Royal increases gratuities...will HAL follow?

[Lauranne]

We sailed Silversea to the Galapagos last April. The gratuities are included in the fare. We loved it. We were informed that this was the case and were able to budget the cost into the total cost of our vacation. I like this. I have taken the time to calculate the HSC into our fare for our July 2015 cruise but I would rather pay it advance. I didn't feel pressured to tip extra on the Silversea cruise but I certainly do on HAL...interesting.

Laurie

[USN59-79]

When we book a cruise, we look at the following:

1. The cost of the cruise. We expect a few hundred or so for port charges and taxes, depending on the length of the cruise. We know that will be added, but are not concerned about it.

2. The cost of airfare to and from the cruise port. Sometimes this is more than the cost of the cruise, so it is important.

3. The cost of visas and the hassle to get them can be important. For example, we skipped the second half of this year's World Cruise because of the hassle of getting an Indian visa.

4. All other costs, like getting to and from the airport, shore excursions, meals ashore, etc. are minor costs that are part of the adventure.

5. Whether I pay $12.50 a day or $13.00 a day for gratuities is such a minor problem that it isn't worth thinking about, in my opinion. On a 30 day cruise we are talking about $15. Does anyone really care about an extra $15 on a cruise that costs three or four thousand dollars?

[take us away]

If you are concerned about the hotel charge at the end of the cruise, you can pre-buy OBC to cover the fees. We have no issue with the charge, even if they increase it, as nice to know the unknown person who bakes those marvelous raisin buns and the ones who wash the sheets will also get a bit of a tip.

[Ky Colonel]

Doesn't necessarily mean income taxes. There can be taxes on the fare price itself, whereas separating it out as a "service charge" might not be taxable. Mandatory charges might be taxed, but charges that are at the customer's discretion might not be.

 

IIRC, HAL is headquartered in Washington state, which has a B&O tax on gross business receipts, and I happen to know that the Washington state law which applies to restaurants is, "Tips or gratuities representing donations or gifts by customers under circumstances which are clearly voluntary are not part of the selling price and not subject to tax. However, mandatory additions to the price by the seller, whether labeled service charges, tips, gratuities or otherwise must be included in the selling price and are subject to both the retailing B&O and retail sales taxes." I'm not in a position to know what applies to cruise ships or hotels, but it's very possible that if HAL makes the HSC mandatory, it ends up becoming subject to more taxes.

 

Excellent point, zerbot.

 

However, Phillip217's post was limited to the adverse income tax consequences on ship employees (and not on the business tax burden on the cruise lines) and purported to cover all cruise lines and not just those, like HAL, that are headquartered in Washington State. As such, I believe Eclecticist's post is spot on.

 

Since I do not know the specifics of the Washington B&O and retail sales taxes, I cannot comment on how they might affect HAL's pricing decisions, much less how they might affect other non-Washington based cruise lines.

 

I still wish HAL would increase the pay of its onboard ship personnel and do whatever it needs to do to cover those costs, even if it means fares and/or HAL's tax burden will increase.

 

Smooth sailing,

 

Rod

[POA1]

 

IIRC, HAL is headquartered in Washington state, which has a B&O tax on gross business receipts, and I happen to know that the Washington state law which applies to restaurants is, "Tips or gratuities representing donations or gifts by customers under circumstances which are clearly voluntary are not part of the selling price and not subject to tax. However, mandatory additions to the price by the seller, whether labeled service charges, tips, gratuities or otherwise must be included in the selling price and are subject to both the retailing B&O and retail sales taxes." I'm not in a position to know what applies to cruise ships or hotels, but it's very possible that if HAL makes the HSC mandatory, it ends up becoming subject to more taxes.

 

The ships don't operate in Washington State, so they wouldn't be a taxing jurisdiction. There's a possible exception if the ship overnighted in Seattle, but I don't think that actually happens. The HSC is not charged at the moment the ship is in its home port.

 

If you are familiar with Florida sales tax on bar tabs while you're in Port Everglades, it's basically like that.

[cbr663]

I think $15 pp/day for HAL's Vista Suites, which are little more than regular balcony cabins with telephone concierge, is a little high. I think HAL should focus on improving its service before it even thinks about increasing the HSC. Our experience as been that it is a flip of a coin whether we will receive good service on a cruise ship.

 

I guess we can attribute RCL's service charge increase as yet another example of the constant nickle and diming done by main stream lines. NCL is trying out room service fees of as high as $7.95 on some of its ships and no longer permits passengers to remove food from the food service areas.

 

This path that the cruise lines are on sort of reminds me of the same path that grocery stores have been on. From no-name products to larger stores selling everything but groceries it seems, then self-serve check-outs to charging for grocery bags. The result is a completely unpleasant experience that supposedly saves you money? Funny thing is that I now find myself shopping more and more at smaller, Mom & Pop, type establishments and avoiding the behemoth grocery stores all together.

[BruceMuzz]

Excellent point, zerbot.

 

However, Phillip217's post was limited to the adverse income tax consequences on ship employees (and not on the business tax burden on the cruise lines) and purported to cover all cruise lines and not just those, like HAL, that are headquartered in Washington State. As such, I believe Eclecticist's post is spot on.

 

Since I do not know the specifics of the Washington B&O and retail sales taxes, I cannot comment on how they might affect HAL's pricing decisions, much less how they might affect other non-Washington based cruise lines.

 

I still wish HAL would increase the pay of its onboard ship personnel and do whatever it needs to do to cover those costs, even if it means fares and/or HAL's tax burden will increase.

 

Smooth sailing,

 

Rod

 

You also do not know the specifics of the agreements and requirements between the cruise lines, the manning agencies in other countries, and the tax offices of the national governments of the tipped crewmembers.

 

Many Asian countries require the cruise lines to send a percentage of the tipped crew's salary (not their tips) back to their home country - through the manning agent - for tax purposes.

If the gratuities become part of the fare, they also become part of the crew salary. That forces the cruise lines to send a much higher percentage of the crew earnings back to their government, who then takes a much deeper cut of those earnings.

In the process, the manning agent who is handling those funds, fiddles with the exchange rates and skims a nice percentage off for himself.

 

Depending on many factors, adding the gratuities to the fare can result in a net loss for the service staff.

[Folk Singer]

Right. Even experienced cruisers know it's there but can forget in the rush of watching cruise and airfares.

 

 

So true.:(

[Folk Singer]

You also do not know the specifics of the agreements and requirements between the cruise lines, the manning agencies in other countries, and the tax offices of the national governments of the tipped crewmembers.

 

Many Asian countries require the cruise lines to send a percentage of the tipped crew's salary (not their tips) back to their home country - through the manning agent - for tax purposes.

If the gratuities become part of the fare, they also become part of the crew salary. That forces the cruise lines to send a much higher percentage of the crew earnings back to their government, who then takes a much deeper cut of those earnings.

In the process, the manning agent who is handling those funds, fiddles with the exchange rates and skims a nice percentage off for himself.

 

Depending on many factors, adding the gratuities to the fare can result in a net loss for the service staff.

 

 

would not have thought about that. Thank you for the explanation.

[Ky Colonel]

You also do not know the specifics of the agreements and requirements between the cruise lines, the manning agencies in other countries, and the tax offices of the national governments of the tipped crewmembers...

 

Since you obviously have firsthand knowledge of all these matters, I defer to you ... thanks for clarifying ...

 

Rod

[cbr663]

<snip>

 

Many Asian countries require the cruise lines to send a percentage of the tipped crew's salary (not their tips) back to their home country - through the manning agent - for tax purposes.

If the gratuities become part of the fare, they also become part of the crew salary. That forces the cruise lines to send a much higher percentage of the crew earnings back to their government, who then takes a much deeper cut of those earnings.<snip>

 

This sounds very similar to the income tax that most of the passengers that provide the tips pay.

 

In the process, the manning agent who is handling those funds, fiddles with the exchange rates and skims a nice percentage off for himself.

What type of "nice percentage" are you referring to? Is it anything like the upwards of 5% that HAL skims off the top to pay for credit card fees and re-allocation fees for those ships who do not receive much in tips?

[InTheWASide]

In reply to the OP's question:

 

I doubt HAL will follow Royal... they do not compete with each other directly so there is no need for a "tit for tat" response.

 

However HAL DOES directly compete with Celebrity and there is talk theirs is about to go up as well. Just for fun throw in NCL which can't decide from month to month whether it wants to be more inclusive (premium) or more a la carte (mainstream) doing the same and I think it's safe to say HAL would follow it's direct competitors.

 

I also agree though, that the "Suites" gratuity can only go so high before people wonder what they are getting for that increase (Vista and Signature Suites get very little in terms of extra service and amenities... Neptune and Pinnacle Suites are of course a different story)

Edited May 15, 2015 by InTheWASide

[BruceMuzz]

When I started working for Royal Viking in 1974, the average passenger tipped a total of $25 per day.

If you plug that into an inflation calculator, it would be $118.39 per day in 2014.

 

But instead of increasing the gratuities to keep up with inflation, the cruise lines have reduced them by 50% over 40 years.

 

How many other industries have been able to reduce the earnings of their employees by 50% (without even considering inflation) and still remain in business?

 

Why would talented service staff remain in a business where their earnings go down every year?

Answer: Most of the best ones have left. They cannot afford to work on ships anymore.

 

Even in poorer countries, good service staff can earn more in a good hotel, and still see their families every night.

[CJcruzer]

In reply to the OP's question:

 

I doubt HAL will follow Royal... they do not compete with each other directly so there is no need for a "tit for tat" response.

 

However HAL DOES directly compete with Celebrity and there is talk theirs is about to go up as well. Just for fun throw in NCL which can't decide from month to month whether it wants to be more inclusive (premium) or more a la carte (mainstream) doing the same and I think it's safe to say HAL would follow it's direct competitors.

 

I also agree though, that the "Suites" gratuity can only go so high before people wonder what they are getting for that increase (Vista and Signature Suites get very little in terms of extra service and amenities... Neptune and Pinnacle Suites are of course a different story)

 

confirming Celebrity gratuities are increasing to $12.95 per person, as i received an email regarding this - booked for fall 2015. My gratuities are already prepaid/included on a promo - so does not affect me.

 

"As you prepare to set sail, we wanted to notify you of an update to our daily gratuities. As of June 1, 2015 for all sail dates beginning on or after July 1, 2015, Celebrity Cruises will be adjusting the automatic daily gratuity per day, per guest as follows:

 

• Standard staterooms - $12.00 to $12.95

 

• Concierge Class and AquaClass staterooms - $12.50 to $13.45

 

• Suite Class -- $15.50 to $16.45

 

This gratuity is shared by your Dining & Culinary Services Staff, Stateroom Attendants, Other Housekeeping Services Personnel, as well as staff from other departments who work behind the scenes to enhance your cruise experience.

 

Prepay your gratuities now to lock in the current rate before it adjusts on June 1. After this date, any prepaid gratuities applied to your reservation will be at the new rates.

 

Please note that if you have already prepaid your gratuities or have received them through a sales promotion that you will not incur any additional automatic daily gratuity charges once onboard.

 

Other onboard gratuity policies remain the same: an 18% gratuity is automatically added to bar service beverages; specialty dining reservations and mini bar items, and will be itemized on your receipt.

 

Carol

[LMaxwell]

If anyone thinks these increases go to crew I have a bridge to sell you

[Folk Singer]

With all the prices going up and the loyalty perks going down with the CDN $ so low this will be our last Cruise. Was planning on another with HAL but had to cancel out was so sad.:(:(

Edited May 16, 2015 by Folk Singer

[Ky Colonel]

If anyone thinks these increases go to crew I have a bridge to sell you

 

LM,

 

I'm interested - please provide details ... on both topics.

 

Thanks,

 

Rod

[LMaxwell]

LM,

 

I'm interested - please provide details ... on both topics.

 

Thanks,

 

Rod

Lovely bridge. Two decks. Great construction. half mile span. Blinky lights. Fresh paint. Make offer. No trades.

[sunsetbeachgal]

If service charge was part of cruise fare, which I am supportive of, my gratuities would not have to support those who remove them. I think the higher charge could mean that more opt out, sadly.

[Ky Colonel]

Lovely bridge. Two decks. Great construction. half mile span. Blinky lights. Fresh paint. Make offer. No trades.

 

Thanks, LM - that covers the bridge details, now how about details on where the HSC increase will go?

 

Rod

[serendipity1499]

There is a thread on the RCCL board about this..

 

Since Celebrity is also increasing their gratuities (RCCL does not call it a HSC), I would think that HAL will follow suit..

 

But a poster on the same RCCL thread posted this: Quote Hope they don't follow NCL on restricting people from bringing food to cabin...Unquote Does anyone know what this is all about?

I've occasionally taken a desert back to our cabin to be consumed later on in the evening on HAL

Edited May 16, 2015 by serendipity1499

[cbr663]

NCL is introducing a new service charge for room service and is also bringing in a new restriction: all food must be consumed in the designated food area and cannot leave that area. This means that you cannot take any food or I assume beverage back to your cabin with you. I don't know how they plan to enforce it, but I am sure that they have a plan.

[POA1]

Carnival has had higher HSC for a while now. Why do people think that Royal Caribbean would cause Holland America to increase HSC when Carnival's increase did not?

[serendipity1499]

NCL is introducing a new service charge for room service and is also bringing in a new restriction: all food must be consumed in the designated food area and cannot leave that area. This means that you cannot take any food or I assume beverage back to your cabin with you. I don't know how they plan to enforce it, but I am sure that they have a plan.

 

Thanks for your explanation..

 

Carnival has had higher HSC for a while now. Why do people think that Royal Caribbean would cause Holland America to increase HSC when Carnival's increase did not?

 

IMO Carnival cruises cater to a different demographic of Psgrs. & is not in direct competition with HAL... But IMO, Celebrity is in direct competition with HAL & Celebrity is increasing their HSC..

 

I might be totally wrong, but that's the reason I believe that HAL will increase their HSC sometime in the next year or so.. I have no problem with paying an increase in the HSC..

Edited May 17, 2015 by serendipity1499

[Topsham]

NCL is introducing a new service charge for room service and is also bringing in a new restriction: all food must be consumed in the designated food area and cannot leave that area. This means that you cannot take any food or I assume beverage back to your cabin with you. I don't know how they plan to enforce it, but I am sure that they have a plan.

 

 

 

Easy. If you are caught with food heading to your cabin it will be taken away and then stored then given out to you on disembarkation day to take home.

 

Nice. Thanks NCL for working out a new way to nickel and dime people.