I plan on staying with mandarin oriental on hk and this was their cancellation policy

L450 Superior One King Bed - CXL BY 1400 LOCAL HOTEL TIME ON26AUG10 CXL FEE - 1 NIGHT CXL BY 1400HR 2 DAYS PRIOR TO ARR TO AVOID ONE NIGHT PENALTY

Does that mean if i cancel after august 26, the penalty i lose is just 1 night? I plan to book 4 nights but i might cancel if my gf has a baby that is why i asked. thanks