what works for each person and property, everyone's setup and situation is different
I wish they would have fairer cancellation policies because I think the site functions well for the user, I use it all the time when we travel. Just situations like this that throw problems into sharp relief.