With Lamar Odom being found in a brothel, the business of sex is once again in the headlines.
Sex sells, but selling sex can be dicey
However as a $6 billion industry with high demand and steady growth, it’s a risk many business owners willingly take. Amongst the pitfalls are many legal obstacles, but the most expensive of all can be failing to manage a club’s public perception.
Strip clubs make the money they do, not only because what they offer sells itself, but also because of the high-rollers they attract. As Mike Paul of the New York-based reputation management firm MGP & Associates PR put it, “The bottom line — and you won’t get any company to say it — is that Wall Street and strip clubs are ingrained together and have been for a long time.”
This is true, not just for Wall Street, but for many industries with an entertainment budget. In these industries, business entertaining is the backbone of relationship building. In the world of, “It’s not what you know, but who you know,” strip clubs provide a tool for bringing in business and closing deals.
This has been so common the IRS actually categorized it as a tax-deductible business expense. As a powerful tool in a business exec’s arsenal, controversy sprang up – with female employees suing for discrimination for being excluded, which severely crippled their ability to advance their careers. Not just from being excluded from the “boy’s club”, but also by their inability to bring in revenue because their participation, “might make clients uncomfortable.”
How Strip Clubs Fail
As easy as it is to sell alcohol and gorgeous naked women, it seems almost impossible major strip clubs would shut down for anything short of a police bust. Especially when female employees make as much as $400 an hour.
There have been countless casualties of bad PR in the strip club industry, such as clubs zoned out of existence by conservative locals, and others for crossing that line between adult entertainment and prostitution. How a club hops over these hurdles often predicts not only how long they stay open, but also how profitable they will be compared to their competition.
After all, strip clubs are affected by the economy. During the recession, budgets shrank all over the country, and this included corporate entertainment budgets and participation in events like the Super Bowl. As Mons Venus owner Joe Redner put it, “Even the Super Bowl can’t stand up to a dip in the economy. People have money to spend, or they don’t. When people don’t know whether they will keep their job, we suffer like everyone else.”
How PR Makes the Difference
Of the 3500+ strip clubs operating in the US, there are only a handful considered high profile. These clubs are world-renowned, and in large part this has everything to do with savvy PR management and a strategic PR campaign, nobody knows that better than Lonnie Hanover. Mr. Hanover is credited with making “Scores” one of the most famous strip clubs in the world. His winning strategy? Providing Howard Stern with so many free visits the radio celebrity talked frequently about the club on the air, and even invited dancers onto his show.
Suffice it to say, this had tremendous impact on the club’s notoriety.
After Lonnie Hanover left Scores, he joined Rick’s Cabaret, again announcing his move on Howard Stern’s show. The results were Rick’s securing headlines while Scores suffered a decline amid multiple controversies.
Crazy Horse III is another fantastic example of how quality PR makes the difference. Opened in 2009 in the height of the depression, there were not many that believed it would stay open for long. The location was off of the strip, and categorized as “terrible,” and in a city like Las Vegas, where strip clubs are in constant competition, any disadvantage could be crippling.
Still, it seems the club owner’s decision to hire a PR firm paid off, as the club is now one of the hottest in Vegas, often hosting celebrities. They provide free limo rides to customers and incentives to repeat customers. As a result, not only did they beat the recession, they became the go-to spot for celebrities like Paris Hilton, Snoop Dogg, Carmen Electra, and more.