Tobacco Toolkit - Economic Impact of Smoking Bans

Economic Impact of Smoking Bans

No smoking bylaws make good business sense. The argument that smoking bans hurt the hospitality sector has been proven false by independent research. The only business that suffers from smoking bans is the tobacco industry.

What the research really shows
A significant body of scientific research has been accumulated on the economic impact of smoking bans on hospitality business, particularly bars and restaurants. The only research that shows any long-term negative effect on bar or restaurant sales is unscientific research that has been sponsored by the tobacco companies.
All independent published studies conducted in the US and Canada that used tax data in the analysis concluded that "smoking restrictions do not impact negatively on hospitality sales, employment, or tourism activity in the long run." 1

An analysis of restaurant sales in 235 Massachusetts communities before and after the implementation of a smoking ban found no difference in aggregate sales.2
A study of the impact of no-smoking ordinances on hotel revenues and international tourism in 3 states (California, Utah, and Vermont) and 6 cities (Boulder, Flagstaff, Los Angeles, Mesa, New York and San Francisco) found that tourism increased in four localities, and stayed the same in four others.3
A study on the impact of New York City's smoke-free ordinance on restaurants found that real taxable sales from eating and drinking increased over levels two years earlier. Restaurant sales increased 2.1% in NYC, while decreasing 3.8% in the same time period in the rest of the state.4 Another study of the NYC smoking ban found that although smokers were eating out less, non-smokers were eating out much more and restaurant revenues increased.5
A study of bar patronage conducted 2.5 years after smoking was banned in California bars found that 91% of bar customers were either going to bars more often or had not changed their behaviour as a result of the law. Furthermore, support for the ban among smokers increased dramatically from 24% to 44%.6
A study of the economic impact of the short-lived province-wide ban on smoking in bars and restaurants in BC found a short term decline in alcohol sales in hotels, pubs, and dining establishments. By the second month of the ban, however, the impact was no longer statistically significant.7
To assess the impact of the smoking ban on the Capital Region District in BC a study was conducted using liquor purchase data. A short-term statistically significant decline of 6.4% was found. The long-term impacts were not statistically significant. A separate analysis of establishments in the CRD but outside the City of Victoria was done to eliminate the impact of tourism. The results likewise showed that the long-term impacts were not significant.8

Hidden benefits to businesses from smoking bans
Various studies have shown that there are significant financial benefits to businesses from implementing smoking bans:

reduced employee absenteeism;
reduced insurance costs;
reduced cleaning and maintenance costs.9

Why the tobacco industry cares about smoking bans
Confidential internal tobacco company documents released as a result of litigation in the US reveal the extent to which tobacco companies are concerned about the trend to ban smoking in public places and workplaces:

Philip Morris estimates that workplace smoking bans cause smokers to quit at a rate that is 84% higher than average and reduce their tobacco consumption by 11-15%.10,11
As early as 1978, tobacco companies regarded public concerns over second-hand smoke as the prime threat to their future profitability: "What a smoker does to himself is his business, but what the smoker does to the non-smokers is quite a different matter.... This we see as the most dangerous development to the viability of the tobacco industry that has yet occurred."12

What tobacco firms are doing to block smoking bans

Financing biased "scientific" studies refuting the evidence that second-hand smoke is harmful to health and claiming that smoking bans hurt business.13
Financing business front groups, such as the Canadian Hotel Association (CHA) and Canadian Restaurant and Foodservices Association (CRFA) and related provincial organizations to lobby against proposed smoking bans.14
Trying to frame the second-hand smoke problem as an issue of indoor air quality rather than health.15
Advancing "solutions" such as ventilation and accommodation, when the science is clear that there is no ventilation system that can reduce the health risks from second-hand smoke to an acceptable level.

References
1 Pacific Analytics Inc. "The Economic Impacts of the Proposed Amendment to the ETS Regulation," February 2001.
2 WJ Bartosch and GC Pope, "The Economic Effect of Smoke-Free Restaurant Policies on Restaurant Businesses in Massachusetts," Journal of Public Health Management Practice 1999; 5(1): 53-62.
3 SA Glantz and A Charlesworth, "Tourism and Hotel Revenues Before and After Passage of Smoke-Free Restaurant Ordinances," Journal of the American Medical Association 1996; 281: 1911-1918.
4 A Hyland, KM Cummings, E Nauenberg, "Analysis of Taxable Sales Receipts: Was New York City's Smoke-Free Air Act Bad For Restaurant Business?" Journal of Public Health Management Practice 1999; 5(1): 14-21.
5 DL Corsun, CA Young, CA Enz, "Should NYC's Restaurateurs Lighten Up? Effects of the City's Smoke-Free Air Act," Cornell Hotel and Restaurant Administration Quarterly 1996; 37(2): 25-33.
6 "Support For Smoke-Free Bars Grows Stronger in California," Business Wire, 16 October 2000.
7 Pacific Analytics Inc. "The Economic Impacts of the Proposed Amendment to the ETS Regulation," February 2001.
8 Pacific Analytics Inc. "The Economic Impacts of the Proposed Amendment to the ETS Regulation," February 2001.
9 Conference Board of Canada, Smoking and the Bottom Line: The Costs of Smoking in the Workplace, 1997.
10 Philip Morris U.S.A. Inter-Office Correspondence from John Heironimus to Louis Suwarna, "Impact of Workplace Restrictions on Consumption and Incidence," 21 January 1992, Bates #2045447779.
11 Another study by the US Tobacco Institute found a measurable reduction in daily cigarette consumption among smokers who work in workplaces with only mild smoking restrictions. The internal document explains the profound effect of annual revenue from even a small individual decrease in consumption. "Those who say they work under restrictions smoked about one-and-one-quarter fewer cigarettes each day than those who don't. That may sound light but remember we're talking about light restrictions, too. Those 220 people in our survey who work under smoking restrictions represent some 15 million Americans. That one-and-one-quarter per day cigarette reduction then, means nearly 7 billion fewer cigarettes smoked each year because of workplace smoking restrictions... That's 350 million packs of cigarettes. At a dollar a pack, even the lightest of workplace smoking restrictions is costing this industry 233 million dollars a year in revenue." Tobacco Institute, I. Public Smoking: The Problem (SDC Introduction), Bates # TIMN0014554/4565. Taken from http://www.tobaccoinstitute.com/getallimg.asp?DOCID=TIMN0014554/4565&if=avtidx.
12 Roper Organization, A Study of Public Attitudes Toward Cigarette Smoking and the Tobacco Industry in 1978, Vol. 1 Roper Organization 1978, Bates #TIMN0048149 at 0048152. Taken from http://www.oklung.org/advocacy/historyof2ndhandsmoke.htm#_edn7.
13 William Marsden, "Big Tobacco's Shell Game With the Truth," Montreal Gazette, CBC, June 21, 2001.
14 The now defunct Canadian Tobacco Manufacturers' Council paid $3.2 million over four years to the Canadian Hotel Association to lobby against smoking bans by promoting their "Courtesy of Choice" program. CBC Radio, Early Edition, Vancouver BC, 7:44 a.m. 14 June 2000. Taken from http://airspace.bc.ca/transcriptCBCRadioJune142000.pdf.
15 EK Ong and SA Glantz, "Constructing 'Sound Science' and 'Good Epidemiology': Tobacco, Lawyers, and Public Relations Firms," American Journal of Public Health 2001; 91(11): 1749-1757.