SINGLE HSC/TIPPING THREAD (Previously "Why are gratuities not included in Fares?")

[taxmantoo]

Hopefully, there won't be any.

Totally agree !

[baggal]

The OP, in his first post, referenced the cost of the hotel service charge for a "family." In my experience, if more than 2 people are sharing a cabin of any size, the room stewards clearly deserve a gratuity!

 

Maybe the OP should change the type of vacation he takes. Rent a house, condo or apartment - let him do his own laundry, room cleaning, food shopping, food prep, cooking, serving and clean -up. Don't forget to clean the bathroom twice a day and have your towels replenished as you need them. Not my kind of vacation but it does work for some families. I'll gladly pay the hotel service charge and tip additionally for service above and beyond.

[Krazy Kruizers]

Just My 2 Cents

We have always left the Hotel Service Charge in place. This way we know that we can give extra cash tips to those people who have made our cruise an enjoyable one and that they can keep those tips -- not sharing it with anyone.

[Rumball]

Would a crew member respond in a manner designed to please a customer who "probed" trying to get a specific response?

Would a crew member tell you they didn't receive the service charge hoping that would be an incentive for you to tip them again?

You alleged that this happens on "different lines" as well as Holland. How did the cruise lines keep this quiet? Why haven't there been multiple law suits?

 

I don't know about lawsuits. But if you structure the payments such that service charge revenue gets directed towards paying employee compensation, there's really no fraud. The cruise lines aren't claiming the service charges are added to employee's salary dollar for dollar as additional income. That's just what some folks maybe want to believe, or try to persuade or shame others to believe. And I suppose the cruise lines don't mind if folks believe that, even though the cruise lines aren't exactly saying that.

 

It's less convenient to reach into your pockets and hand an actual dollar or two to someone whom you wanna tip, I get that. But it works. And you know it works.

[bUU]

BTW, your claim that the cruise lines do not pass on the service charge to their employees would constitute tax fraud in most jurisdictions. Most jurisdiction offer significant incentives to those who expose tax fraud.

Wouldn't such violations also be caught by internal auditors and perhaps even caught by public auditors? And aren't there industry reporters who would jump all over the opportunity to publish exposes about such violations if they were reality, and doesn't the cruise line know that that would result in being subjected to penalties when such fraud becomes public knowledge?

 

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[RocketMan275]

I don't know about lawsuits. But if you structure the payments such that service charge revenue gets directed towards paying employee compensation, there's really no fraud. The cruise lines aren't claiming the service charges are added to employee's salary dollar for dollar as additional income. That's just what some folks maybe want to believe, or try to persuade or shame others to believe. And I suppose the cruise lines don't mind if folks believe that, even though the cruise lines aren't exactly saying that.

 

But Holland is claiming that the service charges are added to the employee salary. Here's the pertinent point (which I will post for the third time): "The Hotel Service Charge is paid entirely to Holland America Line crew members, and represents an important part of their compensation."

 

You do see the part where it says "paid entirely to ... crew members"?

 

Now if that is not the case then it is fraud, and it would be tax fraud as well.

[TiogaCruiser]

Readers have to get through the main message (you can't adjust the service charge anymore folks) before getting to all the cheers for hotel service charges. At least each response bumps the post.

 

The target of my post is families budgeting for a holiday, not cruise line enhanced revenue cheerleaders.

 

There has been a material change in HAL's policy, maybe people ought to know?

 

Rumball

 

And knowing in advance, you budget for it.

 

Do you not budget for sales tax whenever you make a purchase? ( in a location that charges sales tax)

[RocketMan275]

Makes sense. Would a company, often subject to public scrutiny, as well as public auditing of their books, explicitly claim that money with certain tax treatment is actually being allocated in a different way?

 

 

 

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That lawyer down in, IIRC, Fort Lauderdale, who makes his living suing cruise lines would be all over it.

[Rumball]

And knowing in advance, you budget for it.

 

 

I agree

[esimon]

13.50 a day is less than the tip for one dinner. I wish people would stop complaining about this - 3 meals a day and wonderful room service would be way more than 15 a day.

[Rumball]

I do see the reference to the higher fee effective May 1, but I don't see anything about eliminating the ability of adjusting the HSC. ???

 

https://www.hollandamerica.com/cruise-vacation-planning/PlanningAndAdvice.action?tabName=Shipboard%20Life&contentMenu=Money%20Matters&contentSubMenu=Is%20There%20A%20Hotel%20Service%20Charge%20(Gratuity%2FTip)#

 

 

I thought the policy was unclear so I asked. A HAL agent tells me the service charge is adjustable. Not sure how far ahead that applies, but I accept that's the case at least for now.

[styles27]

Been on more than 20 cruises on many different lines and have never even once thought about having the "service charges" adjusted down. If anything we always tip more than the suggested amount.

 

 

I am one that didn't like when the cruise lines stopped the old policy of putting the money in individual envelopes and handing them to the crew on the last night. (It was nice to see how appreciative they were to receive the gratuity, and yes, it made me feel good to know that they were actually receiving it)

 

I can understand why they started automatically charging it to people's accounts...I'm sure there are many cheapo's out there that never intended to place any $$ in those envelopes which left a lot of crew members short changed.

 

Tipping, or the service charge is part of the cruise fare whether you want to accept that or not is your business.

 

I've never seen a staff member on any cruise ship that didn't earn those gratuities and it's sad to think that some passengers would step onto a cruise ship with no intention of paying that service charge...and I bet these are the same people who complain about every single freaking thing.

 

And I am FAR from a cruise line cheerleader. I just happen to be in the service industry and I've met many many many cheap complainers who tip nothing even when they're given A+ service.

[RDC1]

But Holland is claiming that the service charges are added to the employee salary. Here's the pertinent point (which I will post for the third time): "The Hotel Service Charge is paid entirely to Holland America Line crew members, and represents an important part of their compensation."

 

You do see the part where it says "paid entirely to ... crew members"?

 

Now if that is not the case then it is fraud, and it would be tax fraud as well.

 

 

It is also important to note that since the major cruise companies are listed on the US stock exchange they must follow US accounting law in their filings with SEC. Based upon some of the accounting rules the cruise lines would need to disclose if gratuities are not fully distributed to employees. Such rules allow gratuities to be handled outside of the accounting system (neither revenue nor expense) as long as certain rules are followed. The most important one being that funds received must be fully distributed.

[Rumball]

It is also important to note that since the major cruise companies are listed on the US stock exchange they must follow US accounting law in their filings with SEC. Based upon some of the accounting rules the cruise lines would need to disclose if gratuities are not fully distributed to employees. Such rules allow gratuities to be handled outside of the accounting system (neither revenue nor expense) as long as certain rules are followed. The most important one being that funds received must be fully distributed.

 

I guess I missed the posting everyone seems to be responding to where someone suggested the cruise lines are not complying with the law.

 

I have no doubt the cruise lines became so invested in administering tips instead of leaving it all up to passengers because they saw an opportunity to spend more and recover nothing for it. Because cruise lines are generous that way, and are really all about helping everyone. Like a charity, sort of.

 

Oh yeah...but charities aren't listed on the US stock exchange. So maybe there's another reason.

 

I just can't figure it out....:evilsmile:

[Herfnerd]

I see posts stating whether cruise line employees get their full portion or not but what is considered a full portion? It's been my understanding, and this is based on my experience on Carnival cruises, that gratuities are divvied between room stewards, wait staff and others behind the scenes. In other words, no one one employee will see the full $13.50 per person per day HSC. Am I wrong?

 

 

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[bUU]

It's been my understanding, and this is based on my experience on Carnival cruises, that gratuities are divvied between room stewards, wait staff and others behind the scenes.

 

You are correct. The $13.50 is divided up between different crew members.

 

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[rkacruiser]

Please post a link to the policy change. The Holland website I access says: "If our service exceeds or fails to meet your expectations, you are free to adjust this amount at the end of each segment and/or voyage. The Hotel Service Charge is paid entirely to Holland America Line crew members, and represents an important part of their compensation. A 15% Bar Service Charge is automatically added to bar charges and Dining Room wine purchases. In terminals, airports, ports of call and on shore excursions, we suggest that you extend gratuities consistent with customary local practices." This page also notes the change in amounts.

Here's the link.

https://www.hollandamerica.com/cruise-vacation-planning/PlanningAndAdvice.action?tabName=Shipboard%20Life&contentMenu=Money%20Matters&contentSubMenu=Is%20There%20A%20Hotel%20Service%20Charge%20(Gratuity%2FTip)#

 

I accessed the same link and found the same thing. Gratuities may still be adjusted. Much ado about little.

[RDC1]

I guess I missed the posting everyone seems to be responding to where someone suggested the cruise lines are not complying with the law.

 

I have no doubt the cruise lines became so invested in administering tips instead of leaving it all up to passengers because they saw an opportunity to spend more and recover nothing for it. Because cruise lines are generous that way, and are really all about helping everyone. Like a charity, sort of.

 

Oh yeah...but charities aren't listed on the US stock exchange. So maybe there's another reason.

 

I just can't figure it out....:evilsmile:

 

 

You are the one that suggested that it is not all going to employees.

 

US accounting rules are very specific on how tips must be handled in accounting systems and how they must be reported in SEC financial filings. One of those rules is that the company MUST distribute all gratuities to employees.

 

If they were not distributing all tips to employees it would be very obvious in their financial filings. Failure to properly disclose if filings would put them in violation of SEC rules and result in them not being able to be listed on US exchanges.

[POA1]

For sailings departing on or after May 1, 2017 the daily Hotel Service Charge for suites is USD$15.00* per guest per day, and USD$13.50* per guest per day for other staterooms.

Thanks. I should have just looked it up. Just being lazy.

[RDC1]

Wouldn't such violations also be caught by internal auditors and perhaps even caught by public auditors? And aren't there industry reporters who would jump all over the opportunity to publish exposes about such violations if they were reality, and doesn't the cruise line know that that would result in being subjected to penalties when such fraud becomes public knowledge?

 

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It would certainly show up in the audit process and the certification of 10k and 10q filings. Also if they did not pay all of the gratuities to employees then they would have to be processed in accounting system as revenue and expenses. That would be noticeable in the 10q and 10k filings and would reduce net margin by about half of a percentage point. Stock analysts would certainly pick up on that in their reports as well.

 

As long as the company fully distributes tips to their employees and meets some other rules, the tip money is processed outside of the company accounts, it is neither revenue nor an expense to the company. The key is that it MUST ALL BE DISTRIBUTED TO EMPLOYEES. It also has benefits to employees from various countries based upon tax and retirement system treatment for tips compared to wages.

[Rumball]

You are the one that suggested that it is not all going to employees.

 

US accounting rules are very specific on how tips must be handled in accounting systems and how they must be reported in SEC financial filings. One of those rules is that the company MUST distribute all gratuities to employees.

 

If they were not distributing all tips to employees it would be very obvious in their financial filings. Failure to properly disclose if filings would put them in violation of SEC rules and result in them not being able to be listed on US exchanges.

 

I said if the payments get directed towards paying employee compensation, there's really no fraud.

 

I don't know how they structure the revenue, either do any of you. You are making assumptions in the cruiseline's favor. You may do so, but I am not required to.

 

I believe if I pay $50 or $500 or $1500 in hotel service charges, it does NOT add the equivalent amount collectively to what the crew would have otherwise received. I concede it's possible, I just don't believe it.

 

I'm sure if I pay someone $50 in cash, it adds $50 to his/her income.

 

Not sure why you still call it a 'tip', even HAL has moved away from that. It's a service charge. A tip is discretionary, not obligatory.

 

Nothing I've heard here changes my view. I've heard it all before.

 

Not angry at any of you. But seems there's not much tolerance for contrary opinions here.

[VennDiagram]

...

To be certain, I am not interested in re-igniting a senseless old debate about the merits of tipping. Heard it all before from the cruiseline cheerleaders and the cruiseline insiders guised as cheerleaders. I firmly subscribe to the view that the only tips the staff ever see are the cash you slip them discretely. The rest of these charges are cruiseline revenue/profit shamelessly pitched as gratuities. I say don't be fooled or shamed by cheerleaders.

....

.

 

 

......

 

Not angry at any of you. But seems there's not much tolerance for contrary opinions here.

 

People have, even after your insults, and your suggestion that anyone who defends the cruiseline is some sort of paid shill, taken their own time and tried to explain to you. So you're okay with being allowed to express your opinion, but anyone else expressing a view contrary to yours is a "cheerleader" or "cruiseline insiders guised as cheerleaders".

 

 

You don't even see the irony, do you? Okay then :rolleyes:

[navybankerteacher]

My understanding is that the courts are still looking at this very issue: if it's mandatory, it's no longer a tip, and if it's no longer a tip, it must be taxable income.

 

Because service (as provided by cabin stewards, dining room waiters, etc.) is a major part of the cruise experience, passengers are arguably entitled to reduce part of what they pay for the cruise experience if the service has been unsatisfactory.

 

So, just as passengers who have received service "above and beyond" are inclined to tip extra, the reverse should also be possible.

 

It is unfortunate that some people see that option as a chance to save a bit of money, but there are people like that everywhere.

[AZNative2000]

Anyway maybe someone who is sailing in the next month or so can report back on whether they were successful in adjusting these new service charges.

Pretty sure we won't see a thread by someone on CC telling everyone here that they "adjusted" their HSC. Bragging about cheaping out seems incongruous.

It is unfortunate that some people see that option as a chance to save a bit of money, but there are people like that everywhere.

As many others have said, "If you can afford to cruise, you can afford to tip".

 

Cheers!

[RDC1]

I said if the payments get directed towards paying employee compensation, there's really no fraud.

 

I don't know how they structure the revenue, either do any of you. You are making assumptions in the cruiseline's favor. You may do so, but I am not required to.

 

I believe if I pay $50 or $500 or $1500 in hotel service charges, it does NOT add the equivalent amount collectively to what the crew would have otherwise received. I concede it's possible, I just don't believe it.

 

I'm sure if I pay someone $50 in cash, it adds $50 to his/her income.

 

Not sure why you still call it a 'tip', even HAL has moved away from that. It's a service charge. A tip is discretionary, not obligatory.

 

Nothing I've heard here changes my view. I've heard it all before.

 

Not angry at any of you. But seems there's not much tolerance for contrary opinions here.

 

I am not making assumptions. It is all in the accounting and government filings. 100% of the money paid in daily gratuities is paid out to employees and it is done so as tips, not wages.

 

As far as being discretionary or not. The only item to point to is that they have removed some language. As anyone that deals with contracts and other legal documents knows the lack of a comment does not mean that the opposite is true. Until someone actually reports that HAL has removed all ways to modify the daily gratuity I will expect that it is modifiable. While NCL has made it difficult to modify there gratuity, it can still be modified.

 

If HAL removes all ways to modify then it will impact their fillings and will have far more impact on them and their employees then it would be worth.

 

Making it more difficult is not the same as not allowing. I would actually be in favor of them making it more difficult, while still staying on the correct side of accounting regulation and tax law.