With tipping on the decline, hospitality providers are turning to tech and blunt invitations

Fewer people carrying cash has taken its toll on industry workers.

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Eliav Cohen and his colleagues noticed two things in the last few years of running their hot-air ballooning business.

First, travelers stopped carrying cash. Second, as a result, the tips they got from guests of Seattle Ballooning, where Cohen is chief pilot, plunged.

“We’d get $40 to $80 in cash and some people would give nothing” when they came back to earth after enjoying rides that range in price from $325 to $1,750 for a private sunset flight for two.

Think the gratitude expressed through lavish tipping at the start of the pandemic has persisted? Think again.

Tipping in the hospitality industry has been buffeted by that shift away from cash, along with inflation, cutbacks in amenities such as daily hotel housekeeping, tipping fatigue, and just bad service in a hospitality industry that’s still significantly understaffed. All of these things have only compounded pre-COVID confusion over whom to tip while traveling, and how much.

“At least in terms of the frequency of tipping, in most cases, it’s down,” said Ted Rossman, senior industry analyst at CreditCards.com, whose periodic surveys of this topic show that Americans are worse tippers now than they were before the pandemic.

Fewer than half of consumers say they always tip rideshare or taxi drivers, barely one in four always tip hotel housekeepers, and even the proportion of restaurant goers who always tip is down, from 77 percent in 2019 to 73 percent now.

As people prepare for winter holidays often associated with both travel and tipping, the implications of this on the quality of service they will get are huge. So are the unprecedented changes coming to the way guests tip — and how much more likely they are to confront blunt invitations to fork over gratuities that were once politely unspoken expectations.

More hospitality providers are adding tips and service charges to the bill. Cruise lines in particular automatically tack on daily gratuities to passengers’ accounts. In September, Royal Caribbean increased its daily gratuity fee to $18.50 per day, per person, for guests staying in suites, for instance; Carnival charges $16.50 per person, per day. Norwegian adds 20 percent for tips to the cost of spa services, beverage purchases, and specialty dining.

The biggest change, however, is in the growing use of technology to tip.

Valets, bartenders, tour guides, and others now conspicuously provide their Venmo usernames or QR codes customers can use to tip them. Point-of-sale systems with those guilt-inducing suggested tip amounts are making their way from takeout restaurants to hotels and resorts. (Twenty-six percent of people tip more when they’re presented with those pre-entered tip suggestions, that CreditCards.com survey found.)

Wyndham Hotels in September added an app for guests to tip their housekeepers. Other apps, including UpTip, TipYo, Tippy, Canary, and Grazzy enable cash-free tipping of hotel and restaurant workers.

“There’s a willingness to tip. How do we unlock the ability to tip, in the event you don’t have cash?” said Russell Lemmer, CEO of Grazzy.

A survey by the company at the beginning of this year found that 83 percent of guests want to tip, but don’t have cash. The proportion of payments of all kinds made in cash, which was already falling by about 1 percentage point per year since 2016, fell by an even sharper 7 percentage points when COVID hit, according to the Federal Reserve.

Lemmer recounted how, while claiming his bag from the bell desk at a hotel and running for an Uber, he “did the classic double-tap” — checking his pockets — and didn’t have cash to tip the bellman. “I heard him turn to a colleague and say, ‘That was the seventh in a row’ ” of customers who hadn’t tipped him.

Allowing guests to pay with apps “becomes this virtuous loop,” said Lemmer. “The employees are seeing that they’re getting better tips for better service so they give better service and get even better tips.”

That’s downright urgent at a time when nearly one in 10 hospitality industry jobs is still unfilled, according to the US Travel Association, with 1.1 million fewer workers than before the pandemic. The number of employees in hotels is 17 percent below pre-pandemic levels, and 844,000 leisure and hospitality workers quit their jobs in September.

“This is a group of people who we’re working very hard to bring back,” said Sid Upadhyay, CEO and cofounder of the hospitality hiring platform WizeHire. “I do worry that if our propensity to tip goes down, that’s meaningful dollars that are being taken out of people’s paychecks and may open people up to looking for other jobs.”

Wages in the industry have drastically increased, up by 23 percent since COVID started. But tips remain a big inducement for prospective employees in many of these roles.

“Tips are an important part of the income our guides make,” said Christopher Falvey, cofounder of Unique NOLA Tours in New Orleans, which has added a digital payment app and is considering putting a “tip-your-guide” page on its website. “We get a lot of calls after tours are done to tip guides. This is most likely either because the guest forgot or wants to deal with all tips in one fell swoop at the end of their vacation.”

Seattle Ballooning has built a cash-free tipping option into its reservation system, TripWorks, and tipping soared. It offers options for tipping of 15, 20, or 25 percent of the price. Now, between hourly pay and tips, said Cohen, the members of his ground crew can earn $410 a day for six-hour days. He also serves champagne when the balloon lands and invites them to tip “at the very peak of the experience.”

While most older consumers buy into the idea of tipping, CreditCards.com found, 30 percent of people 18 to 27 would prefer to pay more at restaurants than leave a tip.

“This whole thing will continue to evolve,” said Rossman. “Young adults are the most likely to say, ‘Yeah, let’s do away with tipping. The whole thing just isn’t fair.’ But I just don’t think customers are ready to pay higher prices to do away with tipping, and businesses don’t want to make up the difference.”