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For Business, Corporate Travel & Meeting Buyers & Arrangers

Tipping and expenses

Giving a gratuity while on the road is rising up the corporate travel agenda, but managing the expenses incurred remains a grey area for companies...

WHEN MARRIOTT INTERNATIONAL announced in the autumn of 2014 that it was placing envelopes in 160,000 of its managed hotel rooms in North America, to encourage guests to leave a tip for their daily room cleaner as a mark of gratitude for their efforts, it must have thought it was on to a winner.

After all, it was backing a campaign launched by Maria Shriver, niece of President Kennedy and estranged wife of former California Governor Arnold Schwarzenegger, to highlight the role played by cleaners – overwhelmingly women – who are often overlooked in the hotel tipping stakes. Marriott CEO Arne Sorenson said the hotelier was “proud” to support Shriver’s campaign, called ‘The Envelope Please’, “to shine a light on the excellent behind-the-scenes work our room attendants do day in and day out”.

Yet Marriott’s altruism did not earn it the kudos it might perhaps have expected. Responses in the media and online were largely critical, ranging from irritation by some frequent travellers that they were being pressured into leaving a gratuity for maids for simply carrying out their jobs, to those who felt Marriott was trying to get guests to subsidise the wages of the hotel chain’s cleaners, its largest single group of employees.

While many other groups of employ­ees in Marriott hotels – such as bar staff and porters – are expected to earn tips as they interact with guests and provide a service, housekeepers are classed as working in ‘non-tipping’ positions and so gratuities do not officially form part of their remuneration.

Marriott has since ended its participa­tion in Shriver’s initiative, telling BBT: “Although we’re no longer a programme partner, many of our hotels continue to offer gratuity envelopes for guests who may voluntarily want to show their gratitude to their room attendants.”

CHANGING PRACTICES

Whether guests are so far taking up this offer is unclear. But what is becoming ap­parent is that the whole practice of giving a gratuity in the travel and hospitality world is rising up the agenda. Some New York restaurants, for example, such as Danny Meyer’s Union Square Cafe group, have decided to abolish tipping and raise prices instead, leaving the overall cost to the diner broadly the same. All staff, not just waiters, will, in theory, benefit.

In the UK, moreover, the Department for Business, Innovation and Skills is also investigating what happens to your tips after a number of UK mid-market restaurant chains – including Cote and Pizza Express – were ‘outed’ in the media last summer for allegedly not passing on to their staff all the service charge automati­cally levied on bills.

This led to UK Business Secretary Sajid Javid to launch a public consultation on the issue, arguing that “when a diner leaves a tip, they rightly expect it to go to the staff in full”. Previous research in 2009 had found that one in five restaurants did not pass tips on to their staff, he added. The consultation period ended in November and the government is expected to reveal its findings and possible need for action – including legislation – shortly.

HIDDEN EXPENSES

Yet whatever the government decides, it is not just a problem for hotels and restaurants. In the wider corporate travel world, tipping is in danger of becoming one of those ‘elephant in the room’ issues: a hidden expense that can destabilise reimbursement policies and unsettle those employees out on the road on company business. The questions of when, who and how much to tip are dif­ficult enough for many people who find the whole practice rather embarrassing, without the added pressure of wonder­ing whether or not your employer will reimburse the cost.

“Tipping is very much a grey area for a lot of businesses and we don’t come across many clients who proactively ask for tipping functionality to be built into their T&E [travel and expense] platform,” points out Kyle Ferguson, CEO of HRG’s expense management arm Fraedom.

What makes the whole tipping issue more complicated is the fact that many companies – especially larger ones – are fairly relaxed about gratuities captured on corporate cards as not only are these easily identified but also they are in line with expectations.

But should an employee, for example, be allowed to tip more than the ‘usual’ amount for exceptional service above the level expected? Or is it right for the company to decide this is a personal judgment and not one that the employer should be expected to meet?

Furthermore, the loitering elephant is joined by a more practical concern: if the tip is paid in cash and then all or part disallowed, the employee would only be human to feel rather disgruntled with his or her employer for being out of pocket.

Using a corporate card obviously helps ameliorate this situation, since gratuities are either included automatically or can be added at time of payment. Fraedom’s Ferguson points out that “a number of expense management systems have the ability to track and reconcile gratuities paid on cards”, citing advancements in mobile technology. “Last September we launched our smart scanning functional­ity which allows a traveller to take a photo of a receipt with their mobile device and upload it straight into the Fraedom platform.”

CASH OR CREDIT?

But the key problem is that many service-related tips are, in fact, usually paid in cash rather than plastic. The American Hotel and Lodging Association (AHLA) identifies some ten different categories of hotel employees who may expect a cash gratuity, generally for performing the service a guest may reasonably believe is already part of the room rate.

These are: the hotel’s courtesy shuttle driver; the valet or parking attendant; bell staff and porters; door staff; concierges; delivery of special items; room service; bartenders; waiters/waitresses; and housekeeping. The UK equivalent of the AHLA does not publish its own list, but the US tradition of tipping virtually every employee you have contact with in a hotel is becoming increasingly prevalent on this side of the Atlantic.

The ubiquity of the tipping culture in North America – especially in hotels – is re­flected in the formal travel policies of most major US and multinational companies. “A large number of corporate policies do cover circumstances where, under local custom, gratuities are expected and also that travel­lers will be reimbursed where the charge is not inclusive,” points out Nigel Turner, CWT UK’s senior director for programme management and business services. “This doesn’t specifically promote to staff that they should tip – it’s just saying that if it’s an expected factor, you should do it and the company will reimburse you.”

At software provider Citrix, for example, the global T&E policy allows gratuities up to a pre-defined percentage of the total bill, which can be reimbursed where identi­fied and itemised on original receipts. Jef Robinson, a global travel buyer for Citrix, says: “This is a straightforward process for restaurant meals, as well as many taxi and chauffeur services.”

But he points out there is “an obvious gap” for services such as doormen, porters, housekeeping, some taxis and small places to eat where cash tips are the norm but not identified on receipts or invoices. “In these cases it may not be possible to reimburse all gratuities expected by those providing services,” he says.

OUT OF POCKET

Cultural differences between North America and the UK on tipping perhaps reflects the reduced prominence given to how gratuities are accounted for in T&E policies on this side of the Atlantic. Karen Lopez, strategic relationship manager for Chambers Travel Management, says she has not come across a travel policy that formally covers tipping. “If a travel­ler adds a tip, it would usually be out of their own pocket, unless the tip is already included in the bill as a service charge, or the appropriate manager has agreed to it at their discretion,” she says. “I can’t see this position changing.”

Smaller businesses also appear less likely to embrace formal policies. At the Medical and Dental Defence Union of Scotland, the UK medical indemnity union for healthcare professionals, travel manager Peter Macey says it “does not have any hard and fast rules in place covering tipping”. But his own opinion “is that a gratuity is a personal matter and one which I, for example, would not try and claim back through expenses”.

His view emphasises that tipping remains a thorny issue for both those travelling and those charged with managing the expenses involved. Rightly or wrongly, Citrix’s Rob­inson points out, “whether employees are enabled to reward those providing a service is likely further to drive change in the hospitality industry in the long term.

“If organisations do not reimburse, trav­ellers are less likely to leave tips, resulting in reduced remuneration for those directly affected, although hopefully this will ulti­mately be addressed by their employers.”

But newcomers to the T&E world – such as fast-growing taxi service Uber – are also driving change. Uber specifically states on its website, for example, that ‘there’s no need to tip’ – something that some seasoned travellers find difficult to accept.

Yet there is one group of service providers vital to business travel that are not normally tipped: flight attendants. Given that their role in flight is primarily to ensure the safety of passengers rather than dispensing food and drink, most airlines formally prohibit the acceptance of gratuities by flight at­tendants – although anecdotal evidence suggests this does not stop some people trying. Nothing is ever simple, it seems, when it comes to tipping.

Read some top tips for tipping

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