Legalizing Weed Hugely Boosts Hotel Revenues

A new study by Penn State found that cannabis legalization in Colorado led to an increase in hotel revenues by $130 million in 2014.

The benefits of cannabis legalization seem to grow clearer by the day, generating massive tax revenue, creating plenty of jobs, and as we found out recently, reducing adolescent cannabis consumption. Though there might be a new benefit to add to the list; increased hotel revenues.

A Professor in Hospitality Management from Penn State University, John O'Neill, discovered that after legalizing pot, Denver in Colorado saw an increase of roughly $130 million to existing hotel revenues.

According to Mr. O'Neill, Denver served as the best opportunity to research the benefits of cannabis legalization as Colorado had legalized recreational marijuana use in 2014, giving him a lengthy study period to draw from.

O'Neill derived his findings from hotel data accrued by STR (Smith Travel Research) which he used in conjunction with the opening dates of recreational marijuana dispensaries in the area.

"I found that recreational marijuana legalization positively affected hotel revenues in Denver, totaling approximately $130 million in new hotel revenues," he said.

The year that cannabis was made legal in Denver, 2014, saw a 9% spike in hotel room bookings, which was a larger increase than any other year O'Neill studied. As a result of the spike and the increased demand for a hotel close to a cannabis dispensary, hotels were able to increase prices per room and generate more revenue.

It should be noted, however, that the $130 million increase experienced by Denver hotels is likely a much larger increase than other states can expect in the future. The reason for this is that after one year of legalization, hotel revenue rates effectively returned to normal, suggesting that a large part of the surge was due to the "hype" of cannabis legalization.

While states which legalize cannabis will probably see a similar influx of cannabis tourists booking out hotels in order to utilize dispensaries, it's unlikely they will receive the same amount of attention as Denver, who was a first-mover with regards to cannabis legalization.

"[Denver's] growth after legalizing recreational marijuana was above and beyond what would have been otherwise expected," Mr. O'Neill remarked.

In addition to this, the additional revenues enjoyed by hotels is also only a temporary surge, as the increased profits went back down to normal after roughly a year.

Though this concept of cannabis tourism is hardly a new one; just look at Amsterdam. Amsterdam is famous for bringing in tourists purely on the basis of its cannabis "coffee shops" in which foreigners can go to procure pot products.

In fact, according to a survey carried out in August using 1,100 respondents, 34% of tourists indicated they would visit Amsterdam less frequently if they weren't able to visit coffee shops, and 11% said they would cease visiting entirely.

Evidently, people are willing to hop on a plane for a bit of pot, and they'll pay a pretty penny for it too. Perhaps in the coming years, we will see similar data emerge from countries like Canada, who have federally legalized cannabis in 2018, and who may have experienced a similar surge in cannabis-related tourism as a result.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.

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