From Busts to Boom: Strip Clubs Say Business Is Thriving

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The world's biggest strip club businesses say that business is booming despite the recession, proving that "sex entertainment" still sells despite the global economic downturn. The strip club workers, however, tell a different story.

Peter Stringfellow, who operates the namesake chain of "girl clubs", told CNBC that his business had been protected from the downturn due to its upmarket brand.

Stringfellow opened two clubs in central London in 1996 and 2006 and during his time in the club business since 1980, he has survived through two recessions and a bankruptcy.

"I am now protected at Stringfellows by the fame of the club," he said. "My second club, 'Angels', has developed into the second most successful club(…)but it has taken more time."

Since 1993, the U.K. has seen a proliferation of strip clubs as changes to the government's Licensing Act meant that strip clubs no longer needed a special license for nudity. The change in the rules saw the number of clubs double and it is estimated that there are 300 strip clubs operating in the an industry reportedly worth 2.1 billion pounds ($2.7 billion).

In 2010, the U.K. government changed licensing laws in order to regulate the industry, meaning that clubs are now licensed as "sex entertainment" venues. The clubs have become a common sight on London's streets from inconspicuous basement clubs to several high-profile venues in central London.

Stringfellow, whose two clubs employs 140 people full-time and 200 self-employed dancers, told CNBC that his clientele remained loyal to his venues, though he had seen a decline in the middle income customer as the U.K.'s economic downturn hit the domestic market and consumer spending.

Peter Stringfellow
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Peter Stringfellow

"My clientele are corporate, businessmen and international male travelers. They are not the boys - the boys go to other clubs," he said. "The Americans are still very good business when they come in as they use my clubs for entertaining clients. They have either done a deal or are doing a deal….these are the ones who are happy to spend three or four thousand pounds."

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Strip clubs in London are operating against a tough backdrop of rising debt, increased taxation and a decline in consumer spending. The U.K. economy is now close to entering a recession for the third time since the 2008 global financial crisis.

"Last year was an okay year and this year is going to be nothing than another okay year," Stringfellow said, adding that business was not as good as it was three years ago.

London's financial center and its 370,000 employees have been hit hard by global banking cuts, with thousands of job losses announced in the U.K. and Europe.

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"Those that have suffered are the middle men in the financial markets, those with big mortgages that have suffered because of ferocious taxes…The man that could come into town and spend 300-400 pounds a night is thinning off a bit," Stringfellow said.

What About 'The Girls'?

John Gray, chairman and chief executive officer of Spearmint Rhino, the world's largest operator of strip clubs, told CNBC that sales for the last decade had remained for the most part consistent, at just under $200 million annually, a factor he attributed to the need for people to seek solace from their economic woes.

"In our industry it does not take much money to come in and relax, have some fun and forget for a while the problems of the world outside our four walls. Indeed often when the world's problems hit a customer - he seeks such excursions," he said.

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Gray, whose company employs 1,400 non-dancers and more than 8,000 dancers worldwide, said it was the self-employed dancers that were feeling the impact of the decline in spending.

"Some of the middle spending customers that perhaps got six or eight dances in the club now have curtailed their spending to two or four dances. In the U.K., this largely affects the dancers' income and not the clubs as the dancers are independent," Gray said.

According to data from the largest ever study on the global lap dancing industry, conducted by a leading British university, the economic downturn has hit dancers' incomes hard, particularly given the fees and costs the women have to bear.

Of the 197 strip club workers interviewed by Leeds University professors Teela Sanders and Kate Hardy, most said their finances were predominantly unstable and many had to pay arbitrary "house fees" averaging 80 pounds a night and commissions averaging 30 percent to the club owners.

Despite their precarious self-employment status many women regard the lap dancing industry as lucrative. Paul Kennedy, the marketing director of the Platinum Lace nightclub, told CNBC that his club auditioned 8 to 10 women a day and the clubs were evolving to feel more like bars with strip entertainment.

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"The old style of seedy club has gone out the window now, we have a lot of women members now- around 30 percent of our audience is women, we want to evolve and keep it fresh. Now, we're more like a nightclub with girls in lingerie. People come in for entertainment, not just to ogle the girls."

By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt