Below is is an extract of a document from the ACCC website re travel and accommodation cancellation fees and prepayments. I think it is a matter of treading carefully, as if you can reasonably sell the room, or do, you need to refund the guest. No shows with no possibility of selling the room are one thing, but cancellations ahead of time are slightly different.

"Cancellation fees
Your ability to claim cancellation costs from a customer depends on certain factors. If you charge a cancellation fee, booking fee or administrative charge, it should not be excessive; otherwise, it may be regarded as an unfair contract term. You should consider limiting the fee to the reasonable costs associated with making the booking and, if relevant, preparing the accommodation for the customer's arrival, or reserving services for their use.
If the guest has paid you a deposit, then cancels the booking without a good reason (for example, if they just change their mind), you will usually be able to keep the deposit depending on the terms of the contract.
Generally, a fair deposit should not be more than 10 per cent of the total cost of the accommodation or service booked, unless your potential loss or inconvenience justifies a higher amount. Otherwise, such a higher amount may be seen as a pre-payment. Pre-payments are refundable, minus any actual or reasonable costs you may have incurred before the booking was cancelled.
Cutting your losses
Before applying your cancellation policy, take into account the likelihood that losses can be limited by re-booking another guest. While the chances of re-booking get smaller closer to the booking date, you should make reasonable efforts. If you re-book the accommodation for the same price, it may be difficult to argue that you have the right to impose a cancellation fee, except for costs already incurred.
If the contract allows you to reclaim losses from a customer, without taking reasonable steps to avoid them, it may be deemed unfair under the ACL. This could include any terms that allow you to claim the total cost of accommodation from a guest regardless of when they cancel the booking.
Deducting cancellation fees from credit cards
If you record credit card details when confirming a booking by phone, advise customers at the time that their card will be charged if they cancel and ensure they accept that condition. If you don't, it may be considered an unauthorised transaction under the Australian Securities and Investments Commission's ePayments Code, which may apply to your bank. To be safe, give reservations staff a script to follow.
By issuing a written confirmation, you can also prove to the credit card company that you met their conditions."

more info can be found by googling "cancellation policy motels australia accc" then going to the Word doc under the heading "Consumer Cancellations Australian Competition and consumer..."