Digitizing Gratuity: Hotel Tipping for Modern Guests
We’ve all been caught doing the “double tap,” where you look for a spare bill in your front pockets, then your back pockets – then your front pockets again.
In the span of just a few short years, cash has gone from critical to vintage. Nearly half of Americans say they use no cash in an average week. But because that change was so fluid, these “double tap” moments of surprise and shame come up pretty often.
Whether you’re pulling up to a valet stand or checking out of a hotel room, it’s often already too late when you realize you might need some cash to tip the teams who take care of you at hotels.
The ten dollars you leave behind in your room after a few days’ stay is a meaningful part of hotel employees’ earnings. But that cash flow has dwindled, particularly since the pandemic.
For hotels and their employees, the recent rise in digital tipping options looks to be a welcome reversal of disappearing tips. Bringing software into the traditional practice of gratuity pay presents unique opportunities for both hoteliers and their staff, too.
More Money, More Often
Most importantly, digital tipping is driving more money into the hands of the hardworking teams that make your hotel stay comfortable.
As with any new payment technology, estimates on the true impact vary widely. But consensus is forming that bringing digital tips into hotels drives more tips all around – even cash tips.
Hotels offering digital tipping solutions have seen that roughly 60% of the people who see a QR code or a tap-to-pay sign for cashless options will leave a tip. The average tip is generally about $10, but can vary depending on who is getting the tip; many softwares are set up to accommodate different departments within a property like housekeeping teams, shuttle drivers, valets, bell teams, bartenders, and more.
Even for smaller, more limited-service hotels, those tips can add up quickly into meaningful wage increases, between $1 and $2 per hour for hotel workers.
Some guests who see digital tipping signage are more inclined to leave cash tips if they have cash on hand. Even though they don’t scan a QR code or tap-to-tip, they still get a timely reminder that tipping hotel staff is appropriate and appreciated.
Learning Why Guests Tip Gives Hotels a Guide to Growth
What’s better than a tip? A tip and a compliment. One of the benefits of digital tipping is that guests have a simple way to leave a note of thanks.
Many digital tipping solutions are integrating further feedback methods, encouraging customers to specify if they had a friendly interaction with an employee or if they were pleased with the cleanliness of their room. This helps hotel teams understand where they’re doing a great job and where they might improve to earn even more.
Taking that feedback to the next level, some digital tipping platforms also allow customers to leave a quick review on one of the major travel websites, which helps hotels earn more business and celebrate the teams that deliver to high customer expectations for a great stay.
Rewarding Great Service Keeps Teams Together
For hoteliers, digital tipping’s biggest impact will be on their ability to keep great talent on board and attract new employees. Workers at hotels that use digital tipping can expect higher pay there than elsewhere, and that competitive edge in the labor market will remain critical for hoteliers for years.
Since 2020, when about half a million hotel jobs were wiped out by the pandemic, the industry has made some headway on re-staffing, but competition for staff is tight, especially in housekeeping.
The American Hotel and Lodging Association estimates that the total hotel labor force will still be about 225,000 jobs short of where it stood in 2019, and Bureau of Labor data projects that a full recovery in the sector won’t be complete until 2031.
In such a competitive labor market, hotels that can win over more employees won’t just have full rosters. Instead, they’ll be the ones most ready to adapt to more demanding guest expectations in the years to come.
About the Author
Russ Lemmer launched Grazzy in 2021 to help service workers reclaim tip earnings that have diminished as fewer people carry cash in the tap-to-pay era. The service quickly gained favor in hotels, but also supports service workers at car washes, salons, restaurants and bars. Grazzy can help staff earn several dollars more per hour by encouraging more guests to tip, making it easier for businesses to recruit and keep great employees.
Prior to Grazzy, Lemmer co-founded Silvercar, Inc., a luxury car rental service that was acquired in 2017 by German automaker Audi. While serving in several Vice President roles at Silvercar, Lemmer expanded on the rental car concept to create Dealerware, a fleet management platform that powers rental offerings from car dealerships and other manufacturers. Lemmer served as Dealerware’s President from 2015 until 2021, when he left to start Grazzy.
As a graduate of the McCombs School of Business at the University of Texas, and a former employee of both Austin Ventures and Bain & Company, Lemmer has been at the center of entrepreneurship and innovation in Austin, Texas for 20 years.