Karaoke rooms increase venue profitability by 12%

Looking to boost your bottom line? Consider adding karaoke rooms. A recent 2023 Aalto University study [https://singa.com/blog/karaoke-room-profitability/?utm_source=cateringtoday&utm_medium=referral] revealed a staggering 12.23% jump in ROA (Return on Assets) for businesses offering karaoke rooms compared with those without. Good news for hospitality venues. Adding karaoke rooms appears to be a profitable way to expand their entertainment offerings.

Private karaoke rooms, also known as KTV or karaoke boxes, have become a popular trend. As the name suggests, they are private rooms where groups of people go to sing karaoke in a more intimate setting, as opposed to on a stage in front of a crowd. Search traffic and customer interest have skyrocketed over the past four years, and this momentum shows no signs of stopping.

Businesses that embrace karaoke are seeing real financial rewards. Hotels, bowling alleys, bars, and restaurants are all adding karaoke to their offerings, with big names like Boom Battle Bar, Roxy Leisure, and All Star Lanes leading the charge.

All Star Lanes saw karaoke as a way to broaden their horizons beyond bowling. Inspired by the booming popularity of Japanese and Korean-style karaoke in the US, they wanted to recreate that experience for their customers. Following bowling, food, and drinks, karaoke fit seamlessly into their existing offerings. It injected a dose of interactive fun into the venue, while also encouraging customers to linger longer, creating a more well-rounded experience.

“Karaoke has significantly impacted our business,” says Isaiah Fapuro, Marketing Manager at All Star Lanes [https://singa.com/business/case-studies/all-star-lanes/?utm_source=cateringtoday&utm_medium=referral]. “It accounts for roughly 10% of our total unique customers!”

But the benefits of karaoke rooms extend far beyond dedicated entertainment venues. Local pubs are also discovering the power of karaoke to leverage unused space and attract new patrons. Take The Fox, a classic East End pub in Shoreditch, UK. They added a private karaoke “den” in late 2023 and haven’t looked back. According to Simon Yandell at The Fox, it’s been a hit, attracting a whole new clientele.

“The response has been amazing, especially from new customers,” Yandell explains. “We’ve had a surge of bookings from people who saw our marketing efforts. Weekends are particularly busy, with people specifically seeking karaoke rooms for celebrations.”

Some pubs are taking an even bolder step, replacing underutilized kitchens with karaoke rooms. The Kenton Pub in Hackney [https://singa.com/business/case-studies/the-kenton-pub/?utm_source=cateringtoday&utm_medium=referral] faced skyrocketing gas and electricity costs, making their kitchen a financial burden. The energy-guzzling equipment and staff expenses simply outweighed food revenue. Egil Johansesn, owner of The Kenton Pub, also notes how karaoke rooms require very little staff time, “When the customers arrive. We just activated the session on Singa and the room is already set up so we’re not losing any members of the staff for a long time.”
The magic of karaoke rooms? They provide an additional revenue stream through booking fees combined with increased food and beverage sales, all while capitalizing on the hot trend of competitive socializing – which is the entertainment concept of combining various games and activities with the social aspect of going out. While competitive social activities like billiards or darts are nothing new in UK pubs, today’s scene takes it to a whole new level of sophistication, and karaoke rooms are proving to be a major player.

Cushman & Wakefield research [https://www.cushmanwakefield.com/en/insights/from-putt-to-pint-everyone-wins-with-competitive-socializing] on competitive socialising highlights the industry’s growth – with a 386% growth in the amount of venues offering some sort of competitive socialising activity. Their report also reveals that 75% of millennials prioritise experiences over material possessions, creating a perfect landscape for competitive socialising in entertainment and hospitality venues.

Additionally, adding a karaoke room lets you tap into a whole new customer base and encourages customers to stay longer and spend more on food and beverages. Rooms are typically built for groups of 4 to10 people, but larger rooms can be great for hosting private events. Karaoke rooms are a hit for both individual and corporate events. Venues using the karaoke solution Singa Business report corporate events can account for up to 80% of their total revenue. Unlike individual patrons who might spend more conservatively, companies often plan events with larger budgets.

Learn more about the profitability of karaoke rooms and see how Singa Business can help you get started here [(https://singa.com/business/?utm_source=cateringtoday&utm_medium=referral].