How to Maximize Employee Engagement and Retention in 2025

Key Takeaways

• Employee engagement and retention are key to maintaining great service, cutting turnover costs, and boosting profitability in hospitality.
• High turnover drives up hiring and training expenses, disrupts operations, and creates inconsistent guest experiences. Fair pay, transparent tipping policies, and trust-building initiatives improve job satisfaction.
• Offering flexible schedules and career growth opportunities encourages long-term commitment, while recognition and rewards keep employees motivated.
• Fair pay, transparent tipping policies, and trust-building initiatives improve job satisfaction.
• Recognition and rewards programs motivate staff and encourage loyalty.
• Digital tools like eTip make tip distribution seamless and fair, while boosting earnings and strengthening engagement and retention.

The hospitality industry continues to face a staffing crisis, with a harrowing annual turnover rate of more than 70%. 

This level of disruption has a major impact on operations, leading to increased hiring costs, disrupted service, and declining guest satisfaction. 

These are specific consequences that will affect properties differently, but on the whole, employee engagement and retention go hand in hand with business performance. 

So how can businesses build up their employees and empower them to deliver exceptional service, while also increasing retention across their teams?

In this article, we’ll take a look at some key strategies hospitality leaders can use to improve employee engagement and employee retention, from competitive compensation and career development to modern digital tools like eTip that help to reward staff while streamlining operations. 

Why Employee Engagement and Retention Matters More Than Ever

The Link Between Employee Satisfaction and Guest Experience

When employees aren’t engaged, service suffers. Guests notice the inconsistency, leading to frustration, bad reviews, and a damaged reputation. 

On the flip side, when employees are invested in their work, they deliver better service—making guests happier and more likely to return.

Gallup’s State of the Global Workplace 2024 report did a good job of illustrating this.  It showed that businesses with highly engaged employees see a 23% increase in profitability and a 10% boost in customer loyalty compared to those with disengaged workers. 

In the hospitality industry, where positive guest experiences drive repeat bookings, keeping staff motivated is an investment that cannot be overlooked. 

The Cost of High Turnover in Hospitality

The cost of high turnover has long hampered businesses in the hospitality industry. 

Constantly hiring and training new staff is expensive, with some estimates showing it costs $5,000+ to replace a single employee when factoring in recruitment, training, and lost productivity.

Beyond the world of business and finances, high rates of turnover also represent a failure to keep individual team members happy. While this unhappiness is harder to quantify than dollars and cents lost in business, it is an important human aspect that should not be overlooked. 

Another downside that is hard to quantify is the loss of institutional knowledge that occurs when an experienced team member leaves their post. 

For example, if a bartender leaves a hotel after 20 years, it’s likely that the financial cost of training a new staff member is the least of the hotel’s worries. 

That particular bartender has had 20 years to hone his craft within the hotel, and may well know how to make drinks that other bartenders don’t. Similarly, they may have developed a deep level of rapport with certain guests that have visited many times over the years. 

By focusing on improving drivers of employee engagement, hospitality leaders can improve staff satisfaction, reduce turnover, and ultimately create a more profitable business where everyone is happier, from employees to guests, to managers. 

Key Strategies to Maximize Employee Engagement & Retention

Competitive & Transparent Compensation Practices

One of the top reasons hospitality employees leave is unclear or inconsistent pay. A lack of transparency around tip distribution, payroll errors, and delayed payments can cause dissatisfaction and distrust among staff.

Best practices for fair and transparent compensation:

• Ensure timely and accurate payments, especially for tips.
• Implement clear, fair tip distribution policies.
• Provide real-time earnings tracking so employees can see exactly what they’ve made.

Flexible Scheduling & Improved Work-Life Balance

Burnout is a major issue in hospitality, where long hours and unpredictable schedules make it difficult for employees to maintain a healthy work-life balance. 

Employees who feel overworked and undervalued are more likely to leave for jobs with more stability and flexibility.

While part of this problem is simply due to the nature of hospitality work being highly demanding, there are a few employee-centric policies that hotel managers can implement to support their teams, including:

• Allowing for shift swapping through scheduling apps.
• Offering mental health days or wellness incentives.
• Using predictable scheduling to help employees plan their lives.

The benefits of implementing these practices are twofold. On the one hand, employees gain a bit more breathing space. 

On the other hand, employees tend to value managers and workplaces that show a respect for their time and well-being, and this in itself boosts both employee engagement and retention. 

Career Development Opportunities

A lack of upward mobility is another reason employees leave. Hospitality leaders should provide clear career pathways to motivate and retain top talent.

Implementing career growth initiatives will look different from one property to the next, but can range from providing on-the-job training for new skills to establishing mentorship programs to develop future leaders.

Another good strategy is to offer cross-training opportunities so employees can learn multiple roles.

Recognizing & Rewarding Employee Performance

Employees who feel valued and appreciated are more engaged and committed to their roles. 

Recognition can be as simple as verbal praise, or as structured as an Employee of the Month program.

Ways to recognize top performers:

• Peer-to-peer recognition programs
• Performance-based bonuses
• Public acknowledgment in team meetings

Engagement skyrockets when employees know their hard work is noticed and rewarded.

How Digital Tipping Platforms Like eTip Improve Engagement & Retention

Digital tipping solutions come with a range of benefits while directly addressing common employee frustrations in hospitality, such as delayed or unfairly distributed tips.

By streamlining the process, tools like eTip help boost morale, increase earnings, and improve retention.

Key benefits of eTip for employee engagement:

• Real-time tip tracking – Employees always know how much they’ve earned.
• Instant payouts – No waiting until payday to receive tips.
• Transparent tip distribution – No disputes over missing or unfairly allocated tips.
• Automated compliance – Ensures all tips are accurately reported and processed.

Real-World Examples of Successful Employee Engagement Strategies

Many leading hospitality brands have already invested in employee-first initiatives to improve engagement and retention.

• Hyatt’s “RiseHY” Program – Focuses on career development for entry-level employees, providing mentorship and job training.
• Hilton’s Thrive at Hilton – Supports employees with mental health resources, wellness incentives, and flexible scheduling.
• Hotels using eTip – Properties that have switched to digital tipping report an average of $34,800 in cost savings on staff turnover.

When hotels and restaurants put their people first, it really does benefit everyone. 

The Long-Term Impact of Employee Engagement & Retention

Employee engagement is not just about reducing turnover—it has long-term benefits for businesses. These include:

• Higher guest satisfaction – Engaged employees are more likely to create better guest experiences.
• Lower operational costs – Retaining employees reduces recruitment and training expenses.
• Better brand reputation – Properties known for great workplace culture attract top talent.

Final Thoughts: How To Boost Employee Engagement And Employee Retention In 2025

In 2025, the best way to boost employee engagement and retention is by focusing on fair pay, work-life balance, career growth, and meaningful recognition—while using modern tools to enhance transparency and efficiency.

Hospitality leaders who prioritize these strategies will build stronger teams, reduce turnover, and improve guest satisfaction.

With digital solutions like eTip, hotels and restaurants can streamline operations, enhance service quality, and stay ahead in a rapidly evolving industry.

FAQ: Employee Engagement & Retention in Hospitality