Amsterdam Hotels Face Challenges Ahead of VAT Increase in 2026

What's Happening?

Amsterdam's hotel industry is experiencing underperformance, with average daily rates (ADR) declining across three-quarters of properties over the past year. This trend is occurring despite the absence of typical drivers such as recession or geopolitical conflict. The VAT rate for overnight accommodation is set to increase from 9% to 21% in January 2026, affecting hotels, B&Bs, and short-term rentals. While group demand has been strong, contributing to rising room rates, it represents a smaller portion of overall demand and primarily impacts midweek performance. The VAT increase is expected to limit pricing power and disproportionately affect leisure travelers, leading to further ADR declines concentrated over the summer months.

Why It's Important?

The anticipated VAT increase poses a significant challenge for Amsterdam's hotel industry, potentially exacerbating existing performance issues. The higher tax rate is likely to impact leisure travelers the most, reducing their willingness to spend on accommodations and affecting overall tourism revenue. Hotels may struggle to maintain competitive pricing, leading to decreased profitability and potential job losses within the sector. The situation highlights the delicate balance between taxation and economic vitality, as businesses navigate regulatory changes while striving to attract visitors. The industry's response to these challenges will be crucial in determining its resilience and ability to recover in the coming years.

What's Next?

As Amsterdam hotels prepare for the VAT increase, they may need to explore strategies to mitigate its impact, such as enhancing value propositions or targeting different market segments. The industry could see a shift in focus towards attracting more group bookings or business travelers, who may be less sensitive to price changes. Additionally, hotels might invest in marketing and promotional efforts to maintain occupancy levels and offset potential revenue losses. The outlook for 2027 appears more optimistic, with expectations of occupancy and ADR growth returning, suggesting a potential rebound following the initial adjustment period.