UK cruises, new gratuities

[pablo222]

"it is an American culture and you are on an American ship so do as in Rome" and the most stupidest comment made by people who follow like sheep.

 

I hope you never come to the us and hire a car.

 

We drive on the right here.

 

As you refuse to adapt to local customs, I think you would kill a lot of people by not being one of the sheep.

[BunnieBear]

 

Would it make you happy if the price of a seven day Princess cruise went up by, say, $100 for passengers booking from the UK but not for the other passengers on the same cruise?

 

Would you still book on Princess or would you switch to another cruise line that did not increase their prices?

 

UK bookers may well be paying way more than $100 more for the same cruise already. I joined ShipMate after I booked and the price tracker they'd email me from there was consistently the same or fewer dollars than I've paid in pounds, so around 20% more than if I'd been a US citizen.

 

 

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[RocketMan275]

I have no problem paying more to cover staff costs. I think it's the fact that the price isn't the price that we dislike in the UK, meaning cruises are not directly comparible with land based holidays and it's daunting to book as a first time cruiser without wondering what your eventual holiday price will be. What looks affordable at face value could leave some people in debt when everything else is added in.

 

I don't remember the exact price difference but I seem to think it was at least £200 more than the price we'd booked at and we'd have forfeited our deposit if we'd canceled and rebooked.

 

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Are you saying that the average Englishman cannot add the gratuities to the cruise fare and make that comparison?

[antsp]

UK bookers may well be paying way more than $100 more for the same cruise already. I joined ShipMate after I booked and the price tracker they'd email me from there was consistently the same or fewer dollars than I've paid in pounds, so around 20% more than if I'd been a US citizen.

 

 

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Cruises booked n the UK are actually cheaper than n the US, so its the US market at the moment paying more

[pwake]

My TA pays our gratuities out of their commission. But even so, on our next Princess cruise in January - 17 day Panama Canal transit - at the new rate, it's only about 3.2% of the fare.

 

 

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[BunnieBear]

Are you saying that the average Englishman cannot add the gratuities to the cruise fare and make that comparison?

No, I'm saying a first time cruiser wouldn't necessarily know you had to!

 

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[BunnieBear]

Cruises booked n the UK are actually cheaper than n the US, so its the US market at the moment paying more

Then ShipMate misreports?

 

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[BunnieBear]

Then ShipMate misreports?

 

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(Mine is from Seattle - just in case you meant Med cruises are more for Americans)

 

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[antsp]

Then ShipMate misreports?

 

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What cruise

[BunnieBear]

What cruise

Alaska

 

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[harz99]

Alaska

 

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Specifically which ship/sailing?

 

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[BunnieBear]

Specifically which ship/sailing?

 

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Sorry, our cabin is already fully occupied :-)

 

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[anniegb]

Cruises booked n the UK are actually cheaper than n the US, so its the US market at the moment paying more

 

Are you trying to wind them up?:evilsmile:

 

Annie

[antsp]

Are you trying to wind them up?:evilsmile:

 

Annie

No, at the moment they are. Pick a sailing and we can compare

[AZbeachboy]

So you advocate punishing the crew by removing the gratuities to lower your anxiety level? Just leave the service charge in place and there is no anxiety.

 

You seem to not be reading with any comprehension. I am not advocating anything. I am just showing options while trying to make cruise lines more responsible. By seafarer standards crew's must be paid a minimum. It cruise line get enough money from tips then that relieves them of some responsibility. If they do not get enough tips the cruise lines must make that up.

 

There agreement with the seafarers union is that the cruise lines are responsible for all money payments. The cruise line are trying to transfer their contractual agreements.

[RDC1]

Consider a ship like Emerald Princess...

 

When it is based in the US, gratuities are optional.

 

When it is based in Australia, gratuities are included in the cruise fare.

 

Someone, somewhere has figured out how to handle this accounting.

 

When the ship is based in Australia, is sailing under the Australian subsidiary, Princess Australia, and is under Australian financial rules. The percentage of total revenue of Australian subsidiary compared to those booked under the US and UK components is relatively small. Thus they can do something different for that market, since the tendency not to tip would cost them more, than impact upon their financial reporting.

[RDC1]

Thanks for the info.

 

Why do folk state that gratuities cannot be included in the ticket price then because of tax implications?

 

Annie

 

If a cruise line were to include gratuities in the fare or to make them non-optional then under US accounting rules (which they have to comply with since they are primarily listed on the US stock exchanges and subject to the SEC accounting rules) then the money would have to be booked as revenue and be considered to be salary to the crew.

 

As it sits now that money is neither revenue to the cruise line, nor expense. It is also not considered salary to the crew, but instead are tips.

 

The impact to the cruise line would be

 

Both revenue and expense line would go up by the same amount, resulting in as decrease in net margin percentage. A key financial reporting statistic.

 

Since revenue and expense would change the same net revenue and corresponding income taxes on the company probably would not change.

 

However, the change would impact crew taxes. This varies by country the many countries do not include tips in their retirement system taxes, while they do include salary. In those cases the crew would end up paying more taxes than they do under the current system. You even have some countries where tips are not taxed. Crew from those countries would be impacted even more.

 

It might impact the cruise line for those countries where the employer pays a match to the employee pays in retirement taxes.

 

In addition to the finance reporting reasons a couple of other reasons for not including it are:

 

1. Competition. Including it while their competition does not would have a negative impact on competition.

 

2. Impact upon contracts, including union, recruiting, contracting firms, etc.

[SantaFeFan]

No, I'm saying a first time cruiser wouldn't necessarily know you had to!

 

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Are you suggesting that first time cruises are pretty stupid? Anyone spending that kind of money will do some research before they make their purchase. Even a rudimentary search on what to be expected during a cruise - something any smart buyer would do - will reveal the so-called "hidden" costs, which are always readily available from my experience. Every cruise line I have sailed on has that information clearly displayed in the "what to expect on board" pages.

 

To spend several thousand dollars (pounds, euro, whatever) and then complain about being surprised because they weren't aware of additional costs is pretty much a non-issue since they are not "hidden". And, if they do get surprised, then serves them right for not bothering to learn about what the heck they are buying.

[RDC1]

Your questions are valid, and deserve answers

 

The cruise lines dont make gratuities mandatory or part of the fare because of they did, they would be required to account for the distribution of the funds.

 

The cruise lines that include gratuities as booking bonuses are an example of the lack of accountability for handling of these funds.

 

Regarding the pay for crew members, here are some numbers that may add some base to this discussion.

 

On a recent cruise on another line, we were charged 13.50 per day per person, and our two stewards had 31 rooms to service. I was told the company distributes 40 percent of the grats to housekeeping.

 

Take these numbers and you will see that the stewards are very well paid when compared to the same work in other venues.

 

Do the stewards actually make over 5000 dollars per months in tips, or is the cruise line keeping some of it?

 

Let me address your comments:

The cruise lines dont make gratuities mandatory or part of the fare because of they did, they would be required to account for the distribution of the funds.

 

 

Not correct. Under US accounting law all of the money received must be accounted for. The requirements are actually tighter dealing with tips. The regulation requires that in order to get the accounting treatment that they do 1. The tips must be optional (i.e. they allow the customer to remove them) 2. ALL FUNDS RECEIVED MUST BE DISTRIBUTED TO CREW.

 

If the cruise line removed the ability to removed and ran all of the gratuities through as revenue and the distribution as expense then it would be rather easy for them to divert some of the money.

 

Regarding the pay for crew members, here are some numbers that may add some base to this discussion.

 

On a recent cruise on another line, we were charged 13.50 per day per person, and our two stewards had 31 rooms to service. I was told the company distributes 40 percent of the grats to housekeeping.

 

Take these numbers and you will see that the stewards are very well paid when compared to the same work in other venues.

 

Do the stewards actually make over 5000 dollars per months in tips, or is the cruise line keeping some of it?

 

 

Your numbers are not valid, because while the cruise line might distribute 40% (I say might because I have not seen any specific numbers of how the money is distributed out of the pool) of that money to housekeeping, there are many people in housekeeping in addition to the Steward. Many are behind the scenes. Some are supervisory personnel in the same department.

 

 

My understanding is that Stewards actually due quite well. Not to the $5000 dollar amount but well above minimum wage.

 

 

The cruise lines are very clear that the money goes into a pool across the fleet and then redistributed. To get the financial reporting treatment that they are getting it all must go to crew.

 

 

The cruise lines that include gratuities as booking bonuses are an example of the lack of accountability for handling of these funds.

 

 

Not sure where you came up with this idea, but it is also incorrect. To do it as a booking bonus, all the cruise line has to do is to pay the money into the pool themselves. Then book the expense (usually as a sales and marketing line item). The fact that a cruise line is running free gratuity sales really has no impact other then who pays into the pool.

Edited August 14, 2017 by RDC1

[anniegb]

If a cruise line were to include gratuities in the fare or to make them non-optional then under US accounting rules (which they have to comply with since they are primarily listed on the US stock exchanges and subject to the SEC accounting rules) then the money would have to be booked as revenue and be considered to be salary to the crew.

 

As it sits now that money is neither revenue to the cruise line, nor expense. It is also not considered salary to the crew, but instead are tips.

 

The impact to the cruise line would be

 

Both revenue and expense line would go up by the same amount, resulting in as decrease in net margin percentage. A key financial reporting statistic.

 

Since revenue and expense would change the same net revenue and corresponding income taxes on the company probably would not change.

 

However, the change would impact crew taxes. This varies by country the many countries do not include tips in their retirement system taxes, while they do include salary. In those cases the crew would end up paying more taxes than they do under the current system. You even have some countries where tips are not taxed. Crew from those countries would be impacted even more.

 

It might impact the cruise line for those countries where the employer pays a match to the employee pays in retirement taxes.

 

In addition to the finance reporting reasons a couple of other reasons for not including it are:

 

1. Competition. Including it while their competition does not would have a negative impact on competition.

 

2. Impact upon contracts, including union, recruiting, contracting firms, etc.

 

Agreed thaat revenue and expenses would increase by equal amount therefore no impact on the nett profit

 

I speak from extensive experience - if a seafarer is not resident in his home country for 183 days in 1 year, they normally accrue substantial tax concessions. I would need to see documentary evidence to support the theory that the seafarer would lose. If such evidence was presented, why not revert to the old system where the employee receives the cash directly from the passenger? Currently I will assume the cash sits in the cruise line bank accounts - nice little earner btw - and they control the distribution but it is not their money?

 

I agree the system is used for marketing purposes.

 

What impact on contracts? - I need documentary evidence.

 

Potential impact on employer pension contributions - possible but more evidence required.

 

Sorry more questions than answers.

 

Annie

[RDC1]

It is not logical to administer the gratuity pool fleet wide - way too complicated. From my experience it complicates the administration of payroll.

 

Annie

 

Not really. I have seen such pool distributed in far more complex environments. Much easier to collect and distribute based upon a automated, computerized system, then to try and figure out how to balance opportunities across positions, ships, routes, home ports, etc. that all could impact tipping percentages.

 

Such a distribution system is very easy to automate.

[BunnieBear]

Are you suggesting that first time cruises are pretty stupid? Anyone spending that kind of money will do some research before they make their purchase. Even a rudimentary search on what to be expected during a cruise - something any smart buyer would do - will reveal the so-called "hidden" costs, which are always readily available from my experience. Every cruise line I have sailed on has that information clearly displayed in the "what to expect on board" pages.

 

To spend several thousand dollars (pounds, euro, whatever) and then complain about being surprised because they weren't aware of additional costs is pretty much a non-issue since they are not "hidden". And, if they do get surprised, then serves them right for not bothering to learn about what the heck they are buying.

 

Of course they will but going on lead price before doing any research a cruise seems a much cheaper option than it actually is. I bet it leads to a lot of disappointment for those who then find they can't actually afford the trip after all.

[RDC1]

Not a bizarre comment......many of the gratuity moralists on CC state that Princess is an American corporation and that non US citizens on Princess just need to "when in Rome do as..." If it is an American corporation then it is practicing tax evasion by this gratuity non sense.....people have the choice to tip or not to tip according to Princess and they are no more or less then others on a Princess ship....I can tell that just because people supposedly tip on CC does not make them righteous people because their name calling, moral tone and insults come off as classless, cheap, low life and ignorant to name a few.....give it a rest and double your tips next time to make up for the ones who choose not too...........:rolleyes::rolleyes::rolleyes:

 

 

This post makes it quite clear that you do not understand the financial reporting rules involved. The company is not conducting tax evasion that it would, in general, not impact their taxes. The impact would be on the crew members from countries that treat tips, different from salary.

 

Now it sounds like you would not have a problem with Princess raising its fares for an amount equal to the gratuity amount and that such a change would not have any impact upon your decision to book cruises.

 

In addition to financial regulations another primary reason is competition. To make such a change while its competition does not would place it at a competitive disadvantage.

 

As far as transparency goes Princess states pretty clearly on its web site what expected tips are based upon room category.

 

Rather than making the comment about being a US company, which actually it is not. I would use the comment that it is the business model and the practice of the company you are choosing to do business with. Nobody is twisting your arm to book with a company with such practices. If the practice is such a negative, with the exception of allowing you to save money by removing tips, then go elsewhere where that is not the business model.

[Colo Cruiser]

Are you trying to wind them up?:evilsmile:

 

Annie

 

 

This is what ANTSP does. Comes in and disrupts threads on purpose.

Actually made a post saying that they like to post non truths to wind everyone up.

Edited August 14, 2017 by Colo Cruiser

[RDC1]

Agreed thaat revenue and expenses would increase by equal amount therefore no impact on the nett profit

 

I speak from extensive experience - if a seafarer is not resident in his home country for 183 days in 1 year, they normally accrue substantial tax concessions. I would need to see documentary evidence to support the theory that the seafarer would lose. If such evidence was presented, why not revert to the old system where the employee receives the cash directly from the passenger? Currently I will assume the cash sits in the cruise line bank accounts - nice little earner btw - and they control the distribution but it is not their money?

 

I agree the system is used for marketing purposes.

 

What impact on contracts? - I need documentary evidence.

 

Potential impact on employer pension contributions - possible but more evidence required.

 

Sorry more questions than answers.

 

Annie

 

Go do your own search on the subject. There have been many previous discussions on this subject. Some of which have included some documentation. Easy enough to search on line. National tax laws are pretty easy to find. Especially the countries that provide a substantial number of crew members.

 

Under the old system the people providing service behind the scenes did not get compensated. Only those with direct contact. Also depending upon the passenger mix the numbers could very wildly. The pool system provides a more balanced, consistent system.

 

Last time I looked a short term account holding such funds prior to distribution would not generate enough revenue to even be considered to be material. No advantage to the company not to distribute it in a timely fashion such as the normal payroll cycle.