Faring in a smoke-free environment

by Emiliya Atanasova

Flanked by cheers and applause on one side and vehement protests and indignation on the other, many European governments have since followed Ireland’s lead, declaring that a healthy nation is worth the loss of some excise duty and tax revenue. The key economic argument of the champions of smoke-free public places is that fewer active and passive smokers means a decline in tobacco-related illnesses, which in turn improves productivity and reduces healthcare costs. This is generally accepted to be the case although it is rather difficult to gauge the precise health benefits and the economic impact of blanket smoking bans. Data varies across countries and is often contradictory, leaving the reader to wonder which source to trust.

The anti-smoking tsunami unleashed by Ireland made its way to the shores of Southeast Europe around 2007 but not all countries in the region have embraced outright prohibition.

The Eurobarometer 2010 survey awarded Greece the “honour” of being number one among EU states by the number of smokers as a percentage of its population. However, Albania’s Public Health Institute announced in 2011 that the country was second only to Turkey in Europe on that count.

A breath of fresh smoke

Croatia, Slovenia and Serbia have provisions that allow bars and restaurants to accommodate smokers in specially designated areas or exempt establishments of a small size. Greece and Albania are interesting cases. The Eurobarometer 2010 survey awarded Greece the “honour” of being number one among EU states by the number of smokers as a percentage of its population. However, Albania’s Public Health Institute announced last year that the country was second only to Turkey in Europe on that count. Both Greece and Albania have smoking bans that cover bars and restaurants but enforcement has been notoriously lax and the prohibition widely disregarded.

Meanwhile, Romania has been sitting on the sidelines, requiring of its bars and restaurants to do no more than display signs whether their premises allow or prohibit smoking.

Bulgaria, which is among the leaders in the bloc by number of smokers, relies heavily on tobacco product taxes for its budget revenues. Still, at the time of writing it had become the latest country in the EU to outlaw puffing in all enclosed public spaces, bars and restaurants included. The ban took effect on 1 June 2012, winning Bulgaria plaudits from Brussels but also triggering apocalyptic forecasts for the revenues of the hospitality sector. A couple of weeks before the law went into force, the Bulgarian Association of Hotel and Restaurant Owners warned that sector turnover would shrink by 300 million levs (153 million euro) as a result of the ban and 20% of local restaurants, casinos and night clubs would be forced out of business by March 2013, leaving 18,000 people jobless in the process, Sofia News Agency reported.

A week after the ban took effect, club and restaurant owners in Sofia told Darik News that turnover at the 50 biggest establishments in Bulgaria’s capital city had dropped by between 30% and 40%. Local news agency Cross reported that the most popular night venues in Sofia had only a handful of visitors inside during peak hours, while throngs of people were seen smoking outside the premises. Nightclub and bar owners told Cross they would soon be forced to shut down if this tendency persisted. Snapshots of the nightlife in Bulgaria’s major cities revealed a similar picture. In Burgas, a popular Black Sea resort, many venues remained closed during the first post-ban weekend for lack of customers. Some bar and nightclub owners in Plovdiv, Bulgaria’s second largest city, were taking gambles and allowing patrons to puff away, calculating the odds of escaping a hefty fine to be in their favour given the limited number of health inspectors, Cross
said.

Being known as the EU nation with the highest number of nicotine addicts, Greece deserves special mention for the consistent failure of its governments to enforce a string of smoking bans over the past decade. The latest one, which adds bars and restaurants to the list of smoke-free areas, took effect on September 1, 2010 but little progress seems to have been made on the enforcement level. And if supervision left a lot to be desired in the past, one can imagine what a gargantuan task it has become recently as the bailed-out country grapples with its massive debt and scrambles for ways to revive its ravaged economy. Early in 2011, Agence France Presse (AFP) cited the Greek health ministry as saying that this time enforcement would be rigorous and no one would get to slip between the cracks. However, AFP said, there was strong resistance and boycotts from local restaurant and cafe owners. They complained that the crippling recession had already depressed their business by 30% to 50% and the smoking restrictions had further exacerbated their plight, wiping up to 80% of their turnover. The persistent government attempts to enforce the blanket smoking ban was among the reasons for the 15% decline in the sector’s sales in 2010, Euromonitor said in its 2011 report on Greek bars and cafes.

Unlike Greece, Turkey has been very serious about enforcing its total smoking ban, which took effect on July 19, 2009. Many industry experts said at the time that the effect would be truly felt the following year and Euromonitor reported an 11% decline of sales in the Turkish bar and cafe sector in 2010. More than a year after the ban became effective, Ipsos KMG set out to determine how the new rules were affecting the business. The research company polled 446 owners and managers of teahouses, clubs, bars and cafes in Istanbul, Ankara, Izmir, Bursa and Adana. Within that group, believed to be representative of a general sample pool, 75% said the ban had depressed their total income and the figure rose to 90% for teahouse owners, Hurriyet Daily News reported last November. About 62% stated that lower income had forced them to lay off staff, while 83% complained they had been driven into cutting costs and were unable to maintain previous supply levels for tea, sugar and coffee.

On 1 January 2010, Macedonia joined the list of countries with blanket smoking bans, introducing restrictions considered to be among the harshest in Europe. In addition to all enclosed public places, it is also against the law to smoke outside establishments serving food or drinks and in open spaces and public areas during sports, cultural, entertainment and other public events. Less than two months after the ban took effect, local newspaper Vecher published the results of a survey conducted by the Tourist Chamber of Macedonia’s Union of Trade Chambers, which found that about 90% of local restaurant, bar and cafe owners had suffered a slide in revenues, with many venues registering drops of 70% year-on-year. Cafes were the worst hit by the new law, followed by restaurants. Among the 511 business owners polled, 14% said they would board up their establishments and 29% stated they would wait a few months to see how the situation played out. It should be noted that the data included in this article reflects the impact of blanket smoking bans right or shortly after they were introduced. It seems that surveys and prognoses abound in the immediate aftermath of enforcement but their number starts dwindling as the initial shock wears off. Hospitality industry observers generally agree that it takes between 12 and 18 months for some stability to return. Some newer reports have shown a reversal of the negative trend in certain markets, an example being the 2012 Euromonitor report on restaurants, bars and canteens in Turkey, which estimates the market to have grown by 18% last year. And all through the initial chaos and the pains of adjusting, legislators and anti-smoking proponents have kept insisting that national economies stand to gain in the long term from the ban on smoking.

Whether the world will one day become a place completely free of tobacco smoke is anyone’s guess. There is no doubt, however, that health concerns have come to dominate national agendas and this will continue to drive the global crusade against smoking in public places. It would be quite safe to assume that non-smoking will one day be the default operating environment for the hospitality sector worldwide and business owners will take it in their stride although some growing pains will be inevitable. Business models and practices are bound to evolve to keep the sector going, similarly to what is happening in the music and film industries as they learn to operate in a digitally centric environment.

Fingers crossed!