An interesting new career option has opened up here in the Philippines. Not sure how this is going to work:
It seems to me it would indeed be therapeutic, and there seems to be nothing sexual about it.
On the other hand, it is playing with human emotions. That is a dangerous game. It is hard not to feel anything emotionally towards someone you have hugged for an hour. Almost certainly, too, you would not just hug for the hour. Accept that sex is ruled out: you would then chat with the person, get to know them, tell them about yourself.
And then they leave.
Withdrawal could be a bitch, especially for those lonely enough to be in need of the cuddle.
It would probably amount to emotional prostitution; and all prostitution is emotional prostitution. The actual sex act is trivial.
Granted, it would also resemble therapy.
And what does that say about therapy?
On the other hand, if you are going to therapy, this at least would be a lot cheaper.