It is to make clear to users the period of time during which they can cancel their reservations. This will encourage travelers to plan their vacations carefully. Also, for the owner, it will protect against last minute cancellation of reservations from users.
In order to do this, define an appropriate cancellation policy beforehand, and clearly state it in a way that is easy for users to understand. It is also important to remember that you must abide by your cancellation policy and treat all travelers equally.