NCL Discretionary charge! when does NCL say NO?

[sfaaa]

You are dead wrong. Daily Service Charges are just that, service charges. There is no line item for tips. It does not exist. Not on any filing anywhere. I challenge you to prove me wrong. There is a very good reason why the only place it is referred to as gratuities is when offered as a perk.

 

DSC is merely another revenue stream.

You honestly believe that NCL is collecting this money and doling it out to staff on top of their salaries? It isn't happening.

 

Here's the proof to dispute your claim.

 

© Service Charges: Certain members of Carrier’s crew are compensated by a combination of salary and incentive programs that are funded in part by the service charge paid by each Guest. The charge, which is automatically added to your onboard account and subject to adjustment at your discretion, is intended to reward service provided in all departments and job categories and is distributed to employees according to Carrier's evaluation of job performance. A portion of the service charge collected by Carrier is also used for fleet-wide crew welfare programs.

 

So unless you are openly accusing NCL of committing fraud, why don't you provide concrete evidence to us why you are so sure DSC is not paid to staff. Let's hear it.

Edited September 28, 2016 by sfaaa

[RDC1]

You are dead wrong. Daily Service Charges are just that, service charges. There is no line item for tips. It does not exist. Not on any filing anywhere. I challenge you to prove me wrong. There is a very good reason why the only place it is referred to as gratuities is when offered as a perk.

 

DSC is merely another revenue stream.

 

Do the math. Getaway - 3,969 pax * $13.50 = $53,581.50 per day DSC. Now Getaway has a crew of 1,640. If we conservatively assume 70% are in the DSC pool (probably closer to 40) we get 1148 crew members sharing 53,581.50 = $46.67 per pooled crew member per day.

 

You honestly believe that NCL is collecting this money and doling it out to staff on top of their salaries? It isn't happening.

 

Service charge, tips, gratuities, what ever term you want to apply to it, the accounting rules are very clear and the terms are interchangeable. As long as certain rules are met, including the fact that the charges can be removed and as long as they are fully distributed to employees they are handled outside of the corporate financial accounting and are neither expense, nor revenue to the corporation. In this case the DSC is an optional gratuity, it can be removed, or reduced.

 

There is absolutely no benefit to the company in allowing the DSC to be removed, if as you say, they are treating it as a revenue stream. So why if they are doing as you say do they allow reduction or removal? Answer that one.

 

Since you want to do math. A few things to consider. 1. not all employees are in the tip pool. So the number benefiting is less then the total number of crew members. Those involved in ship operations are one group that would not be part of the pool and that would be a significant number of employees. It would also not be applied to non-ship employees, entertainment, photographers, store personnel executive level, etc.

 

In Q2 2016 NCLH had 4,237,020 passenger days. Now NCL carries 91.3% of NCLH passengers. So during that period NCL would have had 3,868,399 passenger days. At the number you posted of 13.50 that means during one quarter the amount would total 52 million dollars. During this same period total revenue was 1,187 million, total expense 1,039 million with a net profit before taxes of 148 million. That level of 52 million or approximately 1/3 of net profit would certainly be considered to be material and would need to be listed in the filings. Which it does not.

 

Now one might ask what advantages does a company get by being able ot process gratuities outside of revenue and expenses. The current net profit margin is 12.5%. If you take the DSC in as income and pay it out as expense, the net profit margin would drop by .6% to 11.9%. This is because revenue would increase by 52 mil , just as expenses would, increasing the divisor in the margin calculation. Even though the profits remain the same. A .6% reduction in margin would be a very trackable event to stock analysts.

 

As another point Payroll and related for NCLH was 184 million for that quarter across the entire NCLH corporate structure, NCL, Oceania, Regent, etc. Now NCLH has 24 ships. If we take an average crew size of 800 per ship. That would result in 19,200 ship based employees alone, not include corporate and other land based. That comes out to 9,583 per ship based employee per quarter or $3194 average per month compensation. The real number is much lower since you would need to add land based employees into that number. Consider high ranking crew, corporate executives and everyone else do you really think that 3194 is the average salary per month for the corporation? That the 52 million is included in that payroll number.

 

The employee compensation number is really 52 million more because the DSC is processed outside of the payroll number.

[RDC1]

I don't know where people get this. If a company collects revenue, from fares or service charges, and it is counted as taxable revenue, then they deduct both salary and tips they give employees as an expense, reducing their taxable income.

 

But that doesn't even apply to any US based cruise line with ships registered in foreign countries.

 

They don't pay any US federal income taxes on any ship based or ship related revenue including fares, service charges, alcohol sales, etc.

 

Look at the "Risks" section in their annual reports for confirmation; cruise lines are exempted from paying US income tax under section 883 of the tax code.

 

There is no tax advantage to NCLH to pay their employees in salary, tips or wampum. They don't pay US corporate income taxes on their ship-based income.

 

 

From http://files.shareholder.com/downloads/ABEA-5WOY6H/2917576715x0x884900/6B6BAA0E-51C0-46CE-A981-6D3CA348E1C0/NCLH_Annual_Report_2015.pdf, page 31.

 

Never said anything about a tax advantage to NCL. What I was talking about was financial reporting standards.

 

There is not a tax advantage to NCLH, though there is some to their employees. In many countries tips are treated differently than payroll as far as income tax and retirement taxes are concerned.

 

There is a benefit in NCLH by moving that revenue and expense off their books because it increases their reported net margin, same as with their competition.

 

US tax law and reporting standards does apply because the stock is listed on US stock exchanges. That means that their accounting systems must follow US accounting standards, which are heavily influenced by US tax law, as well as US SEC regulation.

 

The following is a discussion of what is required for a payment to be considered to be a tip

 

Tips are discretionary (optional or extra) payments determined by a customer that employees receive from customers.

 

Tips include:

Cash tips received directly from customers.

Tips from customers who leave a tip through electronic settlement or payment. This includes a credit card, debit card, gift card, or any other electronic payment method.

The value of any noncash tips, such as tickets, or other items of value.

 

Tip amounts received from other employees paid out through tip pools or tip splitting, or other formal or informal tip sharing arrangement.

Certain factors are used to determine whether payments constitute tips or service charges.

 

The absence of any of the following factors creates a doubt as to whether a payment is a tip:

 

The payment must be made free from compulsion;

The customer must have the unrestricted right to determine the amount;

The payment should not be the subject of negotiations or dictated by employer policy; and

Generally, the customer has the right to determine who receives the payment.

Edited September 28, 2016 by RDC1

[sfaaa]

The NCL public statement explaining DSC is abundantly clear. It is used to fund staff compensation incentive program based on job performance. Part of DSC is also used to fund fleet wide staff welfare program. That's it. So long as the money collected is used as intended and stays within this guideline, how it is accounted for is nothing more than a bookkeeping exercise.

Edited September 28, 2016 by sfaaa

[suesings]

The following is a discussion of what is required for a payment to be considered to be a tip

 

Tips are discretionary (optional or extra) payments determined by a customer that employees receive from customers.

 

Tips include:

Cash tips received directly from customers.

Tips from customers who leave a tip through electronic settlement or payment. This includes a credit card, debit card, gift card, or any other electronic payment method.

The value of any noncash tips, such as tickets, or other items of value.

 

Tip amounts received from other employees paid out through tip pools or tip splitting, or other formal or informal tip sharing arrangement.

Certain factors are used to determine whether payments constitute tips or service charges.

 

The absence of any of the following factors creates a doubt as to whether a payment is a tip:

 

The payment must be made free from compulsion;

The customer must have the unrestricted right to determine the amount;

The payment should not be the subject of negotiations or dictated by employer policy; and

Generally, the customer has the right to determine who receives the payment.

 

 

There would be no DSC if there weren't the people (back in the day) who skipped out on the last night at dinner and stiffed all their service people. I will never forget the looks on the waitstaff's faces when they realized couples were missing and they were being stiffed after working so hard all week. It was always the topic for those of us who showed at the table that last night. We always felt bad for the workers. I used to wonder how they were going to fix it. The workers never knew if they would make a reasonable paycheck that week. It was luck of the draw for them with which passengers they got stuck with. Most of the people that we sat with (that ended up as no shows the last night) acted really nice all week and were treated great only to stiff the workers at the last minute. Something had to be done to fix it.

[sparks1093]

You are dead wrong. Daily Service Charges are just that, service charges. There is no line item for tips. It does not exist. Not on any filing anywhere. I challenge you to prove me wrong. There is a very good reason why the only place it is referred to as gratuities is when offered as a perk.

 

DSC is merely another revenue stream.

 

Do the math. Getaway - 3,969 pax * $13.50 = $53,581.50 per day DSC. Now Getaway has a crew of 1,640. If we conservatively assume 70% are in the DSC pool (probably closer to 40) we get 1148 crew members sharing 53,581.50 = $46.67 per pooled crew member per day.

 

You honestly believe that NCL is collecting this money and doling it out to staff on top of their salaries? It isn't happening.

 

The service charge represents the lion's share of their income, their salary is very small. Yes, NCL is using the service charges to reduce what they have to pay out of pocket for staff. No, NCL is not using the service charges as corporate revenue.

 

And FWIW that $46.67 per crew member? That's $1400 a month. The numbers do indeed look big until you look at it that way, don't they?;)

[newmexicoNita]

There would be no DSC if there weren't the people (back in the day) who skipped out on the last night at dinner and stiffed all their service people. I will never forget the looks on the waitstaff's faces when they realized couples were missing and they were being stiffed after working so hard all week. It was always the topic for those of us who showed at the table that last night. We always felt bad for the workers. I used to wonder how they were going to fix it. The workers never knew if they would make a reasonable paycheck that week. It was luck of the draw for them with which passengers they got stuck with. Most of the people that we sat with (that ended up as no shows the last night) acted really nice all week and were treated great only to stiff the workers at the last minute. Something had to be done to fix it.

 

you have that right: I believe it was Holland America that started the DSC and though it was never said so clearly it did have to do with a no tipping (suggested amount) policy. Many people just assumed they didn't need to tip at all and didn't. So HAL went to a tipping plan and others followed. Now, we may see another increase people do not stop trying to find a way not to tip. They keep their money, we get charged for it.

[newmexicoNita]

The crew renews their contracts because they're getting paid a lot more than they would make at any job they could get in their home countries.

 

The restaurant example is a poor one for a few reasons. First off, most servers make substantially above minimum wage, to where a lower base wage for them makes sense. Second, the server makes money with every additional tip that comes in. NCL is not the same. When more "tips" come in (for example, when the DSC gets raised, or when they remove other employees from the DSC pool), that does not result in much of a pay increase for the crew. Instead, NCL just lowers their base pay, thus meaning they keep it. This does NOT happen at restaurants. If more tips come in, the server directly get that extra money. Not on NCL.

 

Look, as I've said, NCL just needs to be transparent about where our "tips" are going.

 

Then we can all make intelligent, informed decisions as to what to do with removing it or keeping it.

 

I don't know why so many people are bending over backward to defend this total lack of transparency of what is happening to our "gratuity" money.

 

Also, please quit repeating that most other cruise lines do it. I know that. I mention it in every post about the DSC, just so everyone knows I'm not picking on NCL. This is an industry-wide problem, not just an NCL problem.

 

I only mention NCL because that's the line I cruise, and that's the subject of this forum.

 

sorry, it is exactly the same and yes, I am very much aware of how much servers on the mainland make; my daughter went to college working as a server, I was a car hop in college, my son in law has managed several restaurants. Yes, many servers make way more than min wage when they combine salary and tips, but their salary is much lower than min wage.

Of course crew members renew because they are making more than at home: I think I made that clear. For that reason they are paid well in compared to what they would earn in their own country.

 

No, the cruise industry does not need to change, anymore than the restaurant industry has to change. Would you be happier if the salary was adjusted and the extra was added to our cruise fare? What is the difference?

[Jane Don]

The service charge represents the lion's share of their income, their salary is very small. Yes, NCL is using the service charges to reduce what they have to pay out of pocket for staff. No, NCL is not using the service charges as corporate revenue.

 

And FWIW that $46.67 per crew member? That's $1400 a month. The numbers do indeed look big until you look at it that way, don't they?;)

 

So you believe that every DSC crew member gets their contracted wage plus an extra $1,400 per month in pooled tips? If so, you are naive. DSC is revenue. The staff get their contacted wage plus any cash we may hand them. Any "incentive" (NCL's word, not mine), funds are minimal and mostly go to supervisors an managers.

 

You don't know how much of the DSC the crew receives. What is a "lions share"? How many dollars or percentage is that? NO ONE KNOWS! There is no transparency and I will stick with ensuring that my gratuities go directly to the crew who serve me well instead of the pockets of NCLH shareholders. I couldn't feel good about it any other way.

[sparks1093]

So you believe that every DSC crew member gets their contracted wage plus an extra $1,400 per month in pooled tips? If so, you are naive. DSC is revenue. The staff get their contacted wage plus any cash we may hand them. Any "incentive" (NCL's word, not mine), funds are minimal and mostly go to supervisors an managers.

 

You don't know how much of the DSC the crew receives. What is a "lions share"? How many dollars or percentage is that? NO ONE KNOWS! There is no transparency and I will stick with ensuring that my gratuities go directly to the crew who serve me well instead of the pockets of NCLH shareholders. I couldn't feel good about it any other way.

 

I don't care, I know that if I leave it in place the system works for all concerned. I'm not out to reinvent the wheel. The service charges do work to reduce NCL's out of pocket expenses, yes, but they do not represent corporate revenue. If they did you wouldn't be able to adjust them. From all that I've read over the years their salary is in the $50 to $100 a month range with the rest coming from the service charges. This is all really no different than leaving a tip for your server in an establishment where tips are pooled- you have no control over who ultimately gets a share of the tip that you leave and you can't tell your server "just keep it for yourself". I know that if I leave the service charges in place those who are supposed to get a share, do. I have no obligation beyond that.

Edited September 28, 2016 by sparks1093

[Jane Don]

sorry, it is exactly the same and yes, I am very much aware of how much servers on the mainland make; my daughter went to college working as a server, I was a car hop in college, my son in law has managed several restaurants. Yes, many servers make way more than min wage when they combine salary and tips, but their salary is much lower than min wage.

Of course crew members renew because they are making more than at home: I think I made that clear. For that reason they are paid well in compared to what they would earn in their own country.

 

No, the cruise industry does not need to change, anymore than the restaurant industry has to change. Would you be happier if the salary was adjusted and the extra was added to our cruise fare? What is the difference?

 

In 2002 I worked at a very popular brew pub while looking for a real job (by real I mean at least minimum wage). My hourly pay was $1.85. I believe the restaurant industry needs to change too. Every time I remove the DSC, I send the message to NCL that the DSC doesn't work for me. It is unfair to infer that the money is a gratuity and not give every red cent back to the employees.

[SheehanDJ]

So when my TA tells me the price it will be $113.50?

 

And when my TA tells my friends their price in the same exact cabin next to mine it will be $100?

 

Hmmm

 

Funny thing though in the past I price my cruise out without logging in to my Ncl account and price it out before calling my TA who gives me the exact same price and perks plus an obc

 

I also price out cruises just for fun with logging in to my Ncl acct and it's the same price when I'm not logged in

 

Fwiw I've never removed dsc but based on what I've gathered both here and from research...I just might remove it on my upcoming cruise and tip the steward and mdr for their personalized service.

 

I'm not real worried about cruises down the road as I'm exploring other lines now

 

 

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If you are running an AdBlocker type software, the cookies are still generated and stored, the Ads are just not displayed. If you are using Chrome in incognito mode, the cookies are still stored, your history isn't. If you disable cookies, cookies are still stored. EVERYTHING you do online is tracked, stored, analysed, and available for sale. I know it sounds like I'm paranoid, I really wish I was, but it is how it all works.

[Até]

There's this thing called cookies. All web sites use them, whether you are logged into NCL or not they still know it's you. Every website you go to looks at these cookies too and pass that info to GoogleAds who then make sure you are seeing advertisements about recent things you have looked into.

 

If you are running an AdBlocker type software, the cookies are still generated and stored, the Ads are just not displayed. If you are using Chrome in incognito mode, the cookies are still stored, your history isn't. If you disable cookies, cookies are still stored. EVERYTHING you do online is tracked, stored, analysed, and available for sale. I know it sounds like I'm paranoid, I really wish I was, but it is how it all works.

 

Including this site.

[Charles4515]

There's this thing called cookies. All web sites use them, whether you are logged into NCL or not they still know it's you. Every website you go to looks at these cookies too and pass that info to GoogleAds who then make sure you are seeing advertisements about recent things you have looked into.

 

 

 

If you are running an AdBlocker type software, the cookies are still generated and stored, the Ads are just not displayed. If you are using Chrome in incognito mode, the cookies are still stored, your history isn't. If you disable cookies, cookies are still stored. EVERYTHING you do online is tracked, stored, analysed, and available for sale. I know it sounds like I'm paranoid, I really wish I was, but it is how it all works.

 

 

 

I don't known much about Chrome but with Safari's Private Browsing Mode cookies and history are deleted when you exit Private Browser mode. I always use Private Browser Mode booking airfare because some airlines will increase the fare if you do subsequent fare lookups for a flight. I also use a VPN so they can't track my IP address.

 

 

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