Report says weight of evidence is that smoking bans have little or no effect in aggregate on hospitality sales

A new report published today (Tuesday, 23 March 2004) concludes that the weight of evidence is that smoking bans have little or no effect, in aggregate, on sales in the hospitality sector.  The report, Smoke-free Policies: Market Research and Literature Review on Economic Effects on the Hospitality Sector, commissioned by the Office of Tobacco Control (OTC), consists of market research undertaken by TNS mrbi and a review of literature in this area undertaken by independent economists Joe Durkan and Moore McDowell, University College Dublin. 

Dr Michael Boland, Chairperson of the Office of Tobacco Control, concludes that “…based on this evidence (contained in the literature review and the market research), the Office of Tobacco Control is of the view that the workplace smoking ban is unlikely to have an adverse economic effect on the hospitality business and may, in fact, have a positive effect.”

TNS mrbi’s Damian Loscher said that their market research, conducted in 2003, suggests that the proposed workplace ban will not have an adverse effect on the hospitality sector as a whole and may, in fact, have a positive effect.  Indeed, according to Mr Loscher, two further pieces of research, conducted in early 2004, are consistent in this regard.

“Our research suggests that the frequency of visiting a pub/bar to eat would increase if smoking was not allowed – 20% of adults say they would visit more often, versus just 7% believing they would visit less often.  Secondly, visiting pubs/bars to drink would be broadly unaffected by a smoking ban – 12% claiming they would visit less often is more than offset by the 13% of adults expressing the view that they would visit more often.”

Mr Loscher pointed out that over one in three adults interviewed for the TNS mrbi research, 35%, have left or chosen not to go into a pub or restaurant because of tobacco smoke.

“This increases to 42% when we look at non-smokers only, although a significant proportion of smokers, 16%, also claim to have withdrawn from a smoky pub or restaurant on some occasion in the past.”

The literature review element of the report consists of a critical analysis of the published literature on the experience of other countries that have introduced similar smoke-free workplace legislation, in order to examine the likely economic impact on the hospitality sector in Ireland.  It also considers two Irish studies in this area, the Goodbody study, prepared for the Irish Hospitality Industry Alliance, and the Foley study, which was commissioned by the Licensed Vintners’ Association and the Vintners’ Federation of Ireland.

Ultimately, Joe Durkan and Moore McDowell conclude that “…the weight of evidence, even if studies are imperfect, is that bans have little or no effect in aggregrate. The same result is seen from different data sets, different time periods and different locations.”

Joe Durkan and Moore McDowell explained the theoretical backdrop to their literature review.

“Economic theory suggests that some hospitality industry customers will react positively and others negatively to the ban.  The economic question is whether businesses in the industry will experience a net loss or a net gain from these changes.  The net effect is what matters.”

A large part of Joe Durkan’s and Moore McDowell’s work consisted of a review of the Scollo et al report, which analysed approximately 100 research papers in this area.  Scollo et al concluded that ‘policy makers could proceed with smoke-free regulations secure in the knowledge that there would be no adverse business impact’.

“Detailed analysis of some of the papers listed in this study lead us to a more conservative conclusion: that there is little statistical evidence to support the proposition that a smoking ban in Ireland would significantly reduce sales in the hospitality sector.”

In this context, however, the two economists conclude that the impact of a ban is unlikely to be uniform across all establishment types or all types of outlet.