Head Tale

Officially, most all-inclusive resorts have a “no tipping” policy.

But the reality is that many workers at all-inclusive resorts toil for relatively low wages and many vacation-goers who spend thousands to go to an all-inclusive, don’t mind giving a bit more on top of that throughout the week in tips for servers, maids and others – either following their own formula for who they tip and how much or only tipping occasionally and/or only for really good service or whatever.

Here’s the suggested tips I saw in one article about tipping in Mexico although these are obviously only guidelines:

Suggested Tip

* Restaurants: $1-3 per meal per table
* Bartender: $1 per round of drinks
* Bellmen: $1-3 per bag / 20-50 pesos
* Housekeeper: $1-5 a day, if you have special minibar requests tip extra
* Pool Boys: $5 if they save you prime chairs by the pool
* Concierge: $5 if they get you into a fully booked specialty restaurant

Because of this, a  recurring question that comes up if you spend any time on Trip Advisor forums, Facebook fan pages for resorts or anywhere else that people are discussing tropical holidays is whether you should tip in USD or the local currency (in this blog post, I’ll talk about Mexican pesos although many of the same points apply if you’re going to the Dominican Republic or Jamaica or even Cuba although Cuba is a bit unique with that country having two forms of currency – one for locals and one for tourists.  We once tried to pay for a meal with a tour guide and he grabbed our “tourist” bills which are worth more and paid with local currency!)

Anyhow, if you are American, there are reasons to tip in USD and reasons to tip in the local currency.  But ultimately, I feel strongly that for most visitors, no matter where you’re from, tipping in the local currency is the best for everyone involved for a variety of reasons.

Reasons People Tip in USD

• This is the currency that most Americans have already so they don’t have to bother with exchanging it.
• Especially in a place like Cancun or Playa Del Carmen or most other tourist hotspots, American money is essentially a second currency, widely used and accepted so it’s not like you’re going to some isolated country in central Africa that rarely sees American dollars.  Prices are often posted in both currencies and most stores and restaurants will accept USD without issue (though not everywhere!)  Also, you may end up getting your change back in pesos anyhow.
  (I’ve seen reports that people feel like they get better deals when negotiating in stores or with vendors if they pay in pesos instead of USD.)
• There is a perception among some people that American money is “worth more” or “more desirable” to workers, even than their local currency which seems counter-intuitive at best and completely uninformed at worst.
• Although it’s impossible for it to be “worth more” than whatever the exchange rate of the day is, American money *is* more versatile – if you have a stack of American dollar bills and you don’t give them all out in Mexico, you can easily use them on your next trip, even if you decide to go to a completely different country.
• Obviously, American money is most useful if you decide to visit the US which is the #1 tourist destination for Canadians and probably on the list for people from many other countries as well.
• I read one comment from someone who said they prefer tipping in USD since they don’t have to do any math, especially after a few drinks.  I mean, right now 1 USD is basically equal to 20 pesos so that’s pretty easy math – one buck = 20 pesos, two bucks = 40 pesos, five bucks = 100 pesos and so on but if that easy math stymies you, by all means, stick with single greenbacks for double tequila shots! 😉
• Many people report that staff tell them that they prefer receiving tips in American dollars but my sense is that this is more about staff being well-trained to be agreeable generally and tell guests what they want to hear and/or that staff see the money as roughly the same so why quibble and risk insulting someone?
• Because of the way the bills of each country “equate”, there’s a chance that people will be more generous if they tip in American money than local currency depending on the exchange rate at the time.  For example, right now Americans commonly use $1 or $5 bills to tip but have no middle option.  But Mexican currency has a 20 peso note (which is basically equivalent to $1 USD), a 50 peso note (which is basically $2.50 USD) and a 100 peso note (which is basically $5 USD).  So the thought is that, on balance, you’re likely to take home more when people only have the option of giving $1 (which might seem low for a tip) or $5 but no option for a $2.50 tip if they’re giving American money.

Reasons To Tip in Local Currency 
Ultimately, I’m with the people who think its better tip in the local currency instead of USD and I have a few reasons I think that is the best way to do it.

• If I tip 20 pesos, that’s slightly more than a single American dollar (at least at at today’s exchange rate of 19.4 pesos to the USD.) So if you give a resort employee $1 USD, it seems like you’re giving a buck (and you are from your point of view) but from their perspective, you’re actually giving them a bit less than if you gave them the nearest denomination in the local currency (20 peso note). The difference is literally only a nickel right now but over the course of a day or a few days or a month, an employee might lose a few bucks (depending on how often they get tipped) just because of this small difference. Over the course of a year, this could add up significantly, especially in countries were people might only be working for a few dollars per day.
• Some argue that US currency gives more “buying power” but I don’t understand that argument at all, especially at the current exchange rate.  Think of it this way – if I give a worker 20 pesos, they can go to Oxxo on their way home and buy a 20 peso chocolate bar.  But if an American gives that same worker $1 USD, the worker still has to use .6 of a peso of their own money to buy that same chocolate bar since $1 USD = 19.4 pesos (and it possibly costs them even more if Oxxo has a worse exchange rate that the bank or currency exchange which seems likely since they’re not in the business of subsidizing financial transactions.)  Of course, if currency fluctuates and $1 USD is worth more than 20 pesos, then yes, $1 USD is a better tip than 20 pesos and preferable.  But I’d argue the exchange rate has to be quite a bit higher than par because there are other costs associated with giving someone tips in a foreign currency.
• For example, I would assume the employee receiving the tip has to spend time and/or money to go get any foreign currency they receive exchanged and wherever they do this (bank, currency exchange, local shop, grey market), whoever is doing the exchange is going to take a cut, reducing the amount they received in foreign currency tips even more compared to if they were given local currency which they could spend/save without issue.
• Ultimately, a lot of this comes down to relatively minor differences in exchange rates. But, at the same time, I’d think that most tourists are in a better position, both financially and time-wise, to absorb the difference banks and other institutions charge for currency exchange than resort workers in Mexico. So to me, it makes sense for me to buy pesos at home and then use them for tips than to take USD then pass that cost of exchange onto the person I’m giving the tip to (though I do read comments from people who feel they get a better exchange rate from Mexican banks than their own financial institutions at home and honestly, I haven’t investigated that too closely.)
• Just in general, I think it’s more respectful to use the local currency (and doubly so with the current tensions between the US and Mexico due to Donald Trump making many inflammatory comments about Mexicans, which, although happening at a much higher level than the average tourist, can also subtly reinforce ideas that Americans think they’re “better” or “worth more” when they use their own currency instead of the local currency.)
• As I mentioned, Mexico’s next highest denomination after the 20 peso note is the 50 peso note which is about $2.50 and then a 100 peso note which is about $5 USD. So pesos give you more flexibility compared to USD which mostly has $1 or $5 as your options.  This may mean less $5 USD tips but may also mean that people are more willing to give something worth $2.50 USD than $1 USD, even if they feel $5 is too “rich” of a tip.  (Even one American I saw commenting said he gave $3 for the maid everyday so that’s basically the same thing – he thought $1 was too low but $5 too high.)
• I’m always surprised in these discussions when even Canadians (or occasionally Brits) say they’re tipping in USD.  That means people end up losing money twice – once to purchase American bills and then again when the person receiving the tip has to convert it into pesos.  (On that note, many Canadians, especially who’ve never been before, think it’s “cute” to leave loonie or toonie coins but my understanding is that most foreign banks won’t even accept non-bills so you end up forcing workers to find ways to exchange this money in other ways.  I think it was in Cuba where we actually saw locals lined up outside the airport trying to “sell” loonies and toonies to the departing Canadian tourists in exchange for their unused local CUCs!)

Some Other Thoughts About Tipping at All-Inclusives 

• In many resorts, it is different people who stock fridges/snacks in rooms and who make up the beds/clean.  So if you leave a tip for the maid, don’t forget to leave a separate tip for the person stocking your fridge!
• There is a “tipping hierarchy” and that list near the start of this post is a good example of the people who tend to get the bulk of the tips – bartenders, waiters, bell boys, etc.  But don’t be afraid to tip others who work just as hard if not harder or who have dangerous jobs – I think of maintenance people, gardeners, lifeguards, security guards, etc.  Also, you might want to tip people who appear to be working on commission (our most recent resort had photographers who might have only been paid if they sold packages after taking “free” photos though I’m not 100% sure if this was the case.)
• In some countries (especially Cuba), taking gifts (everything from school supplies to toys to candy & gum) is seen as even better than tips since most Cubans simply can’t take their tip money and go to Wal-Mart to buy this stuff.  But even in Mexico and the Dominican Republic, we’ve had workers who appear genuinely happy if we offer to leave behind some of items that we either didn’t use or used but didn’t want to transport back to Canada (pool floats, books and magazines, once we even left a small stroller).
• Someone pointed out to me that there’s also a hidden cost if you take pesos in converting them back to your local currency if you don’t spend them all.  I replied that we get around this by having a pretty good idea of our “tip/spending budget for the week” and if we over-estimate, we keep any pesos we don’t spend in a sock drawer to encourage us to book a trip the following year! 😉

In the end, although I prefer tipping in local currency and think there are more good reasons to do so than to not, I think the more important thing is that tourists see tipping as a valuable way to supplement the often meagre (relative to the rest of North America) wages of resort workers.  And ultimately, all things being equal, I suspect workers would prefer whichever type of tips gives them the most money in their pocket at the end of the day!  If I give a bartender a 20 peso tip for my drink and the American beside me gives $1USD, I’ve given slightly more.  But if I  tip the maid 50 pesos and that same American leaves $3USD, they’ve given slightly more.

(Of course, this discussion opens up a whole can of worms about tipping in all-inclusives in general and how that can end up impacting service for everyone in that those that tip more generously may end up receiving better service and how that undermines the point of an all-inclusive in the first place.  But I’m not going to go there – I’ll just say that I don’t personally agree with it but understand if someone chooses not to tip at an all-inclusive at all or in a very limited way and I’m also fine is a big spender throws around money freely, even if they end up getting better service or more perks or whatever. But personally, I try to find the sweet spot in the middle – tipping generously but not outrageously – to maintain balance in the world!) 😉