This is a guest post by TopTipper, a cashless tipping solution for the hospitality industry.
Hiring and retaining good employees is a challenge many hospitality businesses are faced with. A key motivator for this is around the typically low wages associated with the industry – making it difficult to attract and retain good talent.
Current hospitality workforce trends
While wages have grown in the hospitality industry in recent years, employees to fill vacancies are scarce, as many workers left the industry due to the pandemic related layoffs and industry slowdown. Hospitality companies now have to rebuild their workforces and in doing so have to compete with other industries that pay higher wages for less intensive work.
Some Industry-wide issues around finding and retaining talent in the hospitality industry include:
- The U.S. Bureau of Labor Statistics highlights almost 40% of all U.S. jobs lost have been in the leisure and hospitality industries.
- According to Reuters, employment in the hospitality industry is down 15% from pre-pandemic levels. This equates to 2.5 million jobs, which is more than any other industry.
- The hospitality sector traditionally pays lower wages than other industries, especially for tipped workers. For instance, the average pay for hourly workers in non-supervisory roles within the leisure and hospitality sector was $16.21 in June 2021. This is compared to $25.68 across private non-farm payrolls, according to the U.S. Bureau of Labor Statistics (BLS)’s June (2021) job report.
- Of the hospitality workers who left the industry during the pandemic, 45% say they would return for higher pay. But hospitality companies can only increase wages so much before losing money.
Hospitality companies get around the problem of low wages by enticing employees with tips. Tips are typically cash-based and offer a token of appreciation for good care or service. With tips hospitality workers have the opportunity to boost their income significantly. The idea of a significant supplement to salary, is a strong motivator for employees in this sector to work hard and provide the best service possible.
The challenge of cash
However tips bring a problem of their own. Cash. In a survey of over 2,000 Americans, 50% of respondents stated they carry cash on hand less than half of the time they’re out.
But this is not a problem that can’t be solved.
COVID-19 precautions encouraged business owners to carry out cashless transactions. And as technology continues to advance, cash will likely be used less and less in daily activities, with different forms of cashless payment becoming more common.
Cashing out with cashless tipping
Tipping platforms are just one example of technology enabling cashless transactions, and they allow hospitality businesses to implement a convenient and easy cashless tipping solution. As a result, housekeepers, front desk staff, valets and any other employees who depend on tips can garner tips at no cost or expense to the organization.
Many industries are introducing cashless tipping to enable employees to receive tips, even when consumers don’t carry cash – in a hope to enhance hiring and reward employees. For instance, The 5th Street Restaurant Group introduced a “Tip The Kitchen” feature to attract more applicants. Tipping is also built into most modern Point of Sales (POS) Systems so that consumers can tip when they pay for their goods (think about the last time you went to your favorite coffee shop), keeping tipping at the forefront of consumers’ minds while making it way more convenient to do.
Furthermore, Twitter has introduced a “Tips” feature to allow users to be compensated directly through its platform.
To summarize
Cashless tipping offers a number of benefits to hospitality organizations, employees and guests alike;
- Happier employees = better guest experience
- Hospitality organizations can offer “higher pay” without incurring additional costs
In addition, implementing a tipping platform signals to your guests that your company cares about its employees.
Guesty’s talented marketing team is comprised of passionate professionals who share insightful industry knowledge and shape brand narratives. By bringing a diverse blend of expertise to the table, we are the visionary architects behind the Guesty brand and innovative campaigns that help people understand our product.
