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Are Digital Gratuities Just the Tip of the Iceberg for the Hotel Industry?

Industry Executives Say ‘No’ to Mandatory Tipping, but Wonder Who Carries Cash Anymore
Cash could disappear in a digital world, but a hotel panel doesn't want it to lead to mandatory gratuities. (CoStar photo illustration)
Cash could disappear in a digital world, but a hotel panel doesn't want it to lead to mandatory gratuities. (CoStar photo illustration)
CoStar News
April 21, 2023 | 9:09 P.M.

Forget how much of a gratuity to leave the hotel housekeeper, the bigger question is becoming how do you tip hotel staff when you don't have any cash?

The light-hearted question, top of mind for travelers, came up during a panel session at the Toronto Hotel Investment Conference.

"Mandatory tipping: Yes or no?" asked Tony Cohen, partner and executive vice president of Crescent Hotels & Resorts, which manages a portfolio of more than 100 upper-upscale and luxury hotels and resorts in the U.S. and Canada.

Ally Wesson, vice president of marketing for Toronto-based Realstar Hospitality, is against mandatory tipping but noted many brands are testing out mobile tipping apps.

"There have been positive results in some markets and not-so-great results in other markets," said Wesson, asking the audience of 500 if they had any cash on them. "Does anyone carry paper with them? There is very little cash in my wallet. I'm tapping everything with my phone. As a traveler, I would appreciate an additional tipping option."

More and more hotels are rolling out mobile tipping as a way to combat staffing shortages, with some chains having guestrooms that have cards with QR codes to allow tipping.

Danièle Gadbois, vice president of global enterprise sales with CWT, a business-to-business-for-employees travel management platform, said digital tipping is ideal.

"I cannot remember the last time I carried paper money in my pocket," said Gadbois. "Mandatory tipping? No. There still needs to be a service element even with the fact we are struggling to get people [working in the sector] these days."

Cindy Estis Green, chief executive and co-founder of Kalibri Labs, an analytics firm, said digital tipping would help with the challenge of recruiting housekeeping staff.

"I think there are corporate people more comfortable [with digital], but it has to be optional," she said.

From left to right: Tony Cohen, partner and executive vice president of Crescent Hotels & Resorts, Cindy Estis Green, CEO and co-founder of Kalibri Labs, Danièle Gadbois of CWT and Ally Wesson. (CoStar)

Data released by the Angus Reid Institute in February 2023 points to 'tipflation' becoming a significant issue, with 62% of Canadians reporting they were asked to tip more.

The survey found Canadian delivery drivers top the list of workers who get tips at 71%. Salon workers were at 68%.

Hotel workers trailed badly, with only 34% of respondents saying they tip hotel housekeepers. In the 18-34 age category, only 26% tipped the housekeeper, while 42% of those 55 and over tipped.

Asked who they believe should be tipped, 64% of Canadians listed their bartender — topping the list. The survey found 42% of respondents believe the hotel housekeeper should get a tip.

Tipping percentages are on the rise, Angus Reid noted. Before the pandemic, the average tip on payment services company Square was 16%. In the summer of 2020 and 2021, that average rose to 17%. By January 2023, the average was 20%.