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Digital Tipping: Guests Want it, Staff Need it

Consumers are carrying less cash and hotel employees need modern means for receiving tips.
3/30/2023

While tipping has long been a part of the service industry, cash tips in hotels have been decreasing. However, this isn’t because tipping has fallen out of favor. A recent Canary Technologies survey shows that 79% of guests think hotel workers should receive tips. However, only 39% of hotel workers say that guests actually tip staff members.
 

If 79% of guests think hotel workers should be tipped, why do so few actually leave a tip?

First, consumers are simply carrying less cash. The majority of survey respondents say they carry less cash than 5 years ago and this trend is only set to continue with digital payments becoming increasingly popular. Second, even when guests do have cash on them, many times they do not have the correct bills to tip. Third, many guests don’t know when and how to tip since it’s not built into the payment process — unlike most other service industries, such as restaurants, coffee shops, salons, etc.

On top of this, our survey found that approximately 70% of hotel housekeepers reported that tips from guests have decreased or stayed the same over the past five years — and 33% say that tips have significantly decreased in the same time period.

What Can Hoteliers Do?

Digital tipping is the logical next move for hotel owners and operators. The current pain points that customers experience with cash tipping are solved with digital tipping. And the practice is normalized among other service-based industries and built into everyday transactions.

Today, we see a growing appetite for digital tipping within the hotel industry. By introducing digital tipping, hotels can cater to the changing payment preferences of their guests and provide a more convenient payment option. 

Do guests and Staff Want Digital Tipping?

The survey data says: yes! Nearly 70% of guests stated that they would tip more if a digital tipping solution was offered at their last stay.

Hotel teams are also indicating their strong desire for digital tipping solutions. Nearly 80% of current hotel workers, according to Canary’s survey, would be more likely to stay with their current employer if their tips were increased. Importantly, about 70% say that hotel management teams have a duty to encourage tips to staff members. This means that in addition to digital tipping’s emergence as a key mechanism for improving the guest experience, it also is now seen as an effective solution for retaining and attracting workers during the staffing crisis.

How to Implement it

Modern digital tipping technology helps bridge the gap between guest intention and behavior. By removing the friction in cash-based hotel tipping, guests can more easily tip staff. And the benefit to hotel workers is clear: More tips equals more pay for their hard work.

Hoteliers should look for digital tipping solutions that are easy to implement and easy to use. It seems obvious, but guests and staff won’t benefit if no one can figure out how to use the product. Giving guests multiple methods to tip — including strategically placed QR codes and the ability to tip digitally at checkout — allows guests to easily tip when, and how, they want to.

Once a guest leaves a digital tip, staff need a way to easily cash out. This is not a one size fits all solution. Digital tips can go through existing payroll, or a digital tipping vendor can pay your staff directly. If a digital tipping vendor is paying your staff directly, make sure your vendor can handle tax forms and offer multiple cash out options as not all employees are banked.

Direct training for your staff will also be key, so ensure your vendor has a large enough team to actually teach your staff how to use these features.

In conclusion, digital tipping offers a range of benefits for hotels, including improved convenience for both guests and workers and a better overall guest experience. By adopting digital tipping, hotels can cater to changing customer preferences, incentivize high levels of service among staff, and maintain staff levels. With these considerations in mind, digital tipping has the potential to transform the hospitality industry and improve the overall experience for staff and customers alike.

 

 

ABOUT THE AUTHOR
SJ Sawhney is Co-Founder of Canary Technologies, a leader in hotel management software solutions, with thousands of customers worldwide. Prior to Canary, Sawhney led product and technology at Stayful, a booking platform for independent and boutique hotels founded by the former president of Hotels.com. Sawhney is a serial entrepreneur, having successfully founded multiple venture-backed technology companies over the prior decade. He is a graduate of Columbia University.

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