> but in the past, i always had to confirm,
Some guests prefer to send an inquiry first even when they have the option to instant-book. (To make sure that the host is responsive, maybe ask a question, etc.) It's also possible that you have Instant-Book turned on only for guests with past stays with good reviews, in that case some people can InstantBook but not people who are new to AirBnB.
> so i'm not sure what to do now given that i can't really host at the time booked (and definitely for the prices).
> is there a way to resolve this without getting a bad (cancellation) review?
Well, two things: you only get reviews on completed stays, you don't get a review if either party cancels before their stay (or even during their stay for that matter.) However, if you cancel too much then that may result in being ranked less high up in the search results.
Is the issue the low price? If it's only a couple days then you could just suck it up, call it a learning experience and set pricing properly going forward. But if you cannot host because it's really unavailable then it's best to contact the guest and explain the situation.
I personally blame AirBnB to some degree for this, because they are pushing Instant-Book far too much, to the point that people like you don't really know what they're signing up to. So, yeah.: Cancel. Does't look good on AirBnB in the eyes of the guest, but apparently AirBnB wants it this way.