Hi Kate,
When you sign up to any OTA (online travel agent), you set YOUR cancellation policies. So whatever you feel comfortable with, is what you do, and should be the same across all OTAs.
Our policy is, the guest has up to 24 hours prior to check in to receive a full refund, so if they are checking it Tuesday for a 3 day stay, they have until 2pm on Monday to cancel or alter their booking after that they, they lose their first night's tariff. If they fail to show they lose the lot. 2 big brand name motels are now putting 24hour cancellation policy in place.
We also take the first night's tariff to secure the booking. Don't just "hold" the room, as this gives them no incentive to get back and book it or to cancel it!
You are crazy to be holding 2 rooms for them,that means that you are potentially losing money as no-one else can book that room, then the original only takes one room you have then lost that room and the money!!
I have always argued that EVERY accommodation provider should follow the same policies across the board. the same as us, 24 hour cancellation. That way the guest doesn't get confused with all different policies.
Good luck!