When it comes to hoteliers adopting e-tipping, 2023 saw “lots of potential energy, but very little kinetic energy,” as Russ Lemmer, CEO of Austin, Texas-based fintech startup Grazzy, put it. This year, however, Lemmer’s company has seen “considerably more interest in terms of actually buying the software.” As a result, “we are seeing more of what we call ‘flow’ among our client hotels—more dollars being tipped per room digitally than ever before,” said Lemmer, whose company developed an e-tipping platform in 2021 that has since been approved by Marriott, Hyatt, Hilton, and IHG. For hoteliers that are considering an e-tipping solution, Lemmer shared six advantages of the medium versus cash tipping.
1Enhanced guest experience.
One of the primary reasons to offer e-tipping is that it saves guests from the potential negative experience of not having cash handy. “According to our marketplace surveys and focus groups, about 88 percent of hotel guests have had that moment in the last two years where they wanted to leave a tip and didn’t have cash,” noted Lemmer. “And when we asked them what emotion they felt at that moment, the first was shame and the second was frustration. So, if you think about hospitality as providing a branded experience, two things that you don’t want your customers feeling are shame and frustration.”
2Increased employee compensation.
Grazzy’s marketplace studies have shown that digital tips are $10 on average, significantly more than the average cash tip, which is $6. “So, if you invest in e-tipping as an enterprise, you can finally give your team the ‘raise’ it deserves at a fraction of the cost,” Lemmer said. Essential to maximizing e-tipping income is to offer the guest a variety of payment options within the platform. For example, guests can scan the QR code to tip via either Apple Pay, Google Pay, or adding to the room bill.
3Tip transparency.
Unlike the cash tip that goes into an employee’s pocket, digital tips have visibility among staff, which Grazzy has found to be important to employees. “Many of the hotel employees that we survey, especially on the bell and valet sides, pool tips: ‘I love my teammates, but I also want to know that we can all see the amounts going into the tipping pool,’” Lemmer related.
4Opportunity to boost morale.
With the visibility of tips to management via the platform’s dashboard comes the opportunity to celebrate those monetary indicators of great service. “Many GMs we have interviewed use the dashboard—perhaps displayed on a screen in the breakroom—to rally their teams at the Monday morning meeting,” he said. “‘Hey, look at what we accomplished last week; we had X level of tips.’ It’s a way to celebrate the team and provide a cultural boost.”
5Promotes guest feedback.
An e-tipping platform that offers click-throughs to sites like TripAdvisor provides guests an easy means of giving feedback along with their tip. An increase in positive comments is promotionally beneficial to the property overall. “A lot of times in these reviews, we see that guests are using the name of the actual employee who helped them out, which is great,” Lemmer added.
6Convenient tax reporting.
“A common question we get is ‘How are taxes handled with e-tipping? Am I liable for staff reporting their tip income?’ And the answer is no; the system does that all on your behalf,” Lemmer explained. “We connect into data feeds and systems to make the automatic reporting happen at scale.”
