Some hospitality and leisure businesses could face a revenue decline of up to 15% when the smoking ban is implemented this year, with many taking more than three-years to recover to pre-ban levels, experts have predicted.
A new report from consultancy PricewaterhouseCoopers warns that businesses need to think in terms of a 12 to 36 month recovery period when the ban begins in July (for England) or April (Wales and Northern Ireland).
It says that they must in particular ensure that they are able to manage costs effectively during that time to compensate for lost revenues.
David Trunkfield, head of leisure at PwC said: "We have seen smoking prevalence ranging from 20% of customers to over 50%. But the big issue is how those smokers might alter their behaviour after the ban and the knock-on effect that might have on revenues and profit."
"The experience of existing smoking bans in other countries shows that some industries have seen revenues drop dramatically and have taken several years to recover to pre-ban levels. In fact, some businesses may never recover and may face closure," he said.
Adjusting to the new smoke-free environment will also require a focus on innovation with regard to substituting lost revenues with new products and services, Trunkfield added.
By Daniel Thomas