Refunds - How would you handle this?

[Denis Ponder]

I have the moderate cancellation policy through AirBnB, and our guest did not cancel 5 days out, so they are being charged a fee.  Based on the policy, I understand that.  However, the nights they cancelled have already been completely filled by other guests, so I didn't really lose the opportunity to generate income.  The nightly fee was higher when the original guest booked due to how far out they booked it, but that's not a serious amount of money.  I feel bad taking money from the guest who cancelled when those nights have been booked and covered by other guests.  Would you refund the guest who cancelled (claims it was due to illness), or take what the cancellation policy allows me to take on top of the money I will get from the nights being booked?