Tipping is an essential part of North American service culture, but it has always been challenging in the hospitality industry. Travelers carry less cash than ever before, with a recent study showing that only 16 percent of all transactions are now made with cash. More and more businesses are turning to digital tipping solutions to adapt to this shift in consumer behavior. However, there are common barriers in the hotel technology stack that are preventing some independent hoteliers from quickly offering digital tipping. Tipping is an important way for operators to earn cash rewards and judge the level of their service, and hotels owe it to their staff to provide access to digital tipping.
The first challenge many hotels face when adopting digital tipping is that, for operational reasons, tip management is usually limited to the hotel’s PMS. However, hotels must have the ability to make tipping a standalone service. This is important because customers want to ensure that their tips go directly to the vendor providing them with the service. Travelers often worry that their tips will go into a general pool or not reach employees. These perceptions have led to a negative opinion toward tipping among the general public. A recent study shows that only 33 percent of Americans feel positively about tipping.
In addition, tipping rates are high these days. A 2022 study found that 37 percent of Canadians tip between 15 and 19 percent for exceptional service. In the hospitality industry, tips can often be even higher, but that’s only true if consumers can trust that the tip will go to the intended person. Today, there are simple solutions. Barcode and QR code technology can be linked directly to hotel staff ID, making it easy to find the specific person you want to tip. When paired with the PMS, a scanned QR code can direct travelers to a customized page where they can offer a tip to an employee or a general pool of employees.
However, once the money is in a hotel’s system, careful decisions must be made about how tips are distributed among staff, and improper use can destroy the good reputation that was built by introducing this feature in the first place.
Real money
On the surface, managing cash tips is simple—put money in, cash out. But digital tips require a different delivery method if they are to reach the intended worker, especially if workers want immediate access to their money. Hotels have met this challenge with many good ideas, but also some that have not worked so well.
One well-intentioned approach to getting employees to tip digitally is to offer gift cards with tips after an employee’s shift. While gift cards can solve this problem in the short term, how and where they can be used is key. Gift cards are often capped when they reach a low balance and can make employees feel like they’re missing out on the total amount they rightfully earned.
Instead, hotels with payment processing integrated into their PMS can offer Visa gift cards with funds that can be verified, controlled and transferred. Visa cards make employees feel like they can benefit from digital tips just as much as they can from cash. Often, these systems are free for the hotel and only benefit the operation by improving morale and making it easier for guests to reward employees when they feel they have earned it.
Implementation
Digital tipping is becoming increasingly popular across the service industry, particularly in response to the move towards a cashless society in many ways. However, to use this technology, operators must be fully committed to the concept. Digital tipping requires payment processing to run through the hotel’s PMS and must be connected to all areas of the hotel’s operations to be viable at all times.
Digital tipping also has positive security benefits and allows guests to consider carrying larger amounts than they normally would. Operators can also leverage the capabilities of their PMS partner to design branded microsites that deliver digital tipping offers through a branded platform. While your PMS provider supports the system, guests can stay digital with your hotel’s branding, reducing confusion at critical moments in the purchasing process.
While this may sound daunting, hotels are used to adapting to this level of planning. Digital tipping requires a thoughtful approach that allows housekeeping and maintenance staff to be tipped just as often as the front desk and bellboy. If hoteliers take the time to utilize all the options and capabilities this technology offers, they will implement the most effective and reliable method of compensating their staff today. In fact, by the time you read this, digital tipping will likely already be mainstream.
About Maestro PMS
Maestro is the preferred web browser-based PMS solution for independent hotels, luxury resorts, conference centers, vacation rentals and multi-property groups. PCI certified and EMV-enabled, Maestro’s enterprise system offers a web browser version (or Windows) with over 20 integrated modules on a single database, including mobile and contactless apps to support a digitized guest journey and HR operations. Maestro’s sophisticated solutions enable operators to increase profitability, encourage direct bookings, centralize operations and provide a personalized guest experience from booking to checkout and everything in between. For over 40 years, Maestro’s Diamond Plus Service has provided unparalleled, 24/7 support and training services in North America to help hotel groups stay productive and competitive. Click here for more information on Maestro. Click here to get your free PMS Buyer’s Guide.
Barbara Worcester
NORTHWIND Maestro
