Palau is cracking down on prostitution.
If you have a car and you cruise around in the downtown you will see some street prostitutes. Just try to make an eye contact with girls wearing tight outfits and act like hookers. Usually they will hop in to your car if you stop nearby and then you can negotiate.
There is one joint (not actual strip bar) near the Palm Bay Cafe where you can see some girls in quite revealing clothing. Most of them are prostitutes.
Erotic Massage Parlors
Seems like there are massage parlours in Palau that only offer massage, but there is exceptions. You can get a full service from the Paradise Massage. Massage + Full Service costs around $100.