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Twilight of the Tanning Salons

As federal health regulations close in and the economy struggles, is the sun setting on the tanning industry?

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When Leif Vasstrom opened the Midnight Sun in 1978, it was the second tanning salon in Manhattan and an immediate sensation. Cher and Carly Simon darkened the threshold during his first week of business, and Vasstrom remembers talking up the wonders of artificial tans among the revelers at Studio 54.

“It was a fun time,” said Vasstrom. “From there, it spread like wildfire.”

Vasstrom soon launched a chain of salons across the country and built a related business selling tanning beds to other entrepreneurs. In 1984, he sold 16,000 tanning machines and took his company, called Silver Group, public on the Copenhagen Stock Exchange.

The tanning business was on fire, and in the decades to follow, Vasstrom expanded his business into virtually every corner of the $5 billion a year industry. He developed a ubiquitous business management software for the tanning industry and helped pioneer the use of a new kind of light bulb that provided faster, better tans than commonly used fluorescents. Later, he acquired an online forum in which salon owners swap merchandising tips and sharpen talking points about the health benefits of tanning.

Recently, though, the fortunes of salon owners have been fading, and the message board offered Vasstrom a vantage point to observe a sense of gloom falling upon the inherently cheery industry.

First came the Great Recession, robbing millions of Americans of discretionary income and making even cheap luxuries such as a tanning session feel less attainable. Then a new federal excise tax, passed as part of the Affordable Care Act and implemented in 2010, added a 10 percent levy on tanning customers.

At the same time, public health officials and medical researchers, who had spent decades ringing alarm bells over the cancer risks tied to tanning, redoubled their efforts. In 2010, the Federal Trade Commission forced the Indoor Tanning Association to abandon a marketing campaign arguing that there are health benefits to tanning. In 2014, the U.S. Surgeon General issued a “Call to Action” on skin cancer —a move that some salon owners interpreted as a first step towards a Surgeon General’s Warning, like the kind that warns cigarette smokers that the product they are purchasing can be deadly.

That series of blows has taken a toll on the industry.

Photographer: Jonathan Alcorn/Bloomberg

There were about 18,200 salons in September 2008, according to mailing list data published by Dean Mandos, a marketer who specializes in the tanning industry. By September 2015, that number had fallen by 30 percent, to 12,200 salons.

The decline of the business has been even more dramatic, said Chris Sternberg, general counsel at Sun Tan City, one of the largest tanning chains, and a board member of the American Suntanning Association, another trade group. There were 18,000 salons in 2009, he said—and 9,500 this year.

There are still plenty of ways for creative entrepreneurs to thrive, Vasstrom said, but many salon owners have stopped looking for business solutions and have hung their hopes on a presidential candidate whose famously orange complexion is practically a billboard for their product.

“Everyone hopes Trump gets elected and he repeals the tan tax,” Vasstrom said.

Since the modern tanning salon arrived in the U.S. from Europe in the 1970s, it has occupied a curious niche in the annals of late-stage capitalism. Whereas the upper classes had once sought pale skin, so as not to look like outdoor laborers, office workers wanted to seem more tanned so they could pass as people with disposable time and money to spend in the sun.

“We all have a desire to be attractive, and we’ve been fed this image of an attractive person having a golden tan,” said Lori Crane, a professor at the Colorado School of Public Health, who has studied the marketing techniques tanning salons use to court customers.

That appeal has stayed the same, even as the selling proposition has shifted from a fad item for disco-era pop stars to an attainable luxury for cold-weather college students. A 2010 survey conducted by the National Center of Health Statistics showed that indoor tanners are most likely to be young white women. (“There’s only one reason a guy goes to get tan,” said Vasstrom. “So he can get laid.”) Thirty-one percent of white high school students tanned, about the same percentage as women from the ages of 18 to 25; those tanners averaged about 28 salon trips a year. Those trends have made free tanning a must-have amenity for apartment landlords looking to rent off-campus housing to college students.

Lisa Brooking retired from her corporate job when she was in her forties and took out a $60,000 loan to open her first salon, True Colors Tanning, in New Albany, Ind., in 2003. By 2010, she was employing 70 workers at 10 locations and generating $2.5 million in revenue. The first year after the tan tax took effect, revenue was down 18 percent, Brooking said; the next year, it was down 30 percent. In 2014, she sold her salons to Sun Tan City, one of a handful of large chains that has been buying out independent operators in recent years.

“Everyone hopes Trump gets elected and he repeals the tan tax”

There wasn’t any single reason she decided to walk away from the business, said Brooking. About two-thirds of her customers paid for tanning with monthly memberships, which typically cost $19.99 a month. Much of her revenue, though, came from selling tanning lotions, such as Kardashian Glow and JWOWW Black Bronzer, and other add-ons with higher markups. Whether it was the bad economy or the new 10 percent tax, customers started opting for cheaper products. The media, said Brooking, piled on, highlighting the health risks of tanning.

“I think Cosmopolitan ran an article every month,” said Brooking, who still misses partying with the “sisterhood” of salon owners at industry trade shows. “We knew we weren’t going to cure world hunger or send a rocket ship into space. We got to give a mom who had three kids at home a 20-minute break in her day to add some color for a small amount of money.”

If the appeal of an artificial tan is easy to understand, the case for running a tanning salon is a little shakier, because operators are selling a service that can seem like magic on a cloudy February day in the Midwest but wholly unnecessary three months later, when the sun is out.

Indeed, the history of the industry has been riddled with booms and busts. As early as 1981, the New York Times was reporting that the franchise businesses that had sprung up in the late 1970s were already floundering. The industry soon moved past the bumpy start, said Vasstrom, and saturated major U.S. cities by the end of the 1980s. Growth leveled off until new machines imported from Germany let tanners achieve better tans for lower costs, and the number of salons started growing again.

Photographer: Jonathan Alcorn/Bloomberg

Sales slumped again in the first decade of the new millennium, at least at some of the biggest franchise chains. From 2001 to 2011, tanning salon owners were among the likeliest to default on loans backed by the Small Business Administration. That includes 248 defaults, or 58 percent of all loans made to owners of the Planet Beach chain, according to the website Blue MauMau, which covers franchising. (You can tan at the gym, and you can even tan at the laundromat, but is there an MTV-loving entrepreneur who’s figured out how to combine gym, tan, and laundry? As far as Crane knows, no.) Three other chains had worse default rates, including L.A. Tan (67 percent) Image Sun (70 percent), and Executive Tans (81 percent).

All that churn can make it hard to keep track of whether the industry is growing or shrinking said Crane, the public health researcher, who said she has observed salons closing while new ones are opening a few blocks away.

“One thing we have seen is more ads for spray tans than ultraviolet tanning,” said Crane, who has studied the behavior of salon businesses. “When we looked at these companies' social media posts, we expected to see them making claims that tanning is safe or healthy, and we saw almost none of that. I think the people in the tanning industry can see the writing on the wall.”

Maybe.

Skin-care experts and "nanny state" regulators have been campaigning against the industry for decades, and salon owners are well-practiced at covering up with one hand while lashing out with the other.

Sternberg said his industry has been targeted by doctors and cosmetics companies that see a business case for bashing suntans: “We’re like the gnat on the ass of this huge industry comprised of dermatologists and sunscreen manufacturers.” Brooking says salons actually serve to control exposure to ultraviolet rays, adding that she used a fingerprint scanner to make sure customers weren’t tanning more than once a day. “You can’t turn off the sun,” she said. Heather Almond, who runs 15 salons under the Palm Beach Tanning franchise, complained that she’s “not allowed to tell you the health benefits” of tanning because of government regulations. Vasstrom, meanwhile, said he’s holding out hope that new research will demonstrate that indoor tanning can benefit patients suffering from Parkinson’s Disease or Multiple Sclerosis.

Smart Tan, billed as the world’s largest indoor tanning trade show, begins in Nashville on Oct. 7, and the agenda will include nuts and bolts sessions on sales and marketing. One panel will touch on what salon owners can say in their marketing materials without violating a Federal Trade Commission rule that forbids salon owners to promote health benefits. Another session, restricted to card-carrying salon owners due to its sensitive nature, will brief owners on the industry’s lobbying efforts. The topics to be discussed include an attempt to change the Surgeon General’s position on tanning and a debriefing on a lawsuit filed last year by a group of Nebraska salon owners who say they were defamed by anti-tanning advertisements paid for by a cancer research group.

Still, the atmosphere is likely to be less sunny than at the trade shows Brooking so fondly remembers, where salon owners could revel in the company of like-minded entrepreneurs, often on the tabs of vendors hawking tanning beds, lightbulbs, and lotions.

“Morale is horrible,” said Sternberg. “If the government’s intention was to drive tanning salons out of business, they’ve been successful.”

Editor: S.I. Rosenbaum


Design + Development: James Singleton


Lead Photo Illustration: 731; Source – Getty Images (2)