Hi Joe – It depends on what I’d agreed to upfront. If nothing had been discussed, I feel obligated to pay the fee. If I need to cancel, I’d probably approach the host, ask if we could agree that if I, or if s/he, found a replacement, I wouldn’t need to pay because they weren’t out any money. If s/he agreed, if a substitute were found, I wouldn’t be paying.
If the upfront agreement was, “If you cancel within xx period, you pay the full fee.” Then, I would pay the full fee and it doesn’t matter if they found a replacement, because that is what I agreed to upfront. I understand the need for consistent policies in certain instances to run a business smoothly.
There are other ways that the situation you pose could evolve that would result in me feeling like I’d been treated unfairly, and in such a case, if a discussion couldn’t resolve it, I wouldn’t continue doing business with the person.