A challenge called digital gratitude: Tipping

When asked to name America’s greatest contribution to the world of hospitality, there isn’t one clear answer. Historians might point to the 18th-century taverns that offered food, drink, and accommodations for travelers. Hoteliers will point at the global hotel brands that dominate our world until this very day. Even utilities like room service, minibars, and televisions in hotel rooms are an American contribution to the lodging industry. 

But I would point at something different – showing gratuity with money for the service a person performs. A tip.

This sum of money customarily bestowed by a client upon a hospitality person (in addition to the basic price of the experience) for the service they have performed, is part of the American way. US society relies heavily on tipping to reward exceptional service. Most Americans will agree that it compensates for significant social barriers in a capitalist environment by redistributing money, cash or digitally, to those who are working hard to earn a living.

However, some might dispute this way of life. 

“Tipping is a ritual, demonstrating an economically-social status of a well-established person to another one who serves him”, says Oz Almog, a sociology Professor at Haifa University. 

“In the advanced progressive society in America, tipping is a cover to a sense of guilt. Digital tipping is a modern form of the confession chamber, a digital platform of polishing sins. It is a reflection of social hypocrisy. America’s dominance influences the entire world and in Israel, the extremely conformist Gen Y believe these values should be followed”, he says.

Tips and their amount are a matter of social custom and etiquette. This custom varies between countries and between settings. In some places, tipping is not expected and may be discouraged or considered insulting.

Some countries will add a service charge to the bill. Is this a replacement for tipping? Not necessarily. Is imposing a service charge on your hotel bill legal? In some countries it is and in some, it is not. But a service charge is not tipping.

 “Until the 1990s hotel employees in Israel enjoyed a service charge payment as part of their income. In those days they were part of the hotel’s financial process. When occupancy was high they enjoyed a higher salary and in times of difficulties it was the opposite”, says Tuvia Ashkenzi, secretary of the hotel section of the Histadrut, the General Federation of Labor in Israel. 

For most of Ashkenzi’s career he headed the bell attendants department and served voluntarily on the union of employees at the Hilton Tel Aviv. 

”The service charge was eliminated and the employees were compensated by working less days and a more stable income. However, even during the service charge days hotel guests, mainly Americans – the bread and butter of Israel’s tourism industry – tipped generously. Maids always received the most considerable tips and the luggage attendants followed. “Fast service, a smile, and engaging in a conversation with the guest is the secret for a generous tip,” he reveals.

With credit cards and digital payment hotel guests do not carry cash as before and the world of tipping is changing dramatically.

“Since technology became part of the tipping process there is a decrease of the amount employees enjoy at the end of the day”, says Shlomi Cohen, a veteran leader of the staff union at Sheraton Tel Aviv, operating since 1977. “Receiving this gratitude from guests via the paycheck after deductions of income tax and social security is part of life today. However maids in hotels still enjoy cash tips from guests personally”, he says.

But apparently, some see the shining aspects of digital tipping in hotels. Yuval Pomerantz is one of the most experienced hotel Human Resources managers in Israel, currently serving at Tel Aviv’s new David Kempinski hotel. For the last decade, he has recruited employees for new hotels and he is well aware of tipping generation gaps.” Hotel employees today, mainly millennials more than ever before, are more interested in receiving their social rights than a cash gratitude payment from a guest”, he says. 

“The technology today enables us to analyze digital tipping and distribute the sums automatically to the employees as part of their monthly salary. Young employees are less familiar with cash tips as a major benefit in comparison to older employees. They entirely trust technology to serve them respectively. Veteran staff in the hospitality industry might be more disappointed, surely more enthusiastic for cash.”

The customers however are unwillingly – and unconsciously – facing a revolution. Global brands and trusted hotel chains use systems that guarantee that employees will receive their proportional tip share. How do we actually know that all hotels follow? More and more guests are paying digitally, without checking the bill carefully for the tip allocation. They are satisfied with the text message from the credit card company of the amount charged. The number of guests adding a tip to the bill without making sure it is credited under tip is growing significantly.

In America, the number of hotels charging their guests via an iPad checkout is expanding rapidly. These screens will automatically ask if the guest would like to leave a tip. The Wall Street Journal noted recently that even at numerous service self-checkouts, where customers pay without ever interacting with an employee, an on-screen prompt to tip can still pop up – making customers feel like they’re being “emotionally blackmailed.”

Digital solutions replace human beings and help businesses to cut costs. So who gets those tips?

Hopper is a Montreal and Boston-based travel booking app and online travel marketplace that also sells hotel rooms. One of its unique features asks the customer to pay a “tip” as part of a booking. The amount of the tip is either a flat fee or a percentage of the reservation, depending on the type of booking, according to the website. Is this the new world of tipping that awaits us?

“Tipping is becoming a ubiquitous phenomenon especially since companies are realizing that they can significantly boost revenues coming from customers through tipping that way”, says Dipayan Biswas, a marketing and business professor at the University of South Florida. 

They don’t have to pay their employees that much since the tips can compensate for that. Tipflation is the correct way to describe it since a wide range of business establishments are offering and expecting tipping options.

Bearing in mind that Millennials possess intuitive knowledge of technology, these changes might be adopted globally sooner than one thinks. Is this tipping? A gratitude of a person to another that provided him a one-on-one excellent service? This digital gratitude is totally something completely different. Is the golem turning on its creator?

The writer is the Travel Flash Tips publisher.