Proliferation of private members’ clubs has diluted their exclusivity and they are no longer favoured by the famous and artistic

They were once the elitist domain of bohemians and the rich, places where Francis Bacon would entertain his conquests, Damien Hirst would serve drinks naked, and Tom Jones and Bono would duet Sex Bomb on the piano. But the exclusive appeal of private members’ clubs may be in decline, with one of London’s most prominent venues, Soho House, struggling financially, and commentators warning that the venues have become too mainstream.

In order to inject an extra £40m into the business, the Soho House group has sold its 50% stake in the restaurants Pizza East, Dirty Burger and Chicken Shop, as well as increasing its overdraft with Barclays. This comes on top of a costly and high-interest loan of £40m that the company took out last year, and accounts show that the business lost £17.4m in 2015 and the year before lost £28.4m. Its credit rating was also downgraded last year.

However, it is not declining popularity that has triggered the company’s mounting debt, but a costly programme of expansion across the world, prompting some to question the future of exclusive clubs accessible by a handful of members.

Founded by Nick Jones in 1995 and owned by the American billionaire Ron Burkle, it has grown from being a single club on Greek Street into a sprawling global empire, with private sites from Istanbul to Mumbai and Miami. In 2016, the numbers on the list clamouring to join the chain’s existing 50,460 members rose by 38% to 30,500.

Facebook Twitter Pinterest Nick Jones of Soho House, pictured in 2000. Photograph: Gary Calton/The Observer

By the end of this year, there will be a Soho House private members’ club in Barcelona, Malibu and New York’s Lower East Side. Amsterdam and Los Angeles venues are planned for 2017, and Rio de Janeiro, São Paulo and Hong Kong have been floated as future locations. Plans also extend to a new homeware line, restaurants and office spaces.

But the expansion may be coming at a cost that is more than financial. The proliferation of the private members’ clubs has meant their exclusivity has become diluted, and unlike the now defunct notorious private clubs such as the Colony Room, favoured by Bacon, Dylan Thomas and EM Forster, they are no longer the places once favoured by the famous and artistic.

Peter York, a social commentator who wrote The Official Sloane Ranger Handbook, claims “oversupply has ruined the magic” of such venues.

Several new private members’ clubs opened in London this year, including the Devonshire Club, which demands a £2,400 annual fee as well as a £2,400 joining fee, Quo Vadis, which costs £500 a year, and the Chess Club in Mayfair, which also costs £500.

York said: “The whole point of private members’ clubs is that exclusivity, that they are where the magic people will all gather. Soho House is a very efficient operation, but there is one at every turn now, and they have diluted their brand to, I think, their detriment.

“I have been going to Soho House since it opened, and going there now it feels like it has lost something. There’s nothing special about it any more; they’ve lost that sheen, and that’s why it’s not where the magic people, the famous people, go any more.”

Soho House has attempted to maintain its appeal to artists and creatives, offering discounts for those under 27, and the only condition of joining is that people have a “creative soul”. Five years ago, it culled hundreds of members from it branch in New York, whom it deemed “too corporate”.