There’s always a time when something wasn’t, and then it was. For the hotel industry–and society at large–that time is the age of cashless or digital tipping, and that time is now.
Cashless tipping has emerged and accelerated rapidly in recent years as the world becomes increasingly cash-free, a movement that’s been spurred still further by the COVID-19 pandemic. But while other service giants have been quick to pioneer this burgeoning payment method, service workers in the hotel environment are still mostly reliant on cash tips. There’s a huge opportunity to do better.
Hotels and resorts should ask themselves: What’s the real opportunity here?
Let’s start with society’s move away from cash. Prior to 2014, no one was cashless tipping, unless you were in a restaurant, and that’s only because their POS or point of sale system’s payment process included credit cards. Then in 2014, Starbucks made cashless or digital tipping available to its customers on its app, followed soon thereafter by Uber; again, both have customer cashless payment methods (e.g., credit card, debit card, digital wallet, gift card) stored in their systems.
But when the giants embrace a trend, others are soon to follow, and thus over the better part of the last decade, digital tipping has quietly come into its own, while society slowly goes cashless. That trend only heightened during the pandemic, when people became painfully aware of how germ-laden cash really is. In 2019, the U.S. Federal Reserve Diary of Consumer Payment Choice reported that 26% of all payments were cash, but in 2020, at the height of the pandemic, cash transactions dropped to just 19%.
Cash is even less desirable to the current and upcoming generations of young people who grew up with smartphones. Native digitals—Millennials and Gen Z—do just about everything on their phones, and have been early adopters of next-gen mobile payment apps like PayPal, Venmo, and Cash App. It’s even become a global trend: For example, Sweden began its move away from cash years ago and expects to be completely cashless by 2023.
There’s already plenty of evidence that digital tipping is working in other industries, even hotels. Have you personally noticed the rise in point-of-sale console tipping? You know: You’re at one of those take-out or no-service restaurants with the iPad at the order counter, and they spin it around so you can tap through your credit card transaction? Oh, look: It’s asking for a tip, too!
The truth is that restaurants have been moving away from cash for years to reduce the risk of robbery and speed up lines. Then, of course, the pandemic hit, and no one wanted to touch cash. So now, you probably click your desired tip on that restaurant iPad screen.
It’s not just an added convenience either; it’s good business. According to iDrop News, Toast, a point-of-sale software company, found that businesses using its software–which prompts customers to leave a tip–receive tips on roughly 60% of card sales, versus 28% for businesses that give customers a paper receipt and leave a tip jar for cash on the counter.
Even as the pandemic subsides and hotels begin to flourish again, the world continues to go cashless. So, if you’re running a hotel or resort, your valet, housekeeper, bellman, courtesy driver, and caddy are often not rewarded for their efforts and still worse, are missing out on an opportunity to increase their take-home pay. All because you haven’t deployed cashless tipping.
Enter digital tipping for hotels and resorts, the next logical extension of the cashless movement. It couldn’t come at a better time, either, with some 40% of travelers reporting challenges with paying at hotels, including a third unable to use their preferred payment methods at the property, according to a new study by Amadeus.
There are vendors currently offering innovative ways to make digital tipping a reality at hotels. For example, when your service workers provide excellent service to guests, the guests can scan a QR code with their smartphone; your customized tip page opens in their browser, and they enter a tip, rate their experience, and comment, all in about 30 seconds.
At a time when labor shortages are a major issue for the industry, ensuring your payment systems are properly rewarding employees is essential. Sierra Meadows, a 27-cabin getaway at the foot of Yosemite National Park and the Sierra Foothills, used buku’s digital tipping solution to put an extra $7,000 in the pockets of its housekeepers and room inspectors in just over a year, while maintaining excellent retention, only losing one housekeeper during that time.
“It’s a way to pay employees more without it costing you more,” said Reid Spice, COO of Sierra Meadows, who noticed that his housekeeping team was receiving fewer tips in the increasingly cashless world. “With just a bit of administration on our part, our team members are earning an extra $1 an hour. It seemed like an easy way to help give our employees a little more money.”
To learn more about how buku’s digital tipping solution works and how it can put more money in the pockets of your service workers, schedule a demo here.