The development of Berlin's City Tax represents an increasing burden on the capital's tourism industry. While the state of Berlin records record revenues from this tax, accommodation providers in particular are facing an unusually high number of insolvencies. A further worsening of the economic situation results from budget cuts in cultural operations, structural deficits in transport, and expanded tax regulations.
Berlin levies an accommodation tax on private and business travellers via the City Tax. As of 1 January 2025, the tax rate was increased from 5 to 7.5 per cent. At the same time, the taxation period was extended from a previous 21 days to six months. Since the beginning of 2026, the tax has also applied to establishments with fewer than ten beds. These measures led to a new record high in revenues for the state of Berlin. After EUR 58.7 million in 2023 and EUR 89.6 million in 2024, EUR 150.35 million was recently collected for the state budget.
The increasing tax revenues are contrasted by an increasingly tense economic situation for the tourism industry. In 2025, Berlin recorded around 12.4 million visitors and 29.4 million overnight stays. These figures are significantly below pre-pandemic levels, when almost 14 million guests and more than 34 million overnight stays were registered. International business, in particular, showed weak development, with a 4.3 per cent decline in foreign guests and a 6.3 per cent decline in their overnight stays.
In parallel with the increased tax burdens, funding for the city's cultural offerings was significantly reduced. For 2025, the state cut the cultural budget by approximately EUR 130 million. This affects, among others, opera and concert houses, orchestras, choirs, and the State Ballet. The Senate is thus weakening offerings that contribute to Berlin's tourist appeal. Additional burdens arise from structural weaknesses in public transport and high location costs at BER airport. Airlines are reducing their services due to high fees, making travel to Berlin more expensive and complicated. Price increases of up to 35 per cent for travellers are noticeable on important routes.
Rising operating and personnel costs, as well as the expansion of the City Tax, are making overnight stays and gastronomic offerings in Berlin more expensive. In conjunction with declining guest numbers, this increases the economic pressure on small and medium-sized providers, who make a significant contribution to the diversity of the tourist offerings. The current insolvency trend illustrates this tense situation. In April 2026, the number of corporate insolvencies in Germany was 82 per cent above the average for comparable months in the years 2016 to 2019. Particularly high values were recorded in the hotel and gastronomy sectors. In Berlin, the unusually high number of hotel insolvencies was particularly striking. Stephan la Barré, Deputy Chairman of the Board of ApartmentAllianz Berlin, stated that a reduced offering and diminished quality endanger Berlin as an economic hub. He called for a change of course that focuses on decisive issues and politically supports successful practical examples. La Barré emphasised that City Tax revenues must be transparently reinvested in culture, public transport, and urban maintenance to create added value that benefits guests and Berliners alike. He sees targeted investments in quality and a strong offering as leading to visible improvements and an upward trend from which the entire city would benefit.
