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Smoking ban: bad for business?

Smoking ban: bad for business?

As the UAE looks to finalize its Federal National Tobacco law, some are calling for an outright ban. Such a move would have serious implications for many businesses.

May 25, 2010 11:40 by

Aside from the Tobacco companies (who are large enough and resilient enough to survive a ban) restaurants, cafes and hotels would be the most affected businesses. The places where people go to socialize and relax are of course where people go to smoke; this is as true in the UAE as it is anywhere else. In short, the most affected sector would be the hospitality industry, which is a vital plank of the UAE economy (particularly in Dubai).

While the benefits of a ban would include a healthier environment for both employees and customers of these venues, the downside could be a reduction in trade, argues Dr. Jonathan Tomlin in Forbes. And that could be bad news for both small and large businesses.
“Previous studies do not, on the whole, demonstrate that smoking bans don’t harm bars and restaurants. In fact, appropriately done studies and basic economic logic demonstrate that they often do,” writes Tomlin.

In a research article, he performed a study of the proposed smoking ban in India that examined its impact by looking at the stock market.

“I found a statistically significant result that the proposed smoking ban lowered the market value of hospitality industry firms,” writes Tomlin. “In my sample, that category included bars, restaurants and hotels. Of course, I studied only India, and only one particular smoking ban. Yet the result of my analysis (the only one using this well-established method) certainly establishes that a smoking ban can hurt the hospitality industry.”

Tomlin also points out that a partial ban can be just as devastating for some businesses – a business unable to allocate a smoking area will lose out to one that can.

Last month Syria became the first Arab state to implement a ban on smoking in public, reported the BBC.

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