Tourism and Hotel Revenues Before and
After Passage of Smoke-Free Restaurant Ordinances
By Stanton A. Glantz, PhD; Annemarie Charlesworth, MA
Context Claims
that ordinances requiring smoke-free restaurants will adversely affect tourism have been
used to argue against passing such ordinances. Data exist regarding the validity of these
claims.
Objective To determine the changes in hotel revenues and international tourism
after passage of smoke-free restaurant ordinances in locales where the effect has been
debated.
Design Comparison of hotel revenues and tourism rates before and after passage
of 100% smoke-free restaurant ordinances and comparison with US hotel revenue overall.
Setting Three states (California, Utah, and Vermont) and 6 cities (Boulder,
Colo; Flagstaff, Ariz; Los Angeles, Calif; Mesa, Ariz; New York, NY; and San Francisco,
Calif) in which the effect on tourism of smoke-free restaurant ordinances had been
debated.
Main Outcome Measures Hotel room revenues and hotel revenues as a fraction of
total retail sales compared with preordinance revenues and overall US revenues.
Results In constant 1997 dollars, passage of the smoke-free restaurant
ordinance was associated with a statistically significant increase in the rate of change
of hotel revenues in 4 localities, no significant change in 4 localities, and a
significant slowing in the rate of increase (but not a decrease) in 1 locality. There was
no significant change in the rate of change of hotel revenues as a fraction of total
retail sales (P=.16) or total US hotel revenues associated with the ordinances when pooled
across all localities (P=.93). International tourism was either unaffected or increased
following implementation of the smoke-free ordinances.
Conclusion Smoke-free ordinances do not appear to adversely affect, and may
increase, tourist business.
JAMA. 1999;281:1911-1918
As the evidence that secondhand tobacco smoke endangers nonsmokers has accumulated,1, 2
more and more communities have eliminated smoking in public places and workplaces. As of
September 1998, 212 communities and 3 states had enacted laws mandating smoke-free
restaurants3 and 1 state (California4) and 31 communities3 had enacted local ordinances
requiring smoke-free bars. These ordinances not only protect nonsmokers from the toxins in
secondhand smoke, they also create an environment that encourages smokers to quit.5
The tobacco industry vigorously opposes these public health measures to protect its sales.
During the debates over these laws, it is common for the tobacco industry (acting directly
or through front groups6-8) to claim that these ordinances create severe economic problems
for the restaurants and bars. After Glantz and Smith9, 10 published their study
demonstrating that smoke-free restaurant ordinances have had no effect on restaurant
revenues in the first 15 cities to pass such ordinances, the tobacco industry's claims of
economic chaos lost credibility, particularly in California and Colorado, where the cities
were located. Glantz and Smith11, 12 later updated this study and extended it to include
smoke-free bars. Subsequent work by other researchers yielded similar findings for
smoke-free restaurant ordinances in 89 cities in 6 states.13-19 Despite tobacco industry
protestations to the contrary, all the empirical evidence supports the proposition that
smoke-free restaurant ordinances do not hurt the restaurant business.20
As the tobacco industry's claims of adverse effects on the restaurant and bar business
have lost credibility, it has advanced a new economic argument against passing smoke-free
restaurant ordinances: these ordinances will adversely affect tourism. In some places, the
industry has claimed that tourism from countries such as Japan and Germany will be
particularly affected. There is only 1 study of 1 city on the effects of a smoke-free
ordinance on tourism.18 We identified 3 states and 6 cities in which opponents of clean
indoor air ordinances specifically advanced claims that the ordinance would adversely
affect tourism (Table 121-35) and obtained data on tourism from the local authorities.
Contrary to industry claims, these ordinances were not associated with significant drops
in tourism. Quite the contrary, in several locales the ordinances were associated with
significant increases in tourism.
METHODS
We searched newspaper databases and publications by tobacco industry groups (such as the
National Smokers' Alliance that was created for Philip Morris Incorporated36) and
contacted tobacco control advocates in voluntary health agencies, nonsmokers' rights
groups, and health departments to identify localities in which the issue of effect on
tourism was raised in the debate over clean indoor air ordinances.
We then identified those local ordinances and state laws that required 100% smoke-free
restaurants. (An exemption for the bar area of a restaurant did not disqualify a
smoke-free restaurant ordinance from our study, so long as the eating areas were
smoke-free.) Smoke-free restaurant ordinances and their effective dates were confirmed
with local health department officials. This process yielded the 3 states and 6 cities
that met the criteria for inclusion in the study outlined earlier. Because hotel revenue
data for Aspen, Colo, were not available predating passage of its ordinance in 1985, we
could not include it, leaving 6 cities for analysis (Table 1).
We used revenues from hotel rooms as our measure of tourism. Data on hotel revenues were
obtained from the appropriate authorities (Table 237-46). We analyzed the hotel revenues
directly and in constant 1997 dollars using the appropriate seasonally unadjusted
all-items consumer price index.
We also analyzed hotel revenues as a fraction of total retail sales, similar to the
analysis we did in our studies of restaurant revenues.9-12 Analyzing hotel revenues as a
fraction of total retail sales accounts for underlying economic conditions and inflation.
In our earlier studies,9-12 we compared restaurant revenues in similar control cities that
did not have 100% smoke-free restaurant ordinances. Rather than doing a
locality-by-locality matching, in this study our comparisons against control are done by
comparing hotel revenues in the study localities with hotel revenues for the entire United
States. We followed this approach because, unlike our earlier study, there was often not a
natural match to the study cities and states or, when there may have been a logical match,
the "control" locality did not have available data or had a smoking-restriction
ordinance in place that prevented it from qualifying as a control locality. Comparing
revenues in the study localities with the United States as a whole controlled for the
overall health of the tourist industry.
The issue of impact of smoke-free ordinances on international tourism was raised in
California, Utah, and New York City (Table 1). We obtained data on the numbers of
international tourists for California, Utah, and New York City (Table 2) and analyzed the
effects of the ordinance on the number of tourists over time. The dependent variable was
the hotel revenues in the study locality divided by total US hotel revenues for the same
year. To facilitate comparisons between localities, this ratio was normalized by 1989
population for each locality (Table 1) divided by the US population (248,709,873) from the
1990 census.21 Data were analyzed with linear regression: y=b0+btt+bL(t-tlaw)L+biSi where
y indicates the dependent variables in Table 3 and Table 4; t, time to represent the
underlying secular trend; L, a dummy variable that indicates whether a smoke-free
restaurant law is in force; and tlaw, the time the law went into force. The dummy variable
L quantifies the presence of a smoke-free restaurant ordinance according to L=0 if no
ordinance and L=1 if an ordinance is in effect. For the period in which the ordinance goes
into effect, L is set to a value between 0 and 1 that corresponds to the fraction of the
period that the ordinance was in force. The term bL (t-tlaw)L models the effect of the
smoke-free law as a change in the slope of tourism revenues or volume over time. This
approach differs from our earlier work, which modeled the effect of the ordinance as a
simple intercept change. We found that modeling it as a slope change consistently gave
better fits to the data than an intercept change model; the results obtained with an
intercept change model were qualitatively similar to those presented in this article using
the model above. For locations where data were available more frequently than annually
(ie, quarterly or monthly), we also included a dummy variable, Si, to allow for seasonal
variability. The estimate of the coefficient bt quantifies the annual rate of increase (or
decrease) in the dependent variable y each year. The coefficient bL quantifies the
magnitude of the effect of the ordinance on the rate of change over time of the dependent
variable.
For hotel revenues as a fraction of retail sales and normalized locality hotel revenues
divided by total US revenues, we also conducted a pooled analysis with the equation above
by adding effects-coded dummy variables to code for between-locality effects. The pooled
analysis was done using annual data for all localities. A change is considered
statistically significant when P<.05.
RESULTS
Table 3 and Figure 1 present the results for total hotel revenues over time before and
after implementation of the law. In terms of constant 1997 dollars, the smoke-free law was
associated with a significant increase in the rate of growth of hotel revenues in 4
localities, no significant change in 4 localities, and a significant slowing in the rate
of increase of hotel revenues in 1 city (Flagstaff) where revenues tended to flatten out.
Analysis of hotel revenues in current dollars or as a fraction of total retail sales
(Table 3) yielded similar results. Pooled across all localities, there was no significant
change in the fraction of hotel revenues as total retail sales (P=.16).
The smoke-free law was associated with no significant change in the rate of growth of
hotel revenues compared with the United States as a whole in 5 localities, a significant
speeding in 2, and a significant slowing in 2 localities (Table 3). Pooled across all
localities, there was no significant change in the rate of change of hotel revenues
compared with the United States as a whole (P=.93).
Figure 2 and Table 4 show the changes in the number of tourists from Japan (or Asia) and
Germany (or Europe) associated with implementation of the California, Utah, and New York
City smoke-free restaurant ordinances. The implementation of the ordinances was associated
with a significant increase in the rate of change of tourists from Japan to California and
from Europe to New York City. The other trends were not significantly affected by the
ordinances.
The regressions for Flagstaff and Mesa, Ariz, exhibited significant Durbin-Watson
statistics, indicating the presence of serial correlations in the residuals. We attempted
a variety of alternate models using functions of time, changes in the intercept term
associated with the ordinance, or interactions between the seasonal variables and the
presence of the ordinance. None of these approaches substantially changed the value of the
Durbin-Watson statistics. Figure 1 suggests that the significant Durbin-Watson statistic
for Flagstaff is due to a period of rapid hotel building between 1989 and 1993; the rate
of change in hotel revenues before and after this period (which includes the time covered
by the smoke-free ordinance) were similar. For Mesa, the significant Durbin-Watson
statistic is due to the disproportionate seasonal increase in business following
implementation of the smoke-free ordinance.
COMMENT
This study debunks the tobacco industry allegation that smoke-free restaurant laws
adversely affect tourism, including international tourism. Quite the contrary,
implementation of these laws is often associated with an increase in the rate of growth of
tourism revenues. In the pooled analysis, the ordinances had no significant effect, one
way or the other, on tourist revenues as a fraction of total retail sales or compared with
the rate of change in the United States as a whole. The cities and states included in this
study represent a wide range of geographic locations and types of tourist destinations, a
fact that increases the confidence one can have in the generality of the results.
The result that smoke-free restaurant ordinances did not hurt, and may have helped,
international tourism was surprising because of the commonly held belief that Europeans
are more willing to tolerate secondhand smoke and less supportive of clean indoor air
regulations than are Americans. Secret research conducted for Philip Morris Incorporated
in 1989, however, shows that this belief is incorrect.46 Philip Morris polled 1000 people
in each of 10 European countries and found that smokers were more accepting of smoke-free
restaurant ordinances than were Americans (Figure 3).
In our analysis of smoke-free restaurant ordinances, we include Boulder, Colo, which
permits the construction of a separately ventilated smoking room. While the Boulder
Environmental Enforcement Office has not done a formal survey, they reported that
"actual use" of such separate smoking rooms is rare. We also included Flagstaff
and Mesa, cities that allowed for the application of hardship exemptions or exceptions.
The Flagstaff County Health Department reported that no such hardship exemptions have been
granted. As of August 1998, the City of Mesa Code Compliance Office cited 73 (3.5%) of
2080 businesses (including smoke shops) that were granted such exceptions. Our results are
based on aggregate data, not results from individual businesses. As a result, we cannot
exclude the possibility that some establishments experienced gains in business that
exactly offset losses in other businesses. At the same time, no data have ever been
published to support this possibility. In any event, it is the aggregate data that are
necessary to test the tobacco industry's hypothesis that business is severely depressed by
these laws.
Food-service workers enjoy the least protection from secondhand tobacco smoke of any
employee group.47 Legislators and government officials can enact such health and safety
requirements to protect patrons and employees48 in restaurants from the toxins in
secondhand tobacco smoke without the fear of adverse effects on tourism. Indeed, these
ordinances may even be beneficial for business.
Author/Article Information
Author Affiliations: Institute for Health Policy Studies, Department of Medicine,
University of California, San Francisco.
Corresponding Author and Reprints: Stanton A. Glantz, PhD, Division of Cardiology,
University of California, San Francisco, San Francisco, CA 94143-0124 (e-mail:
glantz@medicine.ucsf.edu).
Funding/Support: This work was supported by National Cancer Institute grant CA-61021 and a
gift from Edith and Henry Everett.
Acknowledgment: We thank Jeremiah Paknawin-Moch, MS, for his comments on
the manuscript.
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