More gratuity increases. When will it stop?

[newmexicoNita]

NCL has used the term "gratuities" to describe the DSC. They've also used the term "service charge".

 

 

 

 

Too many people get into the "...it's not a tip, it's a service charge....it's not a service charge, it's a gratuity....it's not a gratuity, it's a..." argument but NCL uses whatever term they want to use to describe the DSC.

 

Even on the UBP/SDP, NCL uses both "gratuity" and "service charge" at times. It's bad enough that people argue about where the money goes but they also argue about what it is called.

From day one on the Q&A or facts it has always been called a DSC or service charge. When publishing it has been called both. i am talking about as the general term used. I was responding to the post that stated they just changed the term, that is not the case. Now, it is referred to either way depending on where you are reading it. BTW, we all agree, it really doesn't make much difference what it is called. It is the same. Someone mentioned yesterday another line only charges 13.95 a day. To me, that amounts to so little over the period of a week or so long cruise. I think we are all doing a little too much nit picking lately, me as well. As someone said, we do not have to all agree on every change that is made. I happen to be the type that does not really concern myself with minor changes that may not be my personal choice. As long as the procuct is what I hope for and the price is in our budget, I prefer to just enjoy the experience. When it is no longer in my budget or the product goes down hill then I make a change.

Edited December 6, 2017 by newmexicoNita

[LMaxwell]

Is NCL claiming service levels will improve? Charging more for service is fine if service levels go up.

[e3g]

It will never stop. If you look at the big picture, NCL has been the Master of "nickel and diming" for the last 10 to 12 years. That is their business model and it has worked well. So much in fact that other mass market cruise lines eventually follow to some degree.

They know that some will complain for a couple of months but their latest increase will soon be accepted as the norm.

As long as their ships fill up and their bottom line increases, they don't care what you think. Take it from a retired accountant, it's all about the bottom line. These are service charges ( not tips, not gratuities) and they go towards the bottom line, not employees.

I know this dose of reality will offend some. So mote it be.

[DaCruiseBug]

It will never stop. If you look at the big picture, NCL has been the Master of "nickel and diming" for the last 10 to 12 years. That is their business model and it has worked well. So much in fact that other mass market cruise lines eventually follow to some degree.

They know that some will complain for a couple of months but their latest increase will soon be accepted as the norm.

As long as their ships fill up and their bottom line increases, they don't care what you think. Take it from a retired accountant, it's all about the bottom line. These are service charges ( not tips, not gratuities) and they go towards the bottom line, not employees.

I know this dose of reality will offend some. So mote it be.

 

Be careful because when you point out the obvious some will get offended and tell you that you don't know what you're talking about.

 

You're 100% right and as an accountant you can figure out the obvious. The increase from $79 to $89 per day for the UBP coupled with the increase from 18% to 20% will mean an extra $25 per person per week that sails on NCL. Just the Escape has 4,000 passengers and if 3,000 of them have the UBP that's an additional $75,000 per week ($3.9 million per year) for just 1 ship alone. A ballpark figure for their entire fleet is probably a $15-20 million ballpark figure as to how much additional revenue this increase will bring NCL and without adding a single penny to cost. So when people say "Oh it's just $3 per day" this is what it turns into...$15-20 million per year out of our pockets and into NCLs pockets.

[ray98]

As far as the UBP package...name 1 cruise line that charges $89 per day or more (plus 20% automatic service charge) for their beverage package and doesn't even include bottled water. It's ok, i'll wait...

 

Name another non-premium line that routinely comps the beverage package daily cost.

[cheersforbeers]

It will never stop. If you look at the big picture, NCL has been the Master of "nickel and diming" for the last 10 to 12 years. That is their business model and it has worked well. So much in fact that other mass market cruise lines eventually follow to some degree.

 

They know that some will complain for a couple of months but their latest increase will soon be accepted as the norm.

 

As long as their ships fill up and their bottom line increases, they don't care what you think. Take it from a retired accountant, it's all about the bottom line. These are service charges ( not tips, not gratuities) and they go towards the bottom line, not employees.

 

I know this dose of reality will offend some. So mote it be.

 

 

 

Be careful because when you point out the obvious some will get offended and tell you that you don't know what you're talking about.

 

You're 100% right and as an accountant you can figure out the obvious. The increase from $79 to $89 per day for the UBP coupled with the increase from 18% to 20% will mean an extra $25 per person per week that sails on NCL. Just the Escape has 4,000 passengers and if 3,000 of them have the UBP that's an additional $75,000 per week ($3.9 million per year) for just 1 ship alone. A ballpark figure for their entire fleet is probably a $15-20 million ballpark figure as to how much additional revenue this increase will bring NCL and without adding a single penny to cost. So when people say "Oh it's just $3 per day" this is what it turns into...$15-20 million per year out of our pockets and into NCLs pockets.

 

 

 

Not questioning anything you’ve mentioned!! But my question is “Is it wrong for a business to operate in the black, answer to a board of directors, return profits to share holders, and make money to pay employees” and provide me with a product I gladly pay for and look forward to my next one.

Only one entity I know of pays employees people, doesn’t answer to anyone, doesn’t provide any products and operates in the red and is still in business

Only time any of this will stop is when they stop providing a product consumers purchase.

[Two Wheels Only]

Now, it is referred to either way depending on where you are reading it. BTW, we all agree, it really doesn't make much difference what it is called. It is the same.

I agree but when people on the forum get into the whole "...it's not this, it's that..." because of the language that NCL uses, it is a waste of time.

 

Out of morbid curiosity, I wonder what those people who have the DSC refunded do when NCL offers waived DSC as a promo. Do those people skip the promo, pay the DSC, then have it refunded? :confused:

[cheersforbeers]

I agree but when people on the forum get into the whole "...it's not this, it's that..." because of the language that NCL uses, it is a waste of time.

 

 

 

Out of morbid curiosity, I wonder what those people who have the DSC refunded do when NCL offers waived DSC as a promo. Do those people skip the promo, pay the DSC, then have it refunded? :confused:

 

 

 

Two,

This is a tuff one. I think I will have to pay my 20% charge on the UDP and ponder this one.

By the way I have 3 wheels.

[e3g]

Let me provide an old business quote "Whatever the market will bear". As an accountant (retired), I'm in awe of the success of their business model. Obviously, it works well. They are still building ships. Of course, their public relations approach of "for your convenience" is a bit hard to swallow.

As a cruiser, I think it is the sheets. I think the same about airlines luggage policy. Did complaining change anything there?

[DaCruiseBug]

Name another non-premium line that routinely comps the beverage package daily cost.

 

NCL doesn't comp anything. You're selecting a fare that has the beverage package included in the price. It's like if you're flying and buy a fare that includes alcoholic drinks on a flight is the airline giving you free drinks or did you just pay more to for a certain fare that included drinks? Don't fall into the "but it's free" trap because it's not.

 

Example:

 

Next sailing on the Escape )12/9/17):

 

Sail away inside = $339 per person

Inside with 1 free perk = $499 per person

 

So you just paid $160 plus $120 in service charges for your "free" drink package...which means $280 extra per person.

 

So I can't really answer your question since it's a flawed question to begin with. As far as other cruise lines, MSC throws in free drinks at meal time even with their most basic fares...now that's FREE.

[Princess@Sea]

I just tried a mock booking. NCL posts a total price that updates dynamically as you add things. Here it is after I added the Choice Beverage and Choice Dining packages:

 

 

I don't see how you can have "sticker shock" after adding those things in when it appears on the right side, in real time, as you select each item. As soon as you select the cabin type, the price is shown along with the "govt fees and taxes". Add in promos and click "Continue" and it updates in real time.

 

You can choose what the final price is by choosing different promos, or cabins. I guess seeing the price rise as you work through the booking is it? Maybe it's like watching the taxi fare meter keep clicking adding .40 a minute when you are stuck in traffic.

 

 

 

I had sticker shock when the final price appeared. Not sure which part you could not understand.

[casofilia]

The increase in costs will stop going up when NCL has disappeared due to lack of patronage. While people will still pay increased prices of any form then you can expect further increases.

[chengkp75]

Let me provide an old business quote "Whatever the market will bear". As an accountant (retired), I'm in awe of the success of their business model. Obviously, it works well. They are still building ships. Of course, their public relations approach of "for your convenience" is a bit hard to swallow.

As a cruiser, I think it is the sheets. I think the same about airlines luggage policy. Did complaining change anything there?

 

I'm certainly no accountant, so perhaps you could tell me if my analysis is correct. I looked at Carnival Corp's financial for another thread whining about cut backs for the sake of profit on HAL, so I thought I'd compare the 3rd quarter returns for 2017 between Carnival and NCL.

 

Carnival had net income of $1.3 billion on revenues of $5.5 billion for a 24-25% profit margin.

NCL had net income of $400 million on revenues of $1.65 billion for a 24-25% profit margin.

 

These are considered "healthy" profit levels, but by no means exhorbitant.

 

Carnival earned $1.3 billion on assets of $40.6 billion, for a 3.2% return on investment.

NCL earned $400 million on assets of $14.2 billion, for a 2.8% return on investment.

 

These are not outrageous returns on investment, when 5% is considered the median.

 

So, it seems to me that while NCL is generating the same profit margin as Carnival, despite the "nickel and diming" complaints, they are certainly not in a different ball park from the other cruise lines. It would appear to me that Carnival is reaping some economy of scale in getting a better return on investment, since Carnival has a net cruise cost per capacity day of $93.39, while NCL reports $127.32 for the same figure (excluding fuel costs in both cases).

 

It would also appear that Carnival is a better investment, despite not having the "nickel and dime" approach to charges, since they are returning 0.4% higher on investment.

 

So, whether or not the DSC or the beverage package gratuities goes "directly" to the crew, or whether some is used by NCL to stay profitable, the age old question remains, would you prefer a higher fare with less separate charges, or a lower fare and more charges, since it doesn't appear that either method is earning either company more than the other.

[cheersforbeers]

NCL doesn't comp anything. You're selecting a fare that has the beverage package included in the price. It's like if you're flying and buy a fare that includes alcoholic drinks on a flight is the airline giving you free drinks or did you just pay more to for a certain fare that included drinks? Don't fall into the "but it's free" trap because it's not.

 

 

 

Example:

 

 

 

Next sailing on the Escape )12/9/17):

 

 

 

Sail away inside = $339 per person

 

Inside with 1 free perk = $499 per person

 

 

 

So you just paid $160 plus $120 in service charges for your "free" drink package...which means $280 extra per person.

 

 

 

So I can't really answer your question since it's a flawed question to begin with. As far as other cruise lines, MSC throws in free drinks at meal time even with their most basic fares...now that's FREE.

 

 

 

DA,

I don’t think in your example you are comparing same same

Let’s forget “Free” or any other description.

Sail Away-$339, Inside 1 perk(my perk UBP) $499+ $124.60. To make them equal IMHO you have to add beverage. For you that’s $89/da+20% for the cruise= $747.60. Your total cruise is $1146.60 room plus UBP, total my cruise $623.60.

If you don’t want the UBP your rate is best, but if you want some sort of adult beverage I’ll take my cruise, but Sail Away cannot be straight up to Inside and a perk that I pay for.

This is how I see it and I’m sure most will disagree v

[casofilia]

So, whether or not the DSC or the beverage package gratuities goes "directly" to the crew, or whether some is used by NCL to stay profitable, the age old question remains, would you prefer a higher fare with less separate charges, or a lower fare and more charges, since it doesn't appear that either method is earning either company more than the other.

 

Personally I would prefer to be able to BOOK the cabin I want at rock bottom prices and then add on anything I wanted as an extra. I am very dubious about the Guarantee type of cabin.

How about Guarantee $x; Booked cabin only $(x+250); Booked cabin plus Perks $(x+750)

[cheersforbeers]

I'm certainly no accountant, so perhaps you could tell me if my analysis is correct. I looked at Carnival Corp's financial for another thread whining about cut backs for the sake of profit on HAL, so I thought I'd compare the 3rd quarter returns for 2017 between Carnival and NCL.

 

Carnival had net income of $1.3 billion on revenues of $5.5 billion for a 24-25% profit margin.

NCL had net income of $400 million on revenues of $1.65 billion for a 24-25% profit margin.

 

These are considered "healthy" profit levels, but by no means exhorbitant.

 

Carnival earned $1.3 billion on assets of $40.6 billion, for a 3.2% return on investment.

NCL earned $400 million on assets of $14.2 billion, for a 2.8% return on investment.

 

These are not outrageous returns on investment, when 5% is considered the median.

 

So, it seems to me that while NCL is generating the same profit margin as Carnival, despite the "nickel and diming" complaints, they are certainly not in a different ball park from the other cruise lines. It would appear to me that Carnival is reaping some economy of scale in getting a better return on investment, since Carnival has a net cruise cost per capacity day of $93.39, while NCL reports $127.32 for the same figure (excluding fuel costs in both cases).

 

It would also appear that Carnival is a better investment, despite not having the "nickel and dime" approach to charges, since they are returning 0.4% higher on investment.

 

So, whether or not the DSC or the beverage package gratuities goes "directly" to the crew, or whether some is used by NCL to stay profitable, the age old question remains, would you prefer a higher fare with less separate charges, or a lower fare and more charges, since it doesn't appear that either method is earning either company more than the other.

 

 

 

CH,

I can see you have no qualifications for talking about cruising either(BIG LOL), but I’d hire you to do my books anytime.

Have a GREAT one.

[casofilia]

Edited out in favour of a later response

[casofilia]

I can see you have no qualifications for talking about cruising either

 

As a long time member of CC I feel that you are totally incorrect. Look at his posting history starting with:

Interests: Former cruise ship Chief Engineer

[cheersforbeers]

I can see you have no qualifications for talking about cruising either(BIG LOL)

 

As a longtime poster on CC I feel you are incorrect. Check on his posting history.

 

 

 

I did and it says former chief engineer this the big lol.

[cheersforbeers]

Edited out in favour of a later response

 

 

 

Forgot to add Cruise Ship Engineer.

[cheersforbeers]

I did and it says former chief engineer this the big lol.

 

 

 

Should have been thus (Big LOL). In other words laugh out loud.

[LMaxwell]

can we expect our drinks 11% sooner, specialty waitstaff to be 11% more attentive? If they want to charge more gratuity shouldn't that signal better service?

[chengkp75]

Should have been thus (Big LOL). In other words laugh out loud.

 

Don't worry, I got it.

[cheersforbeers]

Don't worry, I got it.

 

 

 

I’m glad you did, some others apparently didn’t.

For what line, if I might ask?? Retired or move lines?

Take care.

[chengkp75]

I’m glad you did, some others apparently didn’t.

For what line, if I might ask?? Retired or move lines?

Take care.

 

I worked for NCL in their Hawaiian operation when we had 3 US flag ships. When the US flag fleet diminished, I left to go back to cargo ships. Been sailing for 42 years.