Academic Research into UK Hospitality Venues Reveals Financial Benefits of Giving Customers the Opportunity to Sing
British bars and restaurants installing karaoke systems experience a 12.2% increase in ROA, according to research by Finland’s Aalto University.
Finland’s Aalto University (www.aalto.fi/en) has undertaken the first ever research project into the financial impact of karaoke rooms within UK bars, restaurants, and other hospitality venues. At a time when the UK hospitality industry is under increasing pressure (over 6,000 hospitality venues closing their doors between December 2022 – December 2023, according to data from CGA by NIQ and AlixPartners), the findings present a potential silver bullet for the sector: the study of 53 UK venues during 2018-2022 revealing venues with karaoke experienced a 12.2% increase in return on assets (ROA) when compared to a control group without.
The Karaoke Room Effect – Key Findings From Aalto University Study, and additional research
The research was commissioned by Singa (www.singa.com/business), the Finnish startup revolutionising the karaoke industry by providing innovative, professional karaoke software that gives venues access to a fully licensed song catalogue (frequently updated to add new hits), and customisable display and room management capabilities. Singa currently provides professional karaoke tech and business consultancy to well-known UK hospitality venues such as Boom Battle Bar and Roxy Leisure (both of which featured in the analysis).
Singa asked Aalto University researcher Ngoc Anh Pham to explore the impact of karaoke rooms on financial performance in UK hospitality venues. Aalto University is the leading university in Finland and, created through the merger of Helsinki University of Technology, Helsinki School of Economics, and the University of Art and Design Helsinki in 2010, is in the top universities for business and economics worldwide. The study reveals a 12.2% increase in ROA for venues with karaoke compared to those with no such facilities (ROA measures how effectively a business uses its assets to create profit). In addition to booking fees, additional revenue is shown to be created through attracting a new customer base and a corresponding uptick on beverage, snack, and other purchases.
The benefit to the business is not only financial, but has a positive experiential impact on patrons and customers who are able to enjoy an engaging and fun social activity with friends, increasing likelihood of return.
The Aalto University insights support the findings of European research conducted by Singa. In spring 2018, Singa analysed 37 European venues, finding that karaoke resulted in a 31% increase in the number of customers, alongside a 35% increase in average customer spend. In those venues that hosted occasional karaoke nights, a 42% increase in average customer spend during these special events (2-4 times a month) was observed.
The business benefits of a karaoke room can also be viewed in light of the current trend towards experiences, including ‘competitive socialising’. According to research from Savills published in November 2023, the competitive socialising sector has grown at “unparalleled levels” over the past five years (with a 38% increase in competitive socialising venues since 2015). This reflects a growing trend amongst Gen Z and Millennials for favouring defined experiences over ‘things’, and with sobriety or drinking less becoming more popular for Gen Z (the ‘sober curious generation’), venues which offer alternative entertainment options are increasingly appealing to previously underserved customer groups.
Competitive socialising is not a new concept – darts or pool being a mainstay of UK venues for centuries – but new options are increasingly sophisticated and often tech-enhanced.
To further demonstrate the interest in competitive socialising – and karaoke in particular – UK Google Trends data shows a marked volume increase in searches for ‘karaoke room’, with interest (measured by Google searches) more than doubling over the last five years (analysed up to February 2024).
Atte Hujanen, Co-Founder and CEO at Singa, comments:
“Our research confirms that Britons want escapism through song. Anecdotally, I have always known that karaoke brings a huge benefit to hospitality businesses through the joy it brings, but for the first time the positive business impact to British venues can be quantified. Hospitality as an industry has faced serious challenges due to the Covid-19 pandemic and more recently the cost of living crisis in the UK, and it’s clear that karaoke can help venues adapt and continue to thrive by offering local communities additional fun, social experiences.”
