Hoteliers slowly test digital tipping as travelers increasingly go cashless

As any Uber rider or latte drinker knows, digital tip jars have become ubiquitous in an increasingly cashless society. Most hotels, however, have been slow to jump on the mobile tipping bandwagon.

The lag isn’t due to any shortage of solutions. In the past few years, well over a dozen digital tipping startups have hit the market, with several players specifically targeting the hospitality sector. These include companies like eTip, Kickfin, TipYo, Grazzy and Buku (formerly known as Youtip). 

Still, even as travelers are increasingly comfortable adding digital tips through their rideshare app or tacking on a tip to their lunch order by way of Apple Pay, mobile tipping options for a hotel’s valet, bellhop or housekeeper remain rare. 

And with guests carrying less cash than they used to, the lack of a digital-tipping platform has meant a reduction in tips for those employees. 

Jason Emanis

“Hotels can be slow to bring on anything new and different, and there tends to be a lot of wait-and-see in the industry — specifically, waiting to see what the big boys do first,” said Jason Emanis, an advisor with travel and hospitality advisory firm Growth Advisors International Network.

Although the industry’s “big boys” are certainly innovating within the digital-tipping space, most still remain in the early stages of adoption.

Marriott International is piloting a digital-tipping program in a handful of markets through its Bonvoy app, said Julius Robinson, Marriott’s chief sales and marketing officer in the U.S. Hotel guests at those properties can tip housekeeping staff through the app. 

The program will eventually be expanded to include other front-of-house staff, Robinson said, but Marriott is still ironing out the technology. Plus, there are user-experience questions surrounding who guests might be prompted to tip and what form that prompt might take. 

“We don’t want to randomly ask our guests to tip everybody,” he said. “We know if you’re in a restaurant eating, then you have a server. We don’t know if you interacted with the bell person versus the concierge person.”

Hilton, meanwhile, is similarly in the process of testing “various app-based solutions in select hotels to assess how to most effectively address the opportunity” of digital tipping.

“We are continuing to evaluate ways to support both our guests and team members as more stays become completely cashless,” a Hilton spokesperson said.

A pioneer in digital tipping

One hospitality company that has emerged as a pioneer in digital tipping is Wyndham Hotels & Resorts. Wyndham was among the first major hotel companies to publicize a large-scale push into mobile tipping when it announced a partnership with cashless tipping platform Bene last fall.

According to Wyndham, Bene’s mobile tipping solution is available to all U.S. and Canadian franchisees, with hotels that opt into the program able to provide guests the ability to tip specific staff members by using a QR code. 
Michael Skvortsov, co-founder of Bene, said the company’s platform is currently active in around 500 properties within Wyndham’s U.S. and Canada portfolio. 

Michael Skvortsov

Under the Bene model, housekeepers can place a card with their personalized QR code in a guestroom they’ve just cleaned, while other staff members like bellhops and valets are armed with business cards bearing QR codes that they can give to guests. Tips are deposited either directly into employees’ individual bank accounts or into the property’s account to be distributed with regular payroll. 

No app download is necessary, and guests pay a platform fee of 7.9% and 30 cents per tip transaction.

“What’s been interesting is that when a hotel starts using the platform, they not only see the digital tips come in, but they also see the amount of cash tips go up substantially,” said Skvortsov. “And another thing that’s been surprising is that the average tip has been much higher than anyone expected.”

Skvortsov said that the average hotel tip amount on the Bene platform has hovered at around $9.50 to $10. 

Less cash, fewer tips

The digital-tipping revolution promises to be a major boon for hotel employees, many of whom have seen their cash tips dwindle in recent years.

The “State of Tipping in Hotels” study released by digital hotel management company Canary Technologies surveyed 300 hotel employees and 1,000 travelers who have stayed at a hotel in the past 12 months. In the study, 33% of housekeepers said that over the past five years, tips from guests have significantly decreased, while 20% reported a slight decrease. 

Among hotel guest respondents, nearly 40% said that they carry significantly less cash than they did five years prior, while 18% said they’ve transitioned to carrying slightly less cash. 

“Cash tips have been on the decline for quite a while,” said Harman Singh Narula, Canary’s co-founder and CEO. “Generally, people just don’t carry much cash anymore, and even when they do, many guests don’t understand when or how to tip in hotels with cash.”

The Canary survey also highlighted the dramatic impact widespread digital tipping could make. The study found that 60% of hotel guests claim to have tipped frontline hotel staff during a recent stay, but among those who didn’t, more than 70% said they would have tipped if digital tipping was available. 

Moreover, nearly 70% of guest respondents who did tip said they would have tipped more had there been access to digital tipping.

“When our pilots were first being designed, there was some pushback, especially when it came to the taxing of tips,” acknowledged Skvortsov.

Since then, however, Skvortsov said the option to route digital tips through a hotel’s payroll and have taxes be withheld automatically has proven a popular strategy among property managers and hotel employees alike. 

“Guests who don’t have the ability to leave a digital tip are just walking out without leaving anything,” Skvortsov said. “So, I think now everyone understands that digital tips are something that you’ll be getting on top of whatever you’re getting now.”

Emanis believes that widespread adoption of digital tipping in the hotel space is inevitable and predicts that the practice will be commonplace within the next two years. 

“There’s a little pushback with some hotels at first,” Emanis said. “But then they quickly get it, because the tips just start rolling in.”

Rebecca Tobin contributed to this report.

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