Prepaid Gratuities VS Prepaid Service Charges

[MarkusToe]

I've booked my NCL trip at Germany.

I've everything included, tip, grats, you name it.

Price is final, period.

No extra 20 % on drinks....

 

[chengkp75]

11 hours ago, billslowsky said:

Using the maximum amount possible - based on 100% of passengers paying the DSC - is rarely going to be achieved and both the cruise line and the workers know it.  A benchmark based on the normal paying patterns of passengers is a more reasonable analysis.  Especially as long as the cruise line doesn't require the payment.  

Whether that is a "more reasonable" analysis, in your opinion, or not, that is not the model used.

 

Edited October 11, 2021 by chengkp75

[phillygwm]

On 10/9/2021 at 8:39 AM, Two Wheels Only said:

 

But would you be happy? If the DSC went away tomorrow but prices jumped $200pp for a 7 night cruise, would people who remove the DSC still "tip with cash"? 

 

I've seen several references to fees rising disproportionately to the amount of the DSC, were it eliminated.  That doesn't make sense.

 

Let's say current sticker price for your stateroom is $1000 plus ~$100 for DSC.  You would think, if DSC were eliminated, sticker price would be around $1100.  But let's say it increases by $200.  Well, people can and do comparison shop.  If NCL is out of line vis a vis the competition, they'll learn Macroeconomics 101:  Supply and Demand.

 

As for whether people would tip with cash, It's inequitable in any case because it would benefit the front-facing employees but not the support staff that allow them to do their jobs.  But I'm a cynic:  I'm thinking most people will tip less than the DSC equivalent or not at all.

Edited October 11, 2021 by phillygwm

[Two Wheels Only]

28 minutes ago, phillygwm said:

I've seen several references to fees rising disproportionately to the amount of the DSC, were it eliminated.  That doesn't make sense.

 

It actually happened when the DSC was eliminated for UK bookings. Prices went to an amount higher than what the price + DSC was at the time for others.

[ChiefMateJRK]

1 hour ago, phillygwm said:

I've seen several references to fees rising disproportionately to the amount of the DSC, were it eliminated.  That doesn't make sense.

I'm guessing that if the fees are paid to NCL, they are taxed as revenue and then passed on as taxable wages to the employees.  If they are paid as they are now, they are likely only taxed once.

[phillygwm]

11 minutes ago, ChiefMateJRK said:

I'm guessing that if the fees are paid to NCL, they are taxed as revenue and then passed on as taxable wages to the employees.  If they are paid as they are now, they are likely only taxed once.

The ships are flagged in Bahamas so I'm not sure US tax laws apply (except, possibly, when in US port but I'm not a CPA.)

[fshagan]

On 10/8/2021 at 5:37 PM, phillygwm said:

It's no different than a U.S. land-based restaurant.  I'm expected to tip my server (we can argue whether that's a good model but it isn't changing anytime soon.)  On the other hand, I'm not expected to tip the back-of-house staff; it's assumed they're compensated commensurate with whatever they're doing.  And that's a good thing because few people WOULD go back in the kitchen to tip the dishwasher. 

 

I did bookkeeping for several restaurants and the servers would split their tips with the host, bussers and barkeeper (who in turn split his tips with the bar back and other people under him). The tip out amounts to these people were deducted from their tips on the books so they didn't pay taxes on them (but those other employees did pay the taxes on the amount they got). So your tip in the restaurant is a kind of "tip pool" in practice, just like the DSC.

[fshagan]

3 hours ago, ChiefMateJRK said:

I'm guessing that if the fees are paid to NCL, they are taxed as revenue and then passed on as taxable wages to the employees.  If they are paid as they are now, they are likely only taxed once.

 

Shipboard revenue is not taxed by the US Federal government. But the accounting for a pass-through like this is probably handled by allocating it to crew incentives and credited back when given to the crew. Net result: no tax implication to NCL at all, even without the special carve out for shipboard revenue in the tax code. $1 - $1 = $0.

 

It's interesting that Virgin Voyages is including the DSC-style thing in their fares (no extra daily charges). We'll see how they do. I suspect its like the airlines charging baggage fees; they will follow suit because as much as we complain, we "vote with our dollars" for a base price with numerous extra charges.

[ChiefMateJRK]

3 hours ago, phillygwm said:

The ships are flagged in Bahamas so I'm not sure US tax laws apply (except, possibly, when in US port but I'm not a CPA.)

Doesn’t the Bahamas tax revenue and wages?

[cruiseaholic78]

18 hours ago, MarkusToe said:

I've booked my NCL trip at Germany.

I've everything included, tip, grats, you name it.

Price is final, period.

No extra 20 % on drinks....

 

I know that the conditions for Europe are different and here in the NL we do not have to pay the 20% extra on drinks restaurants etc. However we do have to pay the service charge of €12/$15,50 per day, so unless you got a really special deal from your TA you might want to double check your account. 
Rosalyn

[chengkp75]

4 hours ago, ChiefMateJRK said:

Doesn’t the Bahamas tax revenue and wages?

Bahamas has no corporate tax (one reason they are a "flag of convenience".  And, crew wages are not taxable.  Personal income has no tax either.

[KeithJenner]

12 hours ago, phillygwm said:

I've seen several references to fees rising disproportionately to the amount of the DSC, were it eliminated.  That doesn't make sense.

 

Let's say current sticker price for your stateroom is $1000 plus ~$100 for DSC.  You would think, if DSC were eliminated, sticker price would be around $1100.  But let's say it increases by $200.  Well, people can and do comparison shop.  If NCL is out of line vis a vis the competition, they'll learn Macroeconomics 101:  Supply and Demand.

 

As for whether people would tip with cash, It's inequitable in any case because it would benefit the front-facing employees but not the support staff that allow them to do their jobs.  But I'm a cynic:  I'm thinking most people will tip less than the DSC equivalent or not at all.

It makes total sense.

 

Firstly, many people don’t shop around in the way that you suggest. If people

really did look at and understand the bottom line then there would never be the need for the pricing games.

 

You are correct in that over time the market will adjust prices back down, as has happened in the UK, but in the short to medium term prices would be higher, again as happened in the UK when the DSC was removed.

 

One bit of advice I would always give is never encourage someone you buy from to change the basis on which they charge you. It is a very rare company who won’t try to use it as a way of sneaking through a price increase. In this case, NCL is far from rare.

[phillygwm]

8 hours ago, KeithJenner said:

It makes total sense.

 

Firstly, many people don’t shop around in the way that you suggest. If people

really did look at and understand the bottom line then there would never be the need for the pricing games.

 

I get it.  People like what they like, they have status, etc.  I always sail on NCL but I have a bit of a unique situation (Casinos at Sea takes pretty good care of me, including waiving my single supplement.)  But if I weren't CAS or I travelled with someone else in my stateroom, I'd probably shop around to keep them honest.  Is it worth $100?  Not really but when it starts adding up, people vote with their feet.

[phillygwm]

14 hours ago, cruiseaholic78 said:

I know that the conditions for Europe are different and here in the NL we do not have to pay the 20% extra on drinks restaurants etc. However we do have to pay the service charge of €12/$15,50 per day, so unless you got a really special deal from your TA you might want to double check your account. 
Rosalyn

I'm not familiar with the pricing scheme for European travelers, but US travelers are accustomed to tipping so Isuspect it's broken out for Americans but baked into the cost for those on the other side of the pond.  

[chengkp75]

26 minutes ago, phillygwm said:

I'm not familiar with the pricing scheme for European travelers, but US travelers are accustomed to tipping so Isuspect it's broken out for Americans but baked into the cost for those on the other side of the pond.  

No, it is in the law.  European countries generally require the full price to be the posted price, including all taxes and fees. Prices in stores are including VAT, not price plus VAT, for instance.  It has nothing to do with tipping, it is merely a way to lower the advertised fare, by including the DSC in the fine print.

[Mr G RAY]

OKAY so are pre paid service charges the same as prepaid gratuities?

[d9704011]

1 minute ago, Mr G RAY said:

OKAY so are pre paid service charges the same as prepaid gratuities?

Yes.... also 'Crew Appreciation' (Princess terminology).

[MoCruiseFan]

2 hours ago, Mr G RAY said:

OKAY so are pre paid service charges the same as prepaid gratuities?

 

 

No.  There are no pre-paid gratuities other than the mandatory gratuities on some dining and drink packages for example.  Other than those, gratutities on NCL are 100% optional.  The DSC is a different animal and waht all it is and covers is described in the FAQ on NCL's web site.

[room with a view]

On 10/12/2021 at 6:02 AM, cruiseaholic78 said:

I know that the conditions for Europe are different and here in the NL we do not have to pay the 20% extra on drinks restaurants etc. However we do have to pay the service charge of €12/$15,50 per day, so unless you got a really special deal from your TA you might want to double check your account. 
Rosalyn

But when booking on a site within Europe or the UK 20% extra on drinks and speciality restaurants is built in to the price.

 

[RocketMan275]

13 hours ago, MoCruiseFan said:

No.  There are no pre-paid gratuities other than the mandatory gratuities on some dining and drink packages for example.  Other than those, gratutities on NCL are 100% optional.  The DSC is a different animal and waht all it is and covers is described in the FAQ on NCL's web site.

Please show where NCL makes a distinction between Gratuities and the DSC.

[dbrown84]

2 hours ago, RocketMan275 said:

Please show where NCL makes a distinction between Gratuities and the DSC.

 

[MoCruiseFan]

2 hours ago, RocketMan275 said:

Please show where NCL makes a distinction between Gratuities and the DSC.

 

https://www.ncl.com/faq#!#what-is-onboard-service-charge

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. How much is the charge? Onboard Service Charges are additional.

THERE IS NOTHING THERE AT ALL ABOUT GRATUITIES.

Some people choose to read into the above FAQ facts that are not stated and deem the DAC a fgratuity, but that is not what the FAQ states.

[MoCruiseFan]

In addition to the above....

https://www.ncl.com/faq#!#what-about-gratuities

What about gratuities?

Unlike most other ships in the cruise industry, there is no required or recommended tipping on our ships for service that is generally rendered to all Guests. While you should not feel obligated to offer a gratuity, all of our staff are encouraged to “go the extra mile,” so they are permitted to accept cash gratuities for exceptional or outstanding service if you care to offer them. Also, certain staff positions (e.g., concierge, butler, youth program staff and beverage service) provide service on an individual basis to only some guests and do not benefit from the overall service charge. We encourage those Guests to acknowledge good service from these staff members with appropriate gratuities. Additionally, there is an 20% gratuity and spa service charge added for all spa and salon services, as well as an 20% gratuity and beverage service charge added for all beverage purchases and an 20% gratuity and specialty service charge added to all specialty restaurant dining and entertainment based dining.

[RocketMan275]

2 minutes ago, MoCruiseFan said:

 

https://www.ncl.com/faq#!#what-is-onboard-service-charge

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. How much is the charge? Onboard Service Charges are additional.

THERE IS NOTHING THERE AT ALL ABOUT GRATUITIES.

Some people choose to read into the above FAQ facts that are not stated and deem the DAC a fgratuity, but that is not what the FAQ states.

The DSC supplements crew incomes.  You're trying to play word games.

[RocketMan275]

14 minutes ago, dbrown84 said:

 

That isn't a distinction.  You're just playing word games.