In a near-cashless society, hotels are finally catching up to other industries that allow for digital tipping, and that could help ease staffing shortages.
While most customers are used to tipping when they receive a service, such as for food delivery or a car valet, not everyone is aware that tipping housekeepers is also customary.
Fewer people carrying cash on trips also means housekeepers have been missing out on tips.
The rise in online payment services and apps has created opportunity for hotel companies to integrate these platforms, and hotel executives believe this extra compensation for employees could help with hiring and retention.
How They Work
Noble House Hotels & Resorts has been integrating a third-party digital tipping platform at several of its properties, said Stefan Mühle, vice president and regional managing director. The integration started with the Argonaut Hotel and Hotel Zoe Fisherman's Wharf, which are both in San Francisco, and Noble House has been rolling it out to other hotels one at a time.
Guestrooms have cards with QR codes on them that show the name and, optionally, a picture of the housekeeper responsible for the room, he said. Guests can scan the QR codes with their phones to leave a tip.
The hotel teams can decide whether the tips go directly to the housekeeper or are put into a tip pool shared by the housekeepers, Mühle said.
“In some work environments, the housekeeping team might say, ‘You know what, we’re one team, one dream. We wish for this to be a gratuity pool,’” he said. “If that’s the case, we can certainly look at that as an option as well.”
The tipping platform can be set up to pay the employee directly to a connected bank account or debit card, skipping payroll entirely, similar to how cash tips work, he said. Some hotel teams may prefer to run it through payroll, however, because that’s taxable income, so that is another option.
Wyndham Hotels & Resorts began rolling out a third-party mobile tipping platform for its hotels in September, making it one of the few hotel brand companies to officially adopt such technology. Scott Strickland, chief information officer at Wyndham, said introducing a mobile tipping option was one of the seven on-property technology priorities it set with its franchisee advisory board.
Wyndham decided to work with a company that specializes in this type of technology rather than try to build the software on its own, Strickland said. The software also works via a QR code scan on mobile devices, rather than through Wyndham’s loyalty program app, to make it easier for guests.
“If you have to stop and download the app before you’re able to tip the housekeeper, we thought that could be a friction point for them,” he said, adding the company intends to add this capability to the Wyndham app later to provide another tipping option.
Scanning the QR code doesn’t require guests to use another mobile payment platform, such as PayPal or Venmo, but if they have one, they can use it, Strickland said. Wyndham eventually plans to tie this function into its property management system so guests can charge tips to their rooms and have them appear on their bills.
Owners pay a $40 fee to enable the service, which principally covers the cost of the QR codes and cards that go in the rooms, Strickland said.
Employee Reception
The rollout at Noble House’s first two test properties, the Argonaut Hotel and Hotel Zoe Fisherman’s Wharf, took longer than expected because employees were initially concerned the mobile tipping platform would cut into the cash tips they receive, Mühle said. Once management was able to demonstrate that digital tips would be additive to what they were receiving before, housekeepers were more receptive.
“We had a few individuals in each of the hotels who were willing to give it a shot,” he said. “Once they actually saw that it generated additional gratuities, others followed suit and felt confident to join in. Now we have pretty much everyone in housekeeping at both hotels signed up, and they are seeing a steady stream of gratuities come through.”
Including pictures with the QR codes has had an added bonus of creating personal connections with guests, who don’t normally engage much with housekeepers, he said.
Noble House hasn’t been in a situation yet where it needs to hire more staff as demand levels are still below normal, Mühle said. However, as occupancy increases, he expects the mobile tipping platform will make future housekeeping job openings with the company more attractive.
On the retention side, he said so far there has been no staff turnover at any of the hotels where mobile tipping has been implemented.
“That may be coincidental, but I would like to believe that obviously the more benefits we provide to our team members, the more they feel that we have their best interest in mind,” he said.
Rather than pushing it on owners, Wyndham has taken a pull approach to rolling out the mobile tipping platform, Strickland said. So far, the feedback from franchisees has been positive.
“One of the things the franchisees love is that it basically costs them nothing, and it allows them to pay their housekeepers more,” he said.
Housekeepers have on average gained about $3 to $4 in their hourly wages thanks to the tips, Strickland said. On top of increasing tip amounts, mobile tipping has increased the frequency of tips as well.
Maybe a guest normally wouldn’t tip, but “now he is going to tip, or he’s going to tip on a daily basis if it’s a multi-day stay because it’s just so easy to do,” he said.
Those factors help franchisees to entice new employees when it's time to hire, he said.
What Took So Long
Tipping hotel employees, particularly housekeepers, is most like tipping servers in a restaurant. The difference, however, is the central system in hotels is the property management system while it’s the point-of-sale system in restaurants, said Robert Cole, founder and CEO of hotel marketing strategy and technology consulting company RockCheetah.
Property management systems never had much functionality in terms of payment processing other than generating a guest folio, he said. It was only a few years ago that advanced deposits were worked into these systems.
Another main reason why hotel companies didn’t develop their own methods of digital tipping before is the lack of a clear return on investment, Cole said.
“It’s not like the brands are going to come in and go, ‘OK, this is going to cost how much? $1 million or $100,000 or $10,000?’” he said. “It doesn’t matter. They have to figure out how to recoup that development cost.”
The brands would pass that cost onto owners in the form of fees, he said. The revenue stream created by digital tipping platforms would go directly to the employees, not the company.
“There is no revenue stream, and all of a sudden, it’s just not going to get developed,” he said.
The third-party technology companies that have created these platforms have come up with decent solutions, Cole said. One thing hotel companies should be aware of is that the use of QR codes in hotel rooms for tips creates opportunities for scams. Someone could replace a real QR code with a spoofed one, guests wouldn't be able to tell the difference and would then send their tips the scammer.
The QR code approach makes digital tipping simple, which is the point, he said. Adding further steps to improve security, such as tying it to the property management system or a sign-in process, could create friction in what should be an easy process.
“That’s the whole security versus convenience factor,” he said.