Recession Proof: Strip Club Business Is Booming

Rick's Cabaret International, a national chain of upscale adult nightclubs, which attracts 70,000 customers a month to its 19 clubs, reported that for fiscal 2008, revenue is up 87% to $60 million. At its New York spot alone Rick's posted just over $1 million in revenue in December.

Rick's also thrives by its ability to re-brand on a dime. The Rick's club in Philadelphia saw its sales skid recently, prompting the company to re-name it Club Onyx, after another chain of strip clubs it owns aimed at celebrity sport stars and hip hop artists. The location is right: Onyx is within a mile of sports complexes where teams like the 76ers and Eagles play. According to Priaulx, the club has since tripled sales.

AdultVest, the first adult entertainment hedge fund, reported a 50% rise in its returns last year. The funds, called Bacchus and Priapus, invest in gentlemen's clubs and companies that acquire them in the U.S. and Canada. AdultVest purchased strip club chain VCG Holding last May and recently bought iPorn.com, a site that hosts online dating and live video.

AdultFriendFinder, which owns Penthouse magazine and other adult brands, floated a $400 million IPO in December, though the ticker is not trading yet.

Not that skin trade stocks are on fire. Shares of adult oriented companies like Rick's and VCG Holdings are lagging. Others, like New Frontier Media, Playboy Enterprises and Private Media Group have been in the tank for months as Web porn offered by sites like AdultFriendFinder kill adult DVD sales and slam nails in the coffins of hide-bound adult magazines.

So how to account for the sex boom? Part of it is human psychology. Strip clubs and porn sites are about consumption and discrete gratification--typically the last kinds of behavior people change when their wallet thins.

Source: Forbes.com