New (stricter) hotel regulations in the Netherlands

The Netherlands is a popular destination for tourists and visitors. Amsterdam is consistently one of the top European tourist destinations, making the city a popular investment market for hotels. Amsterdam has, however, been struggling with an inflow of millions of tourists and alleged “overtourism” over the past few years. After a brief period of calm during the pandemic, Amsterdam hosted more than 20 million annual visitors in 2023. It is expected that the number of overnight stays will further increase in 2024, reaching between 22.9 and 25.4 million. By 2026, this number is estimated to rise even further to between 23.6 and 26.6 million overnight stays.¹ The city is also facing structural residential growth (growing from 900,000 official residents in 2022 to 1.1 million in 2050 –21% growth).

As a consequence, Amsterdam already introduced a tourism and hotel policy in 2021 aimed at controlling the growth of tourism and hotels in the city.² For the first time, the policy imposed restrictions on new hotel developments and expansions. But tourism has kept growing. And in 2023 the municipality exceeded its limit of 20 million hotel stays a year.

So now Amsterdam has decided to further regulate tourism and hotels (overnight stays) and published its new “Hotel Policy 2024.” The new policy could have implications for real estate investors and developers. In this article we’ll look into the new regulations and share our insights.

 

Former hotel policy (2021)

The 2021 Hotel Policy was aimed at initiatives to develop new hotels or extend existing hotels in Amsterdam. This policy (already) limited the possibilities for new hotel developments. Under these regulations, the City of Amsterdam distinguished two types of areas within the city:³

• “No area” (nee-gebied) – in this area, the municipality would not cooperate with legal planning procedures for new hotel developments or hotel expansions in deviation of the zoning plan.
• “No, unless area” (nee-tenzij-gebied) – in this designated area, the municipality made an exception for new hotel developments or expansions of existing hotels, if they met additional quality conditions and entailed a unique hotel concept.

 

New Hotel Policy (2024)

As described above, according to the previous policy, it was possible to add overnight / hotel capacity in “no, unless” areas. In the new policy this flexibility has now been revoked. The entire municipality of Amsterdam is now a “no area.” The municipality will now no longer cooperate with hotel initiatives that do not fit within the applicable environmental plan (zoning).⁴ However, in order not to make hotel developments completely impossible, the “new-for-old” regulation from the previous 2021 policy will be retained. This principle entails that a new hotel (or an expansion of a hotel) that requires re-zoning can only be realized if it's approved by an expert municipal hotel team and meets (in more detail) the following conditions:

• The overnight capacity (actual number of sleeping places present) remains the same (i.e. under a certain threshold). An exchange is not limited to certain areas and is also possible in the entire city center. However, the preference is for an exchange with the same area.
• The hotel initiative must demonstrate that it contributes to both the innovative range of hotels in Amsterdam and to a particular aspect of the social, cultural or economic climate. Besides the requirement of an original concept, the hotel must have a minimum 4-stars rating.
• The hotel features publicly accessible functions and facilities that can also be used by non-hotel guests – like people living in the neighborhood – and have a positive impact on the environment.
• The initiator has to initiate participation with the neighborhood when applying for an environmental permit for a new hotel or an expansion of an existing hotel.
• The hotel concept must comply with the sustainability objectives set by the municipality in terms construction and exploitation, such as being climate-neutral and using renewable and natural energy. Both hotel initiatives and existing hotels must achieve an energy-certificate as described in the hotel policy.⁵ This also applies when expanding an existing hotel.
• The hotel operator's employee policy should be aimed at achieving the first rung of the Social Enterprise Performance Charter after one year and the highest (third) rung within five years.

Hotel modifications (such as installing an elevator, expanding a restaurant) that deviate from the environmental plan – but do not provide for an expansion of the number of beds – are not in conflict with the lodging policy, provided that it does not result in an increase of the actual number of rooms.

Ground lease instrument

The City of Amsterdam will – aside from not cooperating with the public law approvals for re-zoning – also no longer cooperate with the modification of the ground lease conditions, if needed and when applicable (i.e. not being freehold land), for the purpose of a hotel initiative (expansion or transformation) in a “no area,” even if this zoning is publicly permitted.

Amsterdam’s hotel policy in practice

Specific agreements on the interpretation of the number of hotels rooms (beds) and “innovative and distinctive” hotel concept, the commitments regarding sustainability levels and social entrepreneurship will be laid down in a permit condition (if a permit to deviate from the zoning plan would even be granted). They could also be set out via the ground lease provisions or separate private law agreement, including a penalty and a “change of control” clause to ensure the enforceability of these conditions (if applicable this agreement will be entered into before any permit (if any)).

Key observations for hotel sector players

By shifting the focus to a stricter principle of “new-for-old”, the city of Amsterdam is attempting to take back control over the growth of hotels in Amsterdam to ensure the city is livable.

The content of the (new) legal framework is still not fully clear. In our view, this new policy could have serious ramifications for the real estate sector and all sector players. So, all players should keep this in mind at all times. While the regulations give more or less specific parties clear obligations that affect them directly, the indirect effects of these obligations could impact the broader market, influencing investment decisions, operational strategies, and market stability. In any event, this issue should form part of conducting (technical) due diligence when acquiring or developing (or extending) a hotel in Amsterdam. Apart from the above specific attention points, we expect that there will be a number of developments in the markets. This might lead to some more uncertainty. But being aware of this issue could also give players a head start.

Hotel owners and developers

Developers and owners will face new and increased requirements for new hotel developments or expansions in Amsterdam. We also expect that investors and lenders will be more reluctant to invest in assets or developments with incorrect zoning or ground lease. But they will have more appetite to invest in (new) developments which meet all these criteria, which could affect the valuation of hotel properties and (new) projects in Amsterdam.

Hotel operators

For hotel operators, the first attention points are whether the leased real estate meets the statutory requirements and whether the landlord has obtained these permissions and addressed any non-compliances. Lease or management agreements termination options, in case of statutory non-compliance of the property, are also key attention points. Where new leases are concluded, the above points are just as important, if not more so.

Lenders

For lenders financing assets and asset portfolios, key attention points are whether envisaged hotel project(s) in Amsterdam comply with these (new) regulations and may put debt service at risk. Non-compliant assets will likely decrease (substantially) in value. Lenders may consider developing products that cater to redevelopment or upgrading non-compliant real estate.

Neighbouring municipalities and ripple effects

Following Amsterdam's implementation of stricter hotel polices a 'hotel moratorium' was also introduced in Haarlem at the end of 2019. Recently, this is even extended to 1 January 2026. The main argument for this was the introduction of the new/stricter hotel policy in Amsterdam, as Haarlem is part of the Amsterdam Metropolitan Region and it is expected that hotel developers would move to surrounding municipalities. The municipality of Haarlem wants (also) to secure a “controlled growth and quality” of their local tourism sector. It cannot be excluded that other (neighbouring) municipalities will follow to prevent any (negative) ripple effects for their local communities.

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¹See here  
² Effective as of 1 January 2017 and updated in 2021.
³ See here  
⁴ Hotel policy 2024, Gemeente Amsterdam. ⁵ Hotel policy 2024, Gemeente Amsterdam, p. 19.