Beverage Package Gratuities Update: 15% to 18%

[cle-guy]

But eyes closed to the cost of kitchen staff and other staff.

 

And eyes closed to the cost of electric, gas, delivery, waste oil, ice, napkins etc. Yes lots of hidden costs as in any business, but service staff is a transparent one.

 

Kitchen and other staff gets a standard wage, the lowest being whatever the federal legislated minimum wage is, which each state can then enact an even higher wage, which many do, and of course restaurants can pay those filks any amount above that wage they choose, which often cooks and chefs will make above minimum wage. For this reason they do not receive tips nor share in the tip pool, unless the service staff chooses to include than on their own.

 

And even hidden how the establishment handles the tips that are collected. What percentage of your tip actually goes to the server?

 

100% (less mandated taxes and withholdings), unless the servers have agreed to share with bus staff, which is common among restaurants staff to do depending on the kind of restaurant. Servers might agree with bus staff to ensure bus staff tend to their tables well, thus increasing tips.

 

And remember, staff are taxed on their tips too, as the laws require them to be taxed on assumed tips, so if people stiff them, they still get taxed as if they did get tipped - a big reason why in certain vacation destinations in the US that are highly visited by europeans and australians, the tips are automatically aded to bills. I forget the IRS assumed tip rate relative to sales generated, it's less than 20%, but there is a number.

 

Servers are typically paid their tips out nightly, in cash by the establishment, even if they were paid to the staff member by a credit card, though larger establishments automate the process and remit it to their paychecks. Servers keep very careful eye on their tips. Laws have been enacted as well to ensure the restaurant does not require the staff to reimburse the costs of processing the credit card charges tips portion and take them from tips, so staff get tips in full, not net of any credit card processing fees.

 

TIPS earned by staff have ben legislated in the US to be owned by the server themselves unless they have agreed differently.

 

There was an incident with Starbucks where Starbucks Management started sharing the tip jar, and they lost the lawsuit when the less paid staff said the tips were theirs, not Managements.

[cle-guy]

It's just you'd expect food to go up around the rate of inflation, and thus the tip income would equally go up around the rate of inflation. This would be consistent with many people's salaries - although I know many don't get much of an increase either.

 

It just seems odd that waitstaff incomes would be rising substantially above the rate of inflation (and obviously not due to performance as well, as people still have the flexibility to grant above/below the standard rate), unless something else was at play.

 

Not everything raises at same rate of inflation, and its quite common in the US or wages to raise far more slowly than the rate of inflation actually. There is a lot of talk about our "disappearing middle class" as wages are not keeping pace with inflation and other economic factors, and more and more are falling to poverty, with a relative few being well above middle class.

 

I'm not going to take the time to analyze the rise over time and the myriad of variables that fall into play, but over time, the server's fixed minimum wage has gone from $2.13 an hour where it had held for several years to $2.35 when raised in I believe 2012 or so. Federal minimum for untipped staff is now $7.25, it was $3.35 in 1988. Over this time the suggested gratuity has gone from 10% or 15% to 18% or 20% - and mind you it's strange that patrons do not HAVE to leave a tip, they can remove it, but it's just part of our culture and customs, that we understand the pay rates of service staff and that the bulk of their wage is made up of gratuities we pay, so ethically we choose to pay per custom.

 

Every workplace in the USA is required to have a chart publishing the 2 minimum wage standards clearly to employees (along with a dozen or so other legislated disclosures), so so long as anyone has any sort of job, we all know what our service staff friends make at minimum and realize the ethical requirement to tip accordingly.

 

Here's a great resource for how complicated wages related to tipped employees can be. Reconciliations must be made to verify minimum tipping, overtime thresholds, minimum hourly tipping and sales, etc. It's a hassle handling a tipped employee payroll - I had to do payroll for a couple of the Marriott hotels I worked for years ago.

Edited February 13, 2015 by cle-guy

[Adidas4fun]

And eyes closed to the cost of electric, gas, delivery, waste oil, ice, napkins etc. Yes lots of hidden costs as in any business, but service staff is a transparent one.

 

Kitchen and other staff gets a standard wage, the lowest being whatever the federal legislated minimum wage is, which each state can then enact an even higher wage, which many do, and of course restaurants can pay those filks any amount above that wage they choose, which often cooks and chefs will make above minimum wage. For this reason they do not receive tips nor share in the tip pool, unless the service staff chooses to include than on their own.

 

 

 

100% (less mandated taxes and withholdings), unless the servers have agreed to share with bus staff, which is common among restaurants staff to do depending on the kind of restaurant. Servers might agree with bus staff to ensure bus staff tend to their tables well, thus increasing tips.

 

And remember, staff are taxed on their tips too, as the laws require them to be taxed on assumed tips, so if people stiff them, they still get taxed as if they did get tipped - a big reason why in certain vacation destinations in the US that are highly visited by europeans and australians, the tips are automatically aded to bills. I forget the IRS assumed tip rate relative to sales generated, it's less than 20%, but there is a number.

 

Servers are typically paid their tips out nightly, in cash by the establishment, even if they were paid to the staff member by a credit card, though larger establishments automate the process and remit it to their paychecks. Servers keep very careful eye on their tips. Laws have been enacted as well to ensure the restaurant does not require the staff to reimburse the costs of processing the credit card charges tips portion and take them from tips, so staff get tips in full, not net of any credit card processing fees.

 

TIPS earned by staff have ben legislated in the US to be owned by the server themselves unless they have agreed differently.

 

There was an incident with Starbucks where Starbucks Management started sharing the tip jar, and they lost the lawsuit when the less paid staff said the tips were theirs, not Managements.

What a long post obfuscating the obvious. Tips are not a blatantly transparent measure of labour cost. Yet another claim that fails to withstand basic scrutiny.

[cle-guy]

What a long post obfuscating the obvious. Tips are not a blatantly transparent measure of labour cost. Yet another claim that fails to withstand basic scrutiny.

 

Really, A server makes $2.35 fixed wage and you as the consumer pay the balance by whatever money you leave on the table or the bill. It's basically TOTALLY transparent the wage they make, just figure what you pay and follow how many tables they have at the same time, and realize add to that $2.35 the minimum the business has to pay for the hour.

 

If you don't think tips make the labour cost transparent what other costs are hiding and not apparaent to you then as far as tipped employees go?

 

You certainly know early what YOU are paying them for their service for the time they serve you.

 

Not sure how one wouldn't think it's transparent, you can almost add to the penny the money they make. And the $2.35/hour the business pays outright is among the smallest of line items on their P&L, literally the toilet paper and hand towel bill for the restrooms will likely be more than the wages bill for servers in a month.

[The_Big_M]

Really, A server makes $2.35 fixed wage and you as the consumer pay the balance by whatever money you leave on the table or the bill. It's basically TOTALLY transparent the wage they make, just figure what you pay and follow how many tables they have at the same time, and realize add to that $2.35 the minimum the business has to pay for the hour.

 

I think this is a bit tangential to the topic, but given how the tip is a combination of the cost of purchased items, the generosity of the customer (subject to expectations), the service of the staff and then turnover rate of tables, I see it as far less transparent than a ready wage table that is readily available in western countries.

 

Simply put, the best I could do is hazard a guess based on estimating the four elements above, but I have no idea of what the actual tips being paid are, so it is far less transparent.

 

Not sure how that pertains to the topic though!

[Terpnut]

Hi guys! I thought I'd chime in again. I see the cle-guy has been trying to explain or rationalize the tipping process for the past several days!

 

I'd just like to say again that some of us (mostly Americans) are trying to explain the way it works, and perhaps rationalize why it may be good. I for one, don't think it's a great system.

 

Yet despite the hundreds of posts, Adidas4fun still seems upset despite these explanations, rationalizations or other comments and remains "confused and bewildered". I'm not sure how or why he feels "abused" on here though!?

 

I simply think this thread has reached a point of diminishing returns. Some Americans and others have tried to explain the system and seem to be defending it. Some Americans explain to the best of our ability, yet we do not defend it. Just want to explain how it works. Regardless of what we say, some of you do not get it, do not accept it, and perhaps never will.

 

So I can only politely say: I tried to explain it to the best of my ability, and some of you are nevertheless still not satisfied with my (or others') explanations. So again, how does this change YOUR behaviors when you are immersed in a tipping culture. I can only hope that, with this information, you can make, if not a fully understanding, at least a mostly-informed decision on what to do. In the end, it's entirely your call. But I don't think we are further informing anyone, or convincing anyone else, based on nuances of livable wages or transparency of costs.

 

In summary, in some shape or form, tipping is simply an accepted custom in much of the civilized world. And if anything, it's expanding! Not saying that's good or bad--just the way it is. :)

Edited February 14, 2015 by Terpnut

[LightningB]

Laws have been enacted as well to ensure the restaurant does not require the staff to reimburse the costs of processing the credit card charges tips portion and take them from tips, so staff get tips in full, not net of any credit card processing fees.

 

 

Even though I think this should be the case, unfortunately, it isn't.

 

Per the Dept of Labor:

 

Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA)

 

Credit Cards: Where tips are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA. However, this charge on the tip may not reduce the employee's wage below the required minimum wage. The amount due the employee must be paid no later than the regular pay day and may not be held while the employer is awaiting reimbursement from the credit card company.

[Bollinge]

Hi guys! I thought I'd chime in again.

 

I simply think this thread has reached a point of diminishing returns.

 

Not saying that tipping is good or bad--just the way it is. :)

 

 

Amen!

 

Here endeth the lesson?

[LightningB]

Overall, it's seems pretty straight forward. Celebrity decided that their service employees needed more money (justified or not doesn't matter). They possibly did this to remain competitive among the possible employee pool or to retain what they believe to be good staff. Either way, they wanted more money for them (or felt it was necessary). They have 2 options, raise their base wage by a certain amount and also raise the fare for the cruise or raise the gratuity percentage to bump it up. It is true the prices may have also raised which has in turn raised the funds gathered from gratuities, and I'm guessing this was also taken into account when deciding if the % should be raised or not, and by how much. This is a balancing act. Raising prices lowers demand, so these decisions aren't taken lightly. If they thought the consumer would just go with "whatever" they could have raised it to 30%, and pulled in all the top of the top staff from around the world. But they know that wouldn't fly.

 

A simple way for us to look at it is your final price when all is said and done. Forget if its trip fare or gratuity or service charge or whatever. It doesn't matter. The price went up by some certain percentage because that is what celebrity thought was needed to stay competitive in the labor market and the consumer market at the same time. It is what it is. Your bank account doesn't care where the money went or what it was listed as on the invoice, just that it's gone. It was going to go either way, just be happy that it went to a individual on the boat and not some investor 2000 miles away. The other option is to not go of course. Or I guess to pull back the tips, which is your prerogative. The employees know that you can pull back the tips and that a certain percentage will. It's built into their calculation of what is fair compensation for their labor. If too many people start pulling back tips, overall income will drop, good employees will move on, service will suffer, Celebrity will up their base wage to get employees back, and raise the fare for the cruise. Overall its all going to be the same or very similar.

 

Heck, if you want, someone can send me their 2K a person and I'll book them some Veranda rooms, prepay their gratuities and promise not to tell them how the money was distributed. :)

 

Now, is 15% or 18% a fair amount? Who knows. Sometimes it is and sometimes it's not. The person who just handed me two bottles of warm water is probably making out pretty good. I don't even know what a water costs, $4? so $1.44 tip to bend to the floor and stand back up with 2 bottles? Pretty good money if you ask me. Now, the server that came up to my pool chair, takes my order for a single Miami Vice, asks the bartender for it, who makes two blended drinks and mixes them together, for them to be brought back to me..... they had to work pretty hard for that same $1.44. All I can hope for is that somehow it all works out behind the scenes or within each group of sharing employees. But that is their deal, not mine. I'm guessing 18% is what Celebrity feels like the consumers will bare and will keep good staff happy, reliable and content as a Celebrity employee (not looking elsewhere).

 

Either way, I feel like it's still a reasonable bargain and will continue to plan my next trip, at 15% or 18% as both of those keep my final bill within my acceptable budget for the benefits I'm receiving.

[Bollinge]

Celebrity decided that their service employees needed more money.

 

Who said the increase from 15% to 18% "gratuity" is going to translate to a wage increase for the crew?

[cle-guy]

Who said the increase from 15% to 18% "gratuity" is going to translate to a wage increase for the crew?

 

Gratuities are disseminated to the crew that does the work.

 

Companies are not allowed to collect a gratuity and keep that money in their accounts, it must be disseminated to the people who earned it, and by law (at least int eh US) management may not share in the tip pool.

 

So it's money in money out.

As crews in service positions make the majority of their wages in tips, they are in effect getting a raise, since they get an automatic 18% of their sales now, when they were only getting 15% before, rules of curse sales fall due to this.

 

Reading several comments from non-US citizens, I'm starting to think perhaps some people have the improper impression that gratuities go to the company who then decides what portion they want to redistribute to staff, this is simply not how it works. All gratuities get paid out to the service staff.

[Bollinge]

http://www.dailymail.co.uk/travel/travel_news/article-2960234/A-guide-tipping-etiquette-world.html

[Bollinge]

Please read this before my post above - problems trying to post on an IPad......

 

These cruise lines do not operate under US jurisdiction as their vessels are not registered there, and they instead fly flags of convenience of whichever shipping regime is the most lax and cheapest, viz: Liberia, Malta, Bahamas, etc.

 

Some of your Celebrity daily gratuity will end up with the Chief Housekeeper, an officer grade, and definitely "management".

 

I question whether the 15-18, 3% increase will go immediately and in full to your bartender. Did everyone else on board get 3% extra too?

 

And just to queer the pitch even more, I offer this hyper-link to a helpful guide to tipping in today's newspaper here in Merrie England:

 

http://www.dailymail.co.uk/travel/travel_news/article-2960234/A-guide-tipping-etiquette-world.html

Edited February 20, 2015 by Bollinge

[wallie5446]

Hi all,

 

Effective February 1, 2015 for all sailings beginning on or after February 1, 2015, our beverage gratuity rate will increase from 15% to 18%. This includes all individual drinks and beverage packages (purchased pre-cruise and onboard). Any packages that were purchased prior to February 1, 2015 will still be eligible for the 15% gratuity rate, and no additional gratuities will be assessed.

 

Some of your Celebrity daily gratuity will end up with the Chief Housekeeper, an officer grade, and definitely "management".

 

I question whether the 15-18, 3% increase will go immediately and in full to your bartender. Did everyone else on board get 3% extra too?

 

 

 

IMHO, the orginal post made it very understandable.

[cle-guy]

Some of your Celebrity daily gratuity will end up with the Chief Housekeeper, an officer grade, and definitely "management".

 

I question whether the 15-18, 3% increase will go immediately and in full to your bartender. Did everyone else on board get 3% extra too?

 

And just to queer the pitch even more, I offer this hyper-link to a helpful guide to tipping in today's newspaper here in Merrie England:

 

http://www.dailymail.co.uk/travel/travel_news/article-2960234/A-guide-tipping-etiquette-world.html

 

Where have you been able to learn how much gratuity finds its way to management on the cruise ships? I've not seen that noted anywhere, and am always looking for reliable, verifiable sources of such information.

 

This is the published Standard daily gratuity allocation, from Celebrity from early last year before the 50 cent rate increase. Nowhere do they allocate a portion to Housekeeping Managers, although they do to Dining Room Management (i.e. Maitre'd):

The breakdown is as follows:

• Waiter - $3.65 pp/per day
  
• Ass't. Waiter - $2.10 pp/per day
  
• DR Mgm't. - $1.00 pp/per day
  
• Stateroom Service - Amount varies based on cabin category occupied:
  
  • Suite Butler $3.50 pp/per day (cabin steward ALSO gets $3.50)
    
  • Aqua Cabin Steward - $4.00 pp/per day
    
  • Concierge Class Cabin Steward - $4.00 pp/per day
    
  • Regular Stateroom Cabin Steward - $3.50 pp/per day.
    

  [*]Other service personnel: $1.25 pp/per day

 

 

And the article published in the UK, isn't really current as far as tipping rate in the US are these days. Article says 10-15% is standard, if you tip a wait staff 10% you will not be welcomed back! 15% to 18% is now standard 20% or greater for fabulous service.

Edited February 20, 2015 by cle-guy

[Terpnut]

 

These cruise lines do not operate under US jurisdiction as their vessels are not registered there, and they instead fly flags of convenience of whichever shipping regime is the most lax and cheapest, viz: Liberia, Malta, Bahamas, etc.

Where a cruise ship is flagged or registered is irrelevant to this thread. Ships are indeed flagged in different countries for various other business reasons mostly relating to lower taxes and fees. A cruise line however implements and utilizes customs and business practices that are best suited to its target customer(s). And for the major cruise lines, that primary, target customer is from the U.S. and thus every major cruise line uses mostly U.S. customs and practices aboard most of its cruise ships: American English, U.S. dollar, dress codes, tipping, signage/labeling, U.S.-style casinos, retail, etc. etc. Of course there are always a few accommodations for other cultures, but there is no question that the main focus is on Americans and it's both a business and practical necessity.

 

Of course there are country-specific lines like P&O, Costa, Pullmantur, etc. that focus on specific nations or cultures and deviate from the above, but for purposes of this Celebrity tipping thread, the fact remains that Celebrity is an American cruise line that prioritizes American customers and thus uses mostly American customs. Once this given is understood, a proper discussion can be had as to whether 15% or 18% is appropriate.

Edited February 20, 2015 by Terpnut

[richsea]

Where have you been able to learn how much gratuity finds its way to management on the cruise ships? I've not seen that noted anywhere, and am always looking for reliable, verifiable sources of such information.

 

This is the published Standard daily gratuity allocation, from Celebrity from early last year before the 50 cent rate increase. Nowhere do they allocate a portion to Housekeeping Managers, although they do to Dining Room Management (i.e. Maitre'd):

The breakdown is as follows:

• Waiter - $3.65 pp/per day
  
• Ass't. Waiter - $2.10 pp/per day
  
• DR Mgm't. - $1.00 pp/per day
  
• Stateroom Service - Amount varies based on cabin category occupied:
  
  • Suite Butler $3.50 pp/per day (cabin steward ALSO gets $3.50)
    
  • Aqua Cabin Steward - $4.00 pp/per day
    
  • Concierge Class Cabin Steward - $4.00 pp/per day
    
  • Regular Stateroom Cabin Steward - $3.50 pp/per day.
    

  [*]Other service personnel: $1.25 pp/per day

 

 

And the article published in the UK, isn't really current as far as tipping rate in the US are these days. Article says 10-15% is standard, if you tip a wait staff 10% you will not be welcomed back! 15% to 18% is now standard 20% or greater for fabulous service.

 

Actually, I think the $1.25 for "other service personnel. It used to be that the chief housekeeper got, i think .75 per day. I remember there were many posts about not wanting to tip management.

[Karynanne]

Where a cruise ship is flagged or registered is irrelevant to this thread. Ships are indeed flagged in different countries for various other business reasons mostly relating to lower taxes and fees. A cruise line however implements and utilizes customs and business practices that are best suited to its target customer(s). And for the major cruise lines, that primary, target customer is from the U.S. and thus every major cruise line uses mostly U.S. customs and practices aboard most of its cruise ships: American English, U.S. dollar, dress codes, tipping, signage/labeling, U.S.-style casinos, retail, etc. etc. Of course there are always a few accommodations for other cultures, but there is no question that the main focus is on Americans and it's both a business and practical necessity.

 

Of course there are country-specific lines like P&O, Costa, Pullmantur, etc. that focus on specific nations or cultures and deviate from the above, but for purposes of this Celebrity tipping thread, the fact remains that Celebrity is an American cruise line that prioritizes American customers and thus uses mostly American customs. Once this given is understood, a proper discussion can be had as to whether 15% or 18% is appropriate.

 

Well said.

[chessbriar]

Where to start, I know it's probably been said by others and there is so many directions one can go on this.

 

A gratuity is a gift that the receiver of a service gives as a thank you for good service. How is it a gratuity if they charge you automatically regardless of how good/bad the service is? Let's call it what it is, a service charge or a tax.

 

Changes in policies by the cruise lines with regard to gratuities have saved me big over each change. When I started cruising, tipping was by our choice with recommended amounts. I loved my service and generally tipped 30-50% above recommend amounts. Cruise lines change that to a mandatory fee automatically added to my account. The quality of service dropped and I no longer felt compelled to tip extra as in my mind, it became a service charge.

 

With regard to drinks, I don't drink a lot, so when I do get a drink, I would tip the server extra either on paper or in cash. Just as a thank you. Now with them raising the gratuity it feels more like a service charge instead of a gratuity. They are doing this because the bar servers aren't getting as much because of the drink packages. So charging me extra is a penalty to me and has me funding the tips of those with the drink packages.

 

Even when I get the drink package through the 123 program, I wouldn't be using to the value of 5-7 drinks per day. Maybe 1/2 that, so they would be receiving tips at a rate of about 36%. Once again, I'm feeling a little punished.

 

With the increasing my gratuity to 18% and me having no choice, it is a service charge they are increasing and I am unlikely to tip extra. It will save me money, but hurt those who need it.

 

One last question, as X collects the 18% tips from us to give to their employees. How do we know 100% of that amount goes to the bar servers who work so hard for it. Or does X deduct say 2% out of that to cover credit card fees and another percentage out of that for administrative fees for the people who are hired to monitor and distribute the tips.

 

Funny thing is as I type this, the above is how I feel and what I wonder. But to be honest, I jumped at the chance to cruise on Reflection with the 123 package, paying for more room than usual to ensure I got all 3 perks. Maybe I would be inclined to pay a little more to ensure I don't have to worry about paying for drinks and tips on board.

 

Maybe in time, X rolls everything into one charge that includes all the service charges, then allows us to tip those who we feel have gone above and beyond.

 

I'm going to have to continue to think about how I feel about this. I will say though, I appreciate NCL calling it a service charge instead of gratuity. It feels more honest

Edited February 20, 2015 by chessbriar

[dmk]

Where to start, I know it's probably been said by others and there is so many directions one can go on this.

 

A gratuity is a gift that the receiver of a service gives as a thank you for good service. How is it a gratuity if they charge you automatically regardless of how good/bad the service is? Let's call it what it is, a service charge or a tax...

 

 

So well put!:)

[GazW]

Where to start, I know it's probably been said by others and there is so many directions one can go on this.

 

A gratuity is a gift that the receiver of a service gives as a thank you for good service. How is it a gratuity if they charge you automatically regardless of how good/bad the service is? Let's call it what it is, a service charge or a tax...

 

Hear, hear.

[Lois R]

Hi Rick:) I did the same thing for my upcoming cruise to Alaska.....

I paid more than usual as well but got the 3 perks and will have enough

obc from Celebrity and my TA to take care of my excursions (Alaska

excursions can be pricey).

 

Hope you and the family are doing well:) and yes, they should probably

call it a service charge.

[blindrid]

At the end of the day, who really cares?

[hamrag]

Much of the 23 page discussion/debate/argument has been in vain. Just returned from our 14 night cruise 1st to 15th February, and the drinks tip amount was 15% and not the 18% that the so-called Celebrity post informed would be applied from 1st Feb 2015.....!!:rolleyes:

[wallie5446]

 

Any packages that were purchased prior to February 1, 2015 will still be eligible for the 15% gratuity rate, and no additional gratuities will be assessed.

 

Much of the 23 page discussion/debate/argument has been in vain. Just returned from our 14 night cruise 1st to 15th February, and the drinks tip amount was 15% and not the 18% that the so-called Celebrity post informed would be applied from 1st Feb 2015.....!!:rolleyes:

 

We would have to think that you booked and purschased prior to February 1, 2015 then. Sometimes the speed reading course I took back in the '70 ties fails me too!:D