Hotel Gratuities Debate Reaches Tipping Point

Mark Fischer considers himself lucky. The General Manager at the Revere Hotel in Boston is located in the heart of the city, directly across from an ATM where guests can get a few bills to tip the staff.

But whether those guests actually brave the snow, rain, or traffic is another story, which is just one of the reasons the Revere is in the final stages of beta testing mobile employee tip-collecting solutions.

“As the pandemic pushes us towards ‘touchless’ with keyless access for guest rooms and check-in by phone, this will further enhance the touchless and technically advanced components,” Fischer said of his HEI group hotel. “Technology is definitely where the hospitality industry is moving more and more.”

Cashless tipping technology is a strategy being promoted at HEI Hotels & Resorts, but being rolled out on a property-by-property basis. CEO Ted Darnall faced criticism last year for encouraging comments about training guests to tip more, rather than increasing hourly pay for employees. In 2021, the group of 80 hotels rolled out a policy allowing customers at check-in to authorize tips to be added to their final bill. Others, like the Hampton Inn & Suites Las Vegas-Henderson, made headlines for automatically adding tips to the sheets for guests who used their mobile app to check in.

The battle over who tips what, when and how comes at a crucial time for the hospitality industry. Hotel volume is still low, and many brands (including Hilton) are cutting or eliminating daily housekeeping unless requested. Tariffs for guests are higher, which could result in guests tipping less, a union leader says.

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Marriott has previously been criticized for posting household envelopes in the US and Canada as a not-so-subtle nod to leaving a tip. (The brand didn’t respond to a request for comment.) Hilton CEO Chris Nassetta was disappointed by comments at a hospitality conference that he doesn’t typically tip housekeeping staff — but was making a lot more in 2020 than the year before, though many Hilton employees were furloughed.

Kurt Petersen, co-president of UNITE HERE Local 11, says 95 percent of his 32,000 workers in hotels, restaurants, airports and other venues in Southern California and Arizona lost their jobs “virtually overnight.” While 75 percent of members are back to work, their everyday life looks very different – especially for hotel workers.

“We agreed to limit daily housekeeping, but we never thought of that [policy] would stay,” said Petersen. “I wish employers would raise wages and that tips were less important to our members’ livelihoods. With the rising cost of living, especially in urban areas like Los Angeles, these tips are much more important. It’s getting harder and harder to survive.”

He says that while it’s less common to tip employees abroad, base pay outside the US is often higher. Also, Petersen added, places like Europe have universal health coverage, so paying for medical needs is less likely to eat up base pay.

But no matter what country employees live in, the cost of living goes up — and tips are often paid less frequently, especially for housekeeping staff. A reduction in housekeeping means that guests who would often leave a tip in their room daily may end up leaving a smaller sum at the end of the stay, says Petersen. Also, because rooms aren’t cleaned on a regular basis, they often take more effort to shine — which means housekeepers may end up servicing fewer rooms in a day.

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The union leader says the taboos surrounding tipping are a dark mix of culture, convention and location. In other words, there is no standard formula for who to tip or how much. Guests typically have direct contact with a concierge or bellboys who take luggage to a room, which often contributes to a sense of connection, Petersen believes. But the transition to a cashless and touchless society often affects “faceless” employees — like housekeeping — the most. While Petersen says that “cash is still king,” he’s encouraged by the transition of some brands to offer guests more options.

Those brands include Wyndham Hotels & Resorts, which last week unveiled a new portfolio-wide mobile tipping solution for its franchisees in the US and Canada. On the Béné cashless platform, guests can use a QR code to tip certain hotel employees. Codes are unique to each team member and tips are deposited daily either directly into their individual bank accounts or into the hotel’s account to be paid out with regular payroll.

On the Béné cashless platform, guests can use a QR code to tip certain hotel employees. Source: Wyndham Hotels.

“Having previously empowered our franchisees to accept digital, contactless payments for stays at their hotels, the next logical step was to find a solution that would allow guests to engage housekeepers, waiters and other frontline workers in a similar way recognize,” said Chief Information Officer Scott Strickland.

At Revere, the team is beta testing a mobile platform that also allows guests to tip using a QR code. Another option being considered is the ability to tip an account at the counter when checking out, though general manager Fischer says only 35 to 40 percent of guests choose to check out in person since new features are available on guest room TVs.

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No matter what innovations hotels choose to innovate, the best platforms — and features — are those that give guests transparency and choice about who gets what, says Petersen.

It is subject to resort fees, which typically do not include staff gratuities, are not optional, and are not reflected in the base price displayed when booking online. Petersen essentially views these as “hidden or unclear allegations,” he says. “Many guests expect these to go to staff as tips, but most of the time they don’t.”

Pennsylvania Attorney General Josh Shapiro agrees, and late last year announced a settlement with Marriott International that requires the hotel chain to disclose additional charges beginning a booking process.

“Hotels shouldn’t be able to add last-minute hidden charges to your bill,” Shapiro said in a press release. “With this settlement, we are alerting the hospitality industry to put an end to this fraudulent practice.” Marriott is improving its disclosures, the Washington Post notes.

Where there’s more clarity about what’s included in rates — and how that affects hotel staff — is available through FairHotel, says Petersen. The website, operated by UNITE HERE North America, provides potential guests with a directory of hotel franchisees who are “socially responsible,” including those that provide retirement and healthcare benefits. There is also a tip guide.

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