NCL Cruise Service Charge Refund

[RDC1]

For those of you that disagree with the logic that the best way to be sure that rule 1 is followed (full distribution) is because they allow rule 2 (removal or adjustment) then let me ask the following question:

 

Then if NCLH is so intent on maximizing revenue that they would steal tips from their employees, then

 

1. Why do they still allow removal in any form? Because if they are not fully distributing the monies then allowing removal gains them nothing.

 

2. Anyone that follows stocks in detail now that analysts and for that matter the SEC does not like variance in accounting practices. If they were not following the rules and were including the money as revenue then it would be different from the other companies and would impact the financials in a way that would be considered to be material and would need to be in the 10k or 10Q reports as being a varience from industry practice. It would also impact NCLH's net margin in a negative way about 1/2 percent (from a model I put together on tip level over the NCLH customer base). A very noticeable level and something analysts would certainly note.

[Seminole1975]

Wow. RDC1! Thanks for the explanation. Not sure I completely understand it, but thanks! I will read it a couple more times. Not my specialty area.

[Cafedumonde]

You are not correct. Security law also means meeting US standards for financial reported (audited financial reports by the way certified to meet US financial regulations)

 

The US companies file financial reports to the SEC. You can go to the SEC's edgar site and read all of the US financial filings. These filings require the companies to follow US accounting standards and follow FSB regulations. Those regulations define how tips must be handled in corporate financial systems that produce those reports.

 

If tips meet the following rules 1. All money distributed to employees and 2. Customers can adjust or remove the tips then the tips are not considered to be revenue to the company and payments to employees are not considered salaries.

 

If those two rules are not followed then the company must include the amount in their revenue and must include payments to employees as salary.

 

I think I wasn't very clear. Sorry. Yes, NCL distributes the dsc to employees, but they can distribute it any way they wish to those employees. Yes, they have to comply with the sec. They do not have to comply with US labor laws for ships not registered in the US.

 

To add, I do not think NCL steals tips from employees, but they do distribute it to people "behind the scenes."

[Sam Ting]

I think I wasn't very clear. Sorry. Yes, NCL distributes the dsc to employees, but they can distribute it any way they wish to those employees. Yes, they have to comply with the sec. They do not have to comply with US labor laws for ships not registered in the US.

 

To add, I do not think NCL steals tips from employees, but they do distribute it to people "behind the scenes."

 

If I can get a refund I’m all for it!

[NLH Arizona]

To add, I do not think NCL steals tips from employees, but they do distribute it to people "behind the scenes."

Yes, they do distribute to some "behind the scenes" crew members and they clearly state that fact:

 

Why is there a service charge?

The reason there's a fixed service charge is an important one: Our Crew (as are the crew from other lines) is encouraged to work together as a team. Staff members including complimentary restaurant staff, stateroom stewards and behind-the-scenes support staff are compensated by a combination of salary and incentive programs that your service charge supports.

[erdoran]

https://www.facebook.com/ATTNVideo/videos/1926447314326887/

Interesting video about the whole tipping thing - nothing to with cruises, but it's about the tipping system.

For those with sensitivities, some not very nice language is used occasionally. If you are going to be offended then don't watch the video.

[MrMike45]

As others have said it makes a big difference in how the money is handle and how the income is shown. If it is a mandatory service fees it is handled one way but if it is a optional fee represented to be gratuities, it is account for and taxable in a completely different way.

 

But making these fees optional, NCL can save millions in taxes on this income. It is in NCL best interest to use these optional "service fees" to increase corporate profit.

 

Except...AGAIN for the umpteenth time...you are claiming NCL keeps these DSC charges and does not distribute them to the staff...without any proof whatsoever.

[RDC1]

I think I wasn't very clear. Sorry. Yes, NCL distributes the dsc to employees, but they can distribute it any way they wish to those employees. Yes, they have to comply with the sec. They do not have to comply with US labor laws for ships not registered in the US.

 

To add, I do not think NCL steals tips from employees, but they do distribute it to people "behind the scenes."

 

There is no doubt that the tip pool includes people that passengers do not see directly that work for the hotel department. For example the people that work in the laundry, kitchen workers, cleaners. Workers that do not have direct contact, but whose work contributes to the passengers experience.

 

My understanding from talking with crew across various lines that the pool is distributed according to a formula, that is impacted by internal and external rating. They also move some funds between ships to account for routes where tipping is lower (they do this to remove the potential for ship assignment to impact income.)

[Jana60]

Ultimately the “daily service charge” ends up being an important part of the employees pay. I would not cancel this unless service had been universally bad in all departments but if a particular room steward, bar tender, or waiter gives really great service then I give them a cash handshake at the end of the cruise. No one sees that palmed $20 and the employee doesn’t have to share it with a thousand other people.

 

 

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[Sam Ting]

There is no doubt that the tip pool includes people that passengers do not see directly that work for the hotel department. For example the people that work in the laundry, kitchen workers, cleaners. Workers that do not have direct contact, but whose work contributes to the passengers experience.

 

My understanding from talking with crew across various lines that the pool is distributed according to a formula, that is impacted by internal and external rating. They also move some funds between ships to account for routes where tipping is lower (they do this to remove the potential for ship assignment to impact income.)

 

So what you are saying is the DSC, gratuities, tips etc whatever you want to call it is used to pay people who are not even working on the ship your on? That’s crazy.

[Expat Cruise]

So what you are saying is the DSC, gratuities, tips etc whatever you want to call it is used to pay people who are not even working on the ship your on? That’s crazy.

 

While some may think it is crazy, the whole daily service fee is crazy, it is also true. It has been reported by several creditable sources (outside of this site) that the tips are pooled and distributed to the crew across the fleet.

[erdoran]

Whether NCL pockets the DSC or hands 100% to its employees, the outcome is still that the existence of the DSC reduces the hit to NCL’s bottom line from payroll. Even if they make up the difference to a guaranteed minimum, that’s still putting the responsibility of paying employees on the customer. Many of the DSC positions mentioned in this thread are NOT positions that are tipped in other industries. And that is really the purpose—using Americans’ expectations of tipping in a service industry to shift their payroll to the pax.

 

It sucks, it’s wrong, but it’s reality. NCL is a business, not a non-profit.

[Expat Cruise]

Whether NCL pockets the DSC or hands 100% to its employees, the outcome is still that the existence of the DSC reduces the hit to NCL’s bottom line from payroll. Even if they make up the difference to a guaranteed minimum, that’s still putting the responsibility of paying employees on the customer. Many of the DSC positions mentioned in this thread are NOT positions that are tipped in other industries. And that is really the purpose—using Americans’ expectations of tipping in a service industry to shift their payroll to the pax.

 

It sucks, it’s wrong, but it’s reality. NCL is a business, not a non-profit.

 

Agreed but as customers we are free to do as we want over these fees. If the majority of passengers stop paying these fees, the for profit business would need to change the business model. In the end if you really want to see crews wages to improve you will not allow these fee to be added to your account..

[Shoppie124]

I recommend you read the NCL 10k before you suggest they are pocketing the money. Their 10k is audited. For those that don’t know, calculations and samples are taken from their financial’s, ship manifest, etc. the HAVE to disclose the sources of their income. They plainly state what their sales are derived from. For their other lines, they include the DSC in their sale but not for NCL. I would strongly recommend reading their financials before accusing them of lining their pockets to steal from their staff.

 

They are in this business to make money... no different than anyone else in their line of work. Sorry but if you are that concerned take another vacation and then worry about having to tip the waitress at the restaurants you go to.

 

Sorry if this sounds strong but I have a family of 3 and we could easily tip the daily rate just at dinner...never mind three meals plus snacks

 

 

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[RDC1]

So what you are saying is the DSC, gratuities, tips etc whatever you want to call it is used to pay people who are not even working on the ship your on? That’s crazy.

 

 

Actually it is not crazy. There are some routes that tend to have more passengers, that shall we say, come from non-tipping cultures, and have a higher tendency to remove tips. If the cruise line did not shift some dollars in the pool to that ship the employees on that route would be penalized, not because of the quality of there work, but because of the demographics of the passengers. If they did not account for that no one would want to work those routes and there would be a major personnel problem due to fighting over route assignments. The easiest answer, which the majors all use, is to hold back a percentage of the pool to balance such irregularities and thus make sure the crew is not penalized by the passenger mix.

[RDC1]

Agreed but as customers we are free to do as we want over these fees. If the majority of passengers stop paying these fees, the for profit business would need to change the business model. In the end if you really want to see crews wages to improve you will not allow these fee to be added to your account..

 

Actually the crew would end up being paid the same, but would be negatively impacted because all of their income would be considered to be salary and not tips and as such would be fully taxed for both income and retirement systems in pretty much all of the countries they come from.

 

So when you cruise do you tell your steward that in your opinion it is better off for him if you and everyone else did not tip? I suggest you try that argument on him and see if he agrees.

[RDC1]

Whether NCL pockets the DSC or hands 100% to its employees, the outcome is still that the existence of the DSC reduces the hit to NCL’s bottom line from payroll. Even if they make up the difference to a guaranteed minimum, that’s still putting the responsibility of paying employees on the customer. Many of the DSC positions mentioned in this thread are NOT positions that are tipped in other industries. And that is really the purpose—using Americans’ expectations of tipping in a service industry to shift their payroll to the pax.

 

It sucks, it’s wrong, but it’s reality. NCL is a business, not a non-profit.

 

Actually if they made it a fixed service charge and removed the option for removal, the impact on their profit would be exactly the same as it is now. The only impact to the cruise line would be a lower net margin, but actual profit would be exactly the same.

 

The group that would be negatively impacted are the workers, depending upon their country of residence, type of employment contract, recruiting agency, etc.

 

Looking at the countries the cruise ship workers come from you get annual median family income levels of:

 

Ukraine 11,074

Serbia 8,921

Romania 7,322

Colombia 6,544

Peru 5,161

Phillippines 2,401

Indonesia 2,199

[boo214]

Whether NCL pockets the DSC or hands 100% to its employees, the outcome is still that the existence of the DSC reduces the hit to NCL’s bottom line from payroll. Even if they make up the difference to a guaranteed minimum, that’s still putting the responsibility of paying employees on the customer. Many of the DSC positions mentioned in this thread are NOT positions that are tipped in other industries. And that is really the purpose—using Americans’ expectations of tipping in a service industry to shift their payroll to the pax.

 

It sucks, it’s wrong, but it’s reality. NCL is a business, not a non-profit.

and where do you think ncl's payroll comes from? us the passengers. so whether its the current model or increased fares we are still paying their employees.

[erdoran]

Actually the crew would end up being paid the same, but would be negatively impacted because all of their income would be considered to be salary and not tips and as such would be fully taxed for both income and retirement systems in pretty much all of the countries they come from.

 

So when you cruise do you tell your steward that in your opinion it is better off for him if you and everyone else did not tip? I suggest you try that argument on him and see if he agrees.

 

Let me see - his share of the DSC or a $20 in hand? Which would YOU prefer?

[erdoran]

and where do you think ncl's payroll comes from? us the passengers. so whether its the current model or increased fares we are still paying their employees.

 

Exactly. It’s a marketing thing to make their fares appear lower than they really are. But look at all the debate it causes! I find it personally offensive that they do this, and then all the games involved so you don’t remove it. I’d prefer a no tipping rule and a higher fare. For me it’s not about the $ it’s about the positioning of the DSC, and the pretense that it’s optional—and the “poor poor underpaid workers” guilt trip. It’s not my responsibility to directly pay your staff, NCL. It’s a cost of doing business. Take it out of my fare, and set the fare at an appropriate level, then let people vote with their wallets.

[Sam Ting]

Actually it is not crazy. There are some routes that tend to have more passengers, that shall we say, come from non-tipping cultures, and have a higher tendency to remove tips. If the cruise line did not shift some dollars in the pool to that ship the employees on that route would be penalized, not because of the quality of there work, but because of the demographics of the passengers. If they did not account for that no one would want to work those routes and there would be a major personnel problem due to fighting over route assignments. The easiest answer, which the majors all use, is to hold back a percentage of the pool to balance such irregularities and thus make sure the crew is not penalized by the passenger mix.

 

 

LOL. Keep donating to the billion dollar company so it can pay its employees on ships you are not even on.

 

While you are at it, why dont you send a check to a competing cruise line to help defray the cost of salaries to those pesky employees?

 

I for one couldn’t care less about the employees on the other ships, nor should I.

[Cafedumonde]

Actually it is not crazy. There are some routes that tend to have more passengers, that shall we say, come from non-tipping cultures, and have a higher tendency to remove tips. If the cruise line did not shift some dollars in the pool to that ship the employees on that route would be penalized, not because of the quality of there work, but because of the demographics of the passengers. If they did not account for that no one would want to work those routes and there would be a major personnel problem due to fighting over route assignments. The easiest answer, which the majors all use, is to hold back a percentage of the pool to balance such irregularities and thus make sure the crew is not penalized by the passenger mix.

 

I had not actually considered that they might be moving your gratuity to another ship. Although money is fungible anyway. I had only considered that they might be paying my gratuity money to people on the ship who should be salaried. The idea of moving gratuity to other ships actually makes me more disgusted. Basically you are suggesting that Americans are subsidizing the rest of the world. Again. I am over that.

Edited August 11, 2018 by Cafedumonde

[erdoran]

So you mean that by not paying the DSC not only am I stiffing the behind the scenes folks on my ship, I'm stiffing even more people? OMG bring on the guilt trip!

 

(yes, I pay the DSC, but this type of thing makes me WANT to remove it and tip the crew on MY ship individually and directly - and NO, I am not a cheapskate who removes and doesn't tip). Behind the scenes getting stiffed? Isn't that what NCL is doing if they take my DSC and do NOT use it for the people who served ME?

[NLH Arizona]

 

They also move some funds between ships to account for routes where tipping is lower (they do this to remove the potential for ship assignment to impact income.)

Wondering if this is as much of an issue now that they have started including the DSC from ships leaving from some of the countries where tipping culture is not standard. I remember reading a post where the poster said her child worked for NCL and that the crew hated cruising out of the UK, because so many passengers removed the DSC.

[Seminole1975]

We are talking $203 dollars here for our upcoming cruise. That is how much we are paying for the prepaid service charges. From the way this thread is going, it sounds as if are talking about a fortune! If left to our own devices, we would probably tip that much anyway over the course of a week. For me it is convenient to know that my tips are taken care of. It is a convenience.

 

I went and read about the service charges. The website says that certain staff who provide individual services to passengers are not included in the tip pool. These include butlers, concierge, youth staff and beverage service. I knew about the first three, but what beverage service staff are not included? I thought bartenders were included?