Change Of Heart: Hilton’s CEO Revises His Personal Tipping Policy After Public Blowback

A couple days ago we reported about Hilton’s president and CEO, Chris Nassetta saying at a conference that he doesn’t usually leave tips for housekeeping – a controversial statement that resulted in loud opposition once it made the rounds in the media.

Following a pretty hefty blowback from the public and industry insiders, Mr. Nassetta has now issued a statement that he would revise his tipping policy and will tip housekeeping in the future on both business and personal stays.

The whole matter has prompted a big conversation and many comments from people all over social media, news and travel blog (see John’s article from last week).

Basically what started this whole discussion is that CEO, Chris Nassetta was interviewed at the NYU International Hospitality Industry Investment Conference last week and had stated that he doesn’t usually leave tips for housekeeping and that sentiment was echoed by other event participants.

I guess on the surface that would have been fine if he was a CEO of a random company but not Hilton, a hospitality giant. I believe this opened up a can of worms and opposition within the company itself and the pressure came as much from the outside as it did from the inside to rectify this statement, likely because management feared the CEO’s statement would provoke an uprising of staff and unions.

So what did he say now? Bill Murphy wrote on Inc.com that Nassetta revised his position:

“When it comes to tipping in hotels, I have always had a different approach to work and personal travel. I also never meant for my approach to work stays at Hilton properties to discourage others from tipping when they are traveling,” Nassetta’s statement began. “Going forward, I will tip when traveling for both work and personal travel.”

Fine, ok he rectified that controversy and will tip from now on. An expense that he will likely recoup through the company or even if not is totally insignificant to someone who earns $20 Mil+ annually.

I don’t want to go into the discussion if it’s the right thing for him to tip or not. Nassetta is a self made guy who worked his way up from the bottom in this industry so whatever his decision is I’m sure it’s well founded.

This entire back paddling on the tipping matter wasn’t because he suddenly feels different but Hilton management including the CEO himself probably saw dynamite in this statement if they let it stand. Staff and their unions might feel that this emboldens guests to not tip anymore at Hilton, cutting into the employees bottom line. Something that could very well result in labor action and demands for pay increases so better rectify the position now and hope this matter dies off soon.

The matter has kicked off a discussion about the hospitality industry paying “living wages” to their employees. Two weeks ago I wrote about hotel employees in expensive cities being unable to live in the immediate vicinity of their workplace due to expensive living cost. I pulled some data and found that many hotels in fact pay quite well, especially in places such as San Francisco or Hawaii. So how necessary are tips really?

In Asia it’s very common that hotels are charging a 10-15% service charge on each room rate and the total will be distributed among all employees of the property. There are charts for each city where properties are ranked by the amount of service charge received per employee and people frequently change their workplace over this. Check out this Website called Hotel Service Charge Update by Hotel Thailand Tomorrow, outlining all the service charges for Thailand.

Would a service charge in hotels be a worldwide solution for this issue or just another method for corporations to pass the buck?

Conclusion

Whilst this was likely a simple management decision rather a personal position of Nassetta, I find this culture of bowing to an online mob worrisome.

Even though the implications could have been potentially severe company wide, though I doubt that, many customers who believe it’s right to tip their housekeeper would feel deterred by the CEO’s statement and suddenly don’t leave a tip anymore. Some might even tip extra, who knows?