Are service charges really a scheme to artificially decrease the base cruise fare?

I generally sail solo on 7 day cruises, but if you talk about larger groups on longer itineraries, the services charges add up to serious dough.

I've literally never had a staff/service issue on an NCL ship, but my cynicism still gets the best of me.

Lets adjust some numbers for easy math, and DECREASE the service charge to a convenient $10/day.

For a 7 day cruise with 4k passengers, that comes out to $280k! On one ship!

Does anyone really think NCL is really distributing $300k+ (remember, we adjusted the rate down) in performance bonuses, on every single ship on every single sailing? If they did, you'd think they would brag about it more.

They don't, Just the opposite. There is no transparency about the service charges AT ALL. That leaves the possibility that of that $280k, a big fat chunk of it goes to Miami for "administrative fees" or something along those lines.

If that's the case, I wish NCL would just eliminate the service charge, raise their rates slightly, and increase the base compensation their crew members receive. There's just something unavoidably fishy about the DSC's as currently implemented.

Of course they are.

A higher fare with no service charge would cost the same.

I honestly don’t understand why people struggle with this so much.

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As a publicly traded company, the written, public representations they make wrt the Daily Service Charge need to be accurate.

$300,000/1733=$173 bucks or so, not exactly earth shattering money.,

I honestly don’t understand why people struggle with this so much.

It's probably because they want something to complain about. :p

In the following scenario, all 5 are the same ship, same stateroom, same date, same itinerary, same UBP, same 3SDP, same port fees, same taxes, etc....

1. Cruise fare is $1,000 with $500 in service charges.
   
2. Cruise fare is $750 with $750 in service charges.
   
3. Cruise fare is $500 with $1,000 in service charges.
   
4. Cruise is free with $1,500 in service charges.
   
5. Cruise is $1,500 with zero service charges.
   

I guarantee, some people will complain about whatever price structure NCL uses and prefer it to be one of the others.

$300,000/1733=$173 bucks or so, not exactly earth shattering money.,

That's implying every single eligible crew member gets paid out of the DSC on every single sailing.

Perhaps that's the case, but I doubt it? What if you only get a bonus if you say get....10 hero cards in a week, and only 10% of the MDR waiters and cabin stewards get that many cards?

Of course! Personally I just wish that they would include the SC in the price.

Of course! Personally I just wish that they would include the SC in the price.

DSC is common across most cruise lines.

The Discretionary Service Charge serves many purposes for NCL. The main purpose being revenue generation. A nickel here, a dime there. Right out of your pocket.

NCL is clear to the point that they publish that the daily service charge is used to offset labor costs.

From their website:

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.

In particular:

staff are compensated by a combination of salary and incentive programs that your service charge supports.

That's it. The DSC is NOT a gratuity or tip. It's money collected which is directed towards salary and incentive programs.

This is common practice across cruise lines. On this subject I have read in posts documents from other lines that refer to this as a way of simplifying tipping, including a breakout of who gets what by position.

This is not what NCL does. And I believe there are other lines (Princess and perhaps other Carnival Corp brands) that use incentive programs rather than direct tipping out.

According to Wiki, NCL Escape can hold 4,266 passengers and 1,733 crew.

Not perfect, as there are different DSC rates, but using the current basic DSC:

4266 x 13.50 / 1733 = 33.23 daily. The question becomes, do you think NCL compensates ON AVERAGE more than $33.23 per day per crew member?

Hard question to answer, since for the average it would cover everyone from Captain down to unskilled positions.

My guess is that ALL labor compensation exceeds the total collected for DSC's. That makes it very easy for NCL to be accurate and truthful in their statement that DSC supports salary and incentive programs.

There are many things that are unknown about the specific disposition of the DSC that we will probably never know.

The one thing that we do know with certainty is the NCL --like other lines that use a similar method-- doesn't think it's any of the passenger's business; the details remain confidential. And NCL has never asked passengers how we feel they should administer their program.

So... to the topic and question raised...

about "...a scheme to artificially decrease the base cruise fare?"

NO, simply because of the question's wording.

Perhaps semantics, but more accurately:

the daily service charge is a method to help prevent an INCREASE in the base cruise fare.

LOL.....I think many on here are just controlling people. They go through life controlling others including those who serve them and a process like this just puts it out of reach. So, it bothers them and they post repeatedly about it.

That is the only exception for this infatuation.

That's implying every single eligible crew member gets paid out of the DSC on every single sailing.

 

Perhaps that's the case, but I doubt it? What if you only get a bonus if you say get....10 hero cards in a week, and only 10% of the MDR waiters and cabin stewards get that many cards?

Perhaps it is the case:

staff are compensated by a combination of salary and incentive programs that your service charge supports.

Everyone is at least earning a salary, and the careful language NCL uses allows for interpretation to include salaries.

The Discretionary Service Charge serves many purposes for NCL. The main purpose being revenue generation. A nickel here, a dime there. Right out of your pocket.

According to published NCL material, your statement is inaccurate.

"Discretionary Service Charge" is not a concept or practice at NCL.

Speculation about the purposes of something that is non-existent is fruitless.

As a publicly traded company, the written, public representations they make wrt the Daily Service Charge need to be accurate.

You are correct.

And little is said other than what I've already quoted. As long as the DSC is used to support salary and incentive programs, then they are doing as they publicly state.

In a word, yes. There is no logical reason the cruise fare could not be used to offset their labor costs and provide an incentive program. So why tack on a service charge as opposed to just include in the cruise fare?

It’s basically a gotcha addition to the base fare. It’s like Spirit charging people for carry on and to check bags. They know full well the vast majority of their customers will check or carry on.

In my opinion these pricing games cheapen a company’s brand.

It doesn’t matter that other cruise lines do the same thing. It’s still a nickel and diming business model, which I (personally) find cheap.

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In a word, yes. There is no logical reason the cruise fare could not be used to offset their labor costs and provide an incentive program. So why tack on a service charge as opposed to just include in the cruise fare?

It’s basically a gotcha addition to the base fare. It’s like Spirit charging people for carry on and to check bags. They know full well the vast majority of their customers will check or carry on.

 

In my opinion these pricing games cheapen a company’s brand.

 

It doesn’t matter that other cruise lines do the same thing. It’s still a nickel and diming business model, which I (personally) find cheap.

 

 

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I agree with you regarding perception. And your mention of Spirit airlines is a good example. I'd never fly them with their practices which can actually add up to more than other carriers.

Long before "food for purchase," back when all the airlines provided meals to coach passengers.... an innovative new airline intended to revolutionize air travel: People Express. Everything was a la carte. Ticket prices were low enough to attract individuals who otherwise couldn't afford to fly. They were the first airline to charge a fee to check luggage.

Funniest thing when I traveled on a college trip with a group was the mortified flight attendant relating to a fellow FA what a passenger had just asked her: "Will I need a dime or a quarter for the lavatory?" No, they didn't go that far.

But the point is that breaking the service charge out is a way to keep fares lower and competitive.

That's implying every single eligible crew member gets paid out of the DSC on every single sailing.

 

Perhaps that's the case, but I doubt it? What if you only get a bonus if you say get....10 hero cards in a week, and only 10% of the MDR waiters and cabin stewards get that many cards?

You are assuming that NCL use the service charge as part of the crew's salary. While it may use some of it for salary, to assume that it is all used for salary is erronous. It is a service charge, NOT a gratuity.

I've been looking to book April 2019 and as far as I can tell ncl has not only artificially raised their cruise prices but has also increased the dsc too

Oh well...that's why I just cancelled the cruise cert I purchased on my April 1 cruise

Made sure to do it while still in the 30 day period and since I still have one left to use by oct 2020...I'm thinking if ncl doesn't bring their prices back to normal range I just might forfeit that cert.

Oh well Ncl's loss and rccl or X gain

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Washy, Washy...gotta give you some applause.

Many fish hooks were taken. Nice job. ;p

No

DSC evolved because of specialty dining and not having the same waiter every night.

Most people on a ship do not want to walk around with cash and have to tip after every meal.

I've been looking to book April 2019 and as far as I can tell ncl has not only artificially raised their cruise prices but has also increased the dsc too

 

Oh well...that's why I just cancelled the cruise cert I purchased on my April 1 cruise

 

Made sure to do it while still in the 30 day period and since I still have one left to use by oct 2020...I'm thinking if ncl doesn't bring their prices back to normal range I just might forfeit that cert.

 

Oh well Ncl's loss and rccl or X gain

 

 

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Do you realize that those freebees that everyone loves are why fares are up.

i always assumed that the reason the cruise lines had the dsc as a separate item was some sort of financial/tax advantage to them.

The Discretionary Service Charge serves many purposes for NCL. The main purpose being revenue generation. A nickel here, a dime there. Right out of your pocket.

Can the adjustment of the DSC onboard be done if the charges have been prepaid prior to boarding?

Do you realize that those freebees that everyone loves are why fares are up.

Precisely.

I travel as a solo on an inside guarantee, no perks. I can spend $1000 for my cabin and buy 2 drinks each night for $20 w/tip= $1140 for room and drinks.

I can buy a $1200 inside and get a perk and pay $200 more for the same thing. The math only works if you are going to drink like a fish. Same for the internet, the specialty dining, and the shore excursions.

It's not really free.

$300,000/1733=$173 bucks or so, not exactly earth shattering money.,

I was wondering why OP didn't extrapolate the rest of the equation.

This is what I immediately thought of with his example and whining.