6 Key Benefits of Digital Tipping for Hotels in 2024

Cash is king — or is it? In an increasingly cashless world, thanks in large part to the sharp rise of digital wallets within the last few years, more and more individuals are opting to leave the cash at home (or in the bank) and use credit cards or their phone for all types of purchases and transactions. 

In fact, more than half of all Britians (52%) say they rarely or never take cash with them on routine trips, and approximately 40% of Americans report that none of their purchases in a normal week are made with cash. In Ireland, one in five people never carry cash, and half of all people carry no more than 20 euros at once.

For the hospitality industry, whose employees often rely on gratuities as part of their income, this is not welcomed news, and hotels have been reluctant to embrace a digital tipping solution for a number of reasons. There may be the perception that a digital tipping solution will add more tasks for managers on the back-end such as managing the earned tips. Or it might not be a high priority because it primarily affects non-revenue areas such as housekeeping and porterage. And since the hospitality industry is no stranger to employee turnover, implementing a solution and training new employees can take time. 

But according to J.D. Power’s 2023 North America Third-Party Hotel Management Guest Satisfaction Benchmark^SM, hotel management companies have started to invest in maintenance, staffing, and renovations, all of which drives up guest satisfaction. An easy and efficient way to invest in your business is implementing a digital tipping solution, which allows you to attract and retain employees in an increasingly competitive environment. And since nearly two-thirds of people tip at least 11% more when tipping digitally, this type of solution is more important than ever, especially as higher room rates have resulted in greater guest expectations.

What Is Digital Tipping?

Digital tipping refers to the process of accepting tips via guests’ phones, which may involve clicking a particular link or scanning a QR code to initiate the transaction. 

How Does a Digital Tipping Program Work?

A digital tipping solution, also known as a digital tip jar, is an easy and efficient way for your employees to accept gratuities. Here’s how the process typically works:

1. The guest scans a QR code that’s unique to an employee, department, or property and is redirected to the tipping page — no app required.
2. The guest can select a specific employee from a drop-down list if there’s a department- or property-specific QR code. 
3. The guest selects a preset tip that’s provided or can elect to customize the amount.
4. The tip is submitted, and the transaction is complete.

6 Reasons to Implement Digital Tipping

What does a digital tipping solution have the power to do? 

1. Allows your hotel to adapt to evolving consumer habits. Some guests will continue to carry cash, but an increasing number rely solely on credit cards or their phone to make purchases. A digital tipping solution aligns with your customers’ preference for digital transactions while simultaneously showing that you’re on the forefront of implementing innovative technologies. 

2. Boosts employee earnings. Most people tend to tip more digitally; in fact, data shows that Evention’s InstaTip tips are over $8 per tip higher than standard cash tips. This income growth can also help with attracting and retaining quality employees.  

3. Simplifies tip distribution. A digital solution allows you to manage and distribute tips in a much more streamlined, straightforward manner, without the time-consuming burden of manual entry, which can result in human error.   

4. Provides transparent tip allocation. Track tips automatically as they come in with a system that not only creates accountability with your staff, but allows you to see which employees and departments are receiving the most gratuities. 

5. Ensures increased accuracy and compliance. Manual accounting in any form can be fraught with mistakes, but a digital tipping solution removes the risk of human error and legal complexities that may be associated with cash tipping. For example, InstaTip — Evention’s digital solution that’s powered by our tip calculation engine Tips+Gratuities — automatically calculates earned tips in the background, which simplifies tip management and provides payroll managers with a clear and accessible audit trail.

6. Attracts and retains employees with a competitive benefits package. Salary is often the main draw of a position, and increased tips from digital tipping can help you demonstrate higher compensation, which will enhance employee recruitment and retention efforts. It also demonstrates to your staff that you invest in the latest technology to boost quality of life, especially ones with proven employee benefits. 

Tips for Choosing the Right Digital Tipping Solution

There are a lot of digital tipping solutions out there, but many are new to the market and industry and therefore don’t have a proven track record of success. You want to find an established solution from an experienced provider that integrates seamlessly into your applications and processes. Prioritize a digital tipping solution that:

• Has the complexity to accommodate your properties needs. For example tip pools, splits, union bargaining agreements, local laws, etc.
• Provides full visibility with all tips and keeps track of tipping history
• Has a user-friendly interface that’s intuitive for guests 

Ready to Elevate Your Tipping Game? 

Implementing digital tipping has never been easier thanks to InstaTip, the only gratuity management solution on the market that can handle your complex needs and reconcile digital tips into all time and attendance and payroll options. If you’re interested in discovering how cashless tipping can increase staff compensation, use our InstaTip ROI Cost Calculator to crunch the numbers. Have questions? Contact us and we’ll get back to you. 

And if you’re looking for even more on the benefits of automated gratuity distribution, our eBook — The Win-Win of Automation: How Automation in Gratuity Distribution Benefits Both Employers and Employees — has the answers.