If the owner cancels after the stay begins they can get a refund of 50% off for the first 7 days canceled and 100% for any additional days canceled.
Just an FYI- you have your cancellation policy marked as flexible. You are able to change that to moderate or strict if you choose to.
Although, it would not make a difference in this situation because the stay had already began. (The cancellation policy is the same for all 3 policies once their stay begins.) What makes them different is how much notice they need to give you prior to their reservation starting to receive a full refund.
With Flexible for a full refund the client has up until they drop the pet off for their stay to start.
With Moderate for a full refund the client has until 12pm the day prior to the start date
With Strict for a full refund the client has has up until 12pm 1 week prior to the start date of their reservation.