Short-term rental
Night cap
Also written: 90-day rule, night limit
What Night cap means
A night cap is a municipal or regional regulatory restriction that limits the maximum number of days per year a property can be rented as a short-term lodging accommodation without requiring a commercial hotel license or special zoning permit.
Formula
Available STR Calendar Days = Municipal Night Limit - Annual Booked STR Nights
How it is used
Local authorities enforce night caps, such as London's 90-day rule or Paris's 120-day limit, to prevent housing stock depletion and curb residential neighborhood disruption. For short-term rental operators and investors, hitting the night cap halts revenue generation unless they switch to mid-term leases (30+ days) for the remainder of the calendar year. Revenue managers must dynamically price high-demand periods to maximize yield per available night before reaching the cap, rather than optimizing for pure occupancy.
Worked example
A London apartment operator subject to the 90-day rule generates £200 ADR during high season. By booking 90 peak summer nights, they reach the cap, earning £18,000. To remain compliant and operational for the remaining 275 days of the year, the operator pivots the property to a 9-month corporate mid-term rental at £1,500 per month, generating an additional £13,500.
Common mistake
Failing to track platform-automated calendar blocks can lead to accidental compliance breaches or unbooked, wasted capacity before the annual reset date.
Related terms
Work it out
Rental Arbitrage Calculator — Whether subletting a leased property as a short-term rental actually clears a profit.