Richard Hemsley has visited Amsterdam every year in the past decade to let off steam with friends in the neon-lit alleyways of its red-light district. Now one of those friends is getting married and the men are clad in football tops for one last hurrah.

“The freedom to do what you want to do, when you want to do it,” said Hemsley, a 53-year-old distribution worker from Eastbourne, East Sussex, explaining what keeps drawing him back. “It opened my eyes.” His friends pull him off to the Red Light Bar, where customers can drink, smoke weed and watch sport – all at once, if they wish.

Amsterdam’s reputation as a place where anything goes has come to haunt it in recent years, drawing in tourists whose wild partying helps to fill the coffers but can make the lives of residents a misery.

Last week the city’s ombudsman, Arre Zuurmond, condemned the municipal authorities’ failure to manage the growing crowds, saying the centre had become a lawless “urban jungle” with police spread too thin to keep control.

“Messy, dirty, puking, shitting on the street,” says Suzanne Bleijenberg, 27, an office worker, of the night visitors. She has to cross the red-light district to get to her boyfriend’s house. “It’s annoying,” she says, “because we have to work in the morning.”

She says she has noticed that partying in Amsterdam now goes on every night, not just at the weekends, and criticises stag parties in particular for their boorish behaviour and disrespect to sex workers. She doubts that emergency services could reach people in the crowded alleys if something went wrong.

“It does not always feel safe,” she says. “Last week, on Friday, I was sitting with a girl for an hour before the police got here. She was unconscious, a British girl; she was left alone with her trousers open.”

Nearby, police out on bicycle patrol say that they feel outnumbered. They blame national reorganisation and cost-cutting by the Dutch authorities which, they say, has resulted in too few new recruits to replace retiring officers. But the ombudsman was exaggerating when he labelled the situation “lawless”.

Facebook Twitter Pinterest Tourists stream along a crowded canal bank in central Amsterdam. Photograph: Naomi O'Leary/The Observer

“They come here to have fun – perhaps too much fun,” mutters one officer, as he surveys the crowds for trouble – the start of a long and varied night chasing drug pushers, dealing with the mentally ill and responding to a hotline that sex workers call when clients get violent.

The number of visitors to the Netherlands’ capital grew 60% in a decade, to about 18 million annually in 2016, and is forecast to keep climbing, crowding the small historical centre. The sheer numbers and the estimated €6.3bn (£5.6bn) they spend have reshaped the area according to their desires. Once-elegant canal sides are gaudy with sex emporiums, souvenir shops and every kind of fast food an intoxicated tourist could want. The cash is also a magnet for organised crime, which has a presence in both the brothels and the cannabis trade.

“We cannot deny that there is a problem,” said Nenita la Rose, a city councillor with the Labour party. “At one point, it was very important to get as many people as possible here. Our success is almost killing us now.”

Ramon Hogendoorn, who took over his central Amsterdam porcelain, crystal and glass shop from his father in 1992, blames low-end tourism for its decline. “The richer Dutch people don’t come into town any more. The inner city isn’t so appealing, only for mass tourism.”

The traditional wooden front of his building, where expensive decorative goods have been sold since the 1820s, is plastered with signs saying “closing down sale” and “going out of business”. Wealthy tourists – who once dropped thousands of euros at a time there, ordering wares to be packed up and shipped – have been put off by the sleaze, Hogendoorn believes. “This will never come back. Quality stuff like this will never come back to the inner city. The only thing is really cheap tourist stuff,” he says, as raucous groups pass by the shop door. When he adds that the municipality refused a permit for a tourist souvenir shop to take over his lease, a customer cheers.

Facebook Twitter Pinterest Ramon Hogendoorn at the closing-down sale of his family business. Photograph: Naomi O'Leary/The Observer

According to research by the municipality, a small percentage of tourists are responsible for many of the city’s problems: particularly, it says, Dutch and British men. They are the targets of an information campaign that beams down from street billboards on the stag parties and wandering crowds. The advertisements warn tourists that they have a choice: they can urinate in a toilet for free or on the street for a fine of €140.

“We are known for liberty, diversity, tolerance and freedom. But it comes with a counter side,” said Janine Fluyt, spokeswoman for Amsterdam Marketing, which is behind the campaign. “You have to behave. You have to do as we do.”

According to Peter Kwint, who was a city councillor for three years before being elected to parliament for the Socialist party last year, a tendency to play down residents’ concerns has given way to cross-party acceptance that action is needed. “For a long time, a lot of complaints from people in the city centre have been trivialised – ‘You don’t live in a museum, you live in the city centre, that’s what happens’,” Kwint said. “There’s been a huge shift.”

Yet even those who believe that visitor numbers should be curbed insist that tourism is vital part to the city and that this will always be a place where adventurers come to blow their minds.

“We love it. And we didn’t even come for the pot and the sex!” says a 53-year-old Texan, Sharon Oefinger, with a roar of laughter over pulsing disco music in a central Amsterdam square.

This is her first trip to the city and she spent the day racing around its famous sights and museums before stumbling into this opening party for Amsterdam Pride. If she could afford it, she says, she would consider moving here.

“Look at this beautiful person,” she exclaims wide-eyed as a drag queen comes by. “It’s just diverse and open. Nobody cares that he wants to wear that dress and high heels!”