Gratuities going up...minimally

[luvtheships]

I paid my gratuities for my December cruise when I made the reservation a year ago (way before the increase was announced). Why? Because I just wanted to get it over. Scratch your head all you want, but spending $84 will have no bearing on my life and I will not be in dire need of it if I need car repairs. BTW, I pay my credit care off monthly (as do many, many people); I haven't paid interest to a credit card company in over 15 years or so.

 

I haven't paid credit card interest in decades..... But I still wouldn't prepay dsc for a cruise more than 2 months out.

 

And I could easily afford it and .95 is meaningless anyway. However I still wouldn't pay it

 

 

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[NLH Arizona]

I haven't paid credit card interest in decades..... But I still wouldn't prepay dsc for a cruise more than 2 months out.

 

And I could easily afford it and .95 is meaningless anyway. However I still wouldn't pay it

 

 

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We all do what we want to do and what we feel is A-Okay!

[fshagan]

We need a CPA to chime in on the idea that NCL is "raising cash" by charging the DSC in advance. Seems to me it wouldn't improve the company's financial situation a bit since the cash comes in on one line and is a liability on another to be applied (and recognized as income) when the DSC is actually due .... the last day of the cruise. So it has no effect at all until it is settled. I don't believe a corporation as large as NCL can be on cash-basis accounting, so the cash isn't recognized until earned.

 

I think they are letting us prepay at the older rate because it is a better way to raise rates ... give the current customers notice and give them a way to avoid the increase. It avoids MOST of the complaining because is seems more fair to most of us.

[luddite]

Some call it the daily service charge

 

Because it isn't a gratuity.

[LMaxwell]

Because it isn't a gratuity.

My PCC and NCL latest email to me both call it a gratuity.

[sparks1093]

We need a CPA to chime in on the idea that NCL is "raising cash" by charging the DSC in advance. Seems to me it wouldn't improve the company's financial situation a bit since the cash comes in on one line and is a liability on another to be applied (and recognized as income) when the DSC is actually due .... the last day of the cruise. So it has no effect at all until it is settled. I don't believe a corporation as large as NCL can be on cash-basis accounting, so the cash isn't recognized until earned.

 

I think they are letting us prepay at the older rate because it is a better way to raise rates ... give the current customers notice and give them a way to avoid the increase. It avoids MOST of the complaining because is seems more fair to most of us.

 

I think you're spot on with your last sentence. The amount received by NCL for this will be a paltry sum compared to their total cash flow. And it wouldn't surprise me at all to find out that any money received in advance such as this is put into a non-interest bearing escrow account.

[Out to sea!]

I haven't paid credit card interest in decades..... But I still wouldn't prepay dsc for a cruise more than 2 months out.

And I could easily afford it and .95 is meaningless anyway. However I still wouldn't pay it

 

 

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Then that is bad financial sense but you are entitled to it.

[Out to sea!]

Talk about making stuff up!!!

 

If you can't see that Ncl will have a cash windfall with this deal....I can help that

 

I never said they were in an financial straights I just said they are essentially borrowing money without going to a bank

 

 

There are many ways for a company to raise cash.... This is just one of them

 

Haven't you ever shopped a sale? That too is a way for a company to not only move merchandise but to raise cash.

 

It's done all the time and doesn't mean anything other than it is a viable business strategy

 

 

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I's sorry but who cares???

 

I worry as much about the daily financial intake of NCL as I do about a what a Mongolian in China is having for breakfast. :rolleyes:

Edited February 16, 2015 by Out to sea!

[sparks1093]

I's sorry but who cares???

 

I worry as much about the daily financial intake of NCL as I do about a what a Mongolian in China is having for breakfast. :rolleyes:

Chinese food.

 

If it makes sense for me to do something and someone else benefits from me doing that something that is not going to keep me from doing the something.

[KeithJenner]

If it makes sense for me to do something and someone else benefits from me doing that something that is not going to keep me from doing the something.

 

 

Absolutely.

[LMaxwell]

And it wouldn't surprise me at all to find out that any money received in advance such as this is put into a non-interest bearing escrow account.

 

Why a non-interest bearing account? :confused:

[sparks1093]

Why a non-interest bearing account? :confused:

 

If they did then it would certainly put paid to the argument that customers are giving them an interest free loan or that the company is somehow increasing cash flow by offering this choice.

[LMaxwell]

If they did then it would certainly put paid to the argument that customers are giving them an interest free loan or that the company is somehow increasing cash flow by offering this choice.

 

So? Why would a multi-national corporation just park millions of dollars in escrow and not earn anything off it just so that people can't be right about them making money off it? There's no charity going on here.

 

The money they receive in advance can do any number of things for NCL or Genting and I can't imagine they'd just stuff it under a mattress, so to speak. Any CFO that allowed that should be polishing their resume.

[Pia1913]

This thread has become pathetic. I don't have to take one penny OOP, because it will all be deducted from my OBC. So I'll have $13.30 less. Big deal!

[Demonyte]

This thread has become pathetic. I don't have to take one penny OOP, because it will all be deducted from my OBC. So I'll have $13.30 less. Big deal!

 

Well, if your OBC is a booking perk from NCL, it is non-refundable, and will not be used against service charges so the pennies do come OOP.

[Crusin6]

So? Why would a multi-national corporation just park millions of dollars in escrow and not earn anything off it just so that people can't be right about them making money off it? There's no charity going on here.

 

The money they receive in advance can do any number of things for NCL or Genting and I can't imagine they'd just stuff it under a mattress, so to speak. Any CFO that allowed that should be polishing their resume.

 

 

Stop now..... You are making too much sense

 

Of course ncl will park this cash windfall in an interest bearing acct and anyone here that thinks ncl gets the same interest rate that peon consumers like us do just doesn't understand the system

 

 

My take is that they have some sort of ballon construction loan payment coming due soon but anything is possible that they need to pay

 

 

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[luddite]

My PCC and NCL latest email to me both call it a gratuity.

 

If you and they were correct, we would be in agreement.

[SeaShark]

Are service charges and tips the same?

Not according to a fairly recent addendum from the IRS, which clarified the difference.

 

What Is a 'Tip'?

 

The IRS has set out the following traits as characteristic of 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 negotiation or dictated by employer policy; and
  
• Generally, the customer has the right to determine who receives the payment.
  

Historically, it has been suggested that the term "tip" originated from an innkeeper's sign to ensure faster service. More currently, the general use of a tip remains the same. Customers have the option of tipping their server for punitive reasons (i.e., deducting if the service is bad) or as a reward (if the service is particularly outstanding).

 

What Is a 'Service Charge'?

 

Service charges will usually be clearly indicated as such. If any of the above listed traits for a tip are missing, however, then it is usually a service charge. In other words, a service charge is, when:

 

• The payment is mandatory;
  
• The customer does not possess the unrestricted right to determine the amount;
  
• The payment is the subject of negotiation or dictated by employer policy; and
  
• Generally, the customer does not hold the right to determine who receives the payment.
  

The IRS provides an example of a service charge occurring when a banquet hall charges at a pre-determined rate not negotiable by the customer. In most cases, that money is then distributed to employees who rendered the services that the hall required at that event -- for example, bartenders, waiters, and janitors.

 

Service charges are also common if you dine out in larger parties. They are set for the staff and facilities to be able to accommodate you and exert the additional service needed when there are more bodies.

 

Does It Really Matter?

 

But what's the big deal? While the "tip" versus "service charge" distinction may not seem too important to a customer, it may make a big difference to your server. That's because a "tip" belongs to the server, according to the IRS, while a "service charge" may not.

[LMaxwell]

If you and they were correct, we would be in agreement.

 

I'm only stating what information I have been given by NCL, both by their representative and in printed communication.

 

Are service charges and tips the same?

Not according to a fairly recent addendum from the IRS, which clarified the difference.

 

Pretty sure the IRS has nothing to do with foreign national crew on a foreign flagged ship.

[fshagan]

Of course ncl will park this cash windfall in an interest bearing acct and anyone here that thinks ncl gets the same interest rate that peon consumers like us do just doesn't understand the system

 

They might be able to earn interest on it. I suspect it will be on the balance sheet as I explained before, as both income and liability so it doesn't improve the company's financial position. They are forced to use the accrual method of accounting, recognizing income when booked and expenses when incurred. So they are behind the eight ball, like all corporations are, in terms of distorted cash flow. They have to claim our bookings as income before we actually give them the payment, and recognize the expenses when incurred rather than when paid.

 

Not sure how that works for pre-payment of a service charge (which is why I would love a CPA to chime in on this one). I think that a prepayment has to be accrued against the liability on the books, so there isn't an advantage to getting it early. The cash goes somewhere, and if you're really upset that NCL might have an interest bearing bank account you can check their 10Q or annual report. They are a public company now, so these kinds of things are out in the open. The impact of this change will be revealed there (and you can probably see how prepayments are handled.) None of the corporations I worked for ever had a large interest bearing account where they parked money. Ever. Even when interest rates were much higher than they are now.

 

Here's how I look at it for our September cruise:

 

NCL is raising the price on one of the items by .95 a day. I have two easy options to avoid this 8% increase: cancel my cruise or prepay the charges. I decide to prepay the charges because I like to pre-pay these anyway but usually a month before the cruise. So NCL gets my money a few months earlier.

 

Its such a small amount that it really doesn't matter. I'm saving 8% of this charge but that is only $13. But I like to prepay the charge anyway, and the "time value of money" doesn't really come into play here ... it is $13.

 

I think its a different situation for those in suites who are facing about a 25% increase in the fee, and could save about $83 for their family of four for 7 days. For those people not pre-paying is a bad decision, but $83 is an amount that matters.

[SeaShark]

Pretty sure the IRS has nothing to do with foreign national crew on a foreign flagged ship.

 

Except that what we are talking about here is the legally recognized definition of a term. This has nothing to do with flags or where one particular person is from. You get so lost in the nationality of a crew member (who you aren't paying), and the flag on a ship (which with you don't have a contract), that you forget that you are dealing only with the COMPANY...Norwegian Cruise Line.

 

Regardless of where a particular crew member may reside, NCL is still an AMERICAN company headquartered in Miami, Florida and they are subject to the rules and regulations of the IRS. If they communicate with American citizens on American soil they need to use the legally accepted terms when it comes to financial matters.

 

Why else do you think NCL's lawyers have them talk about Gratuities and the Service Charge in separate FAQs?

[LMaxwell]

Except that what we are talking about here is the legally recognized definition of a term. This has nothing to do with flags or where one particular person is from. You get so lost in the nationality of a crew member (who you aren't paying), and the flag on a ship (which with you don't have a contract), that you forget that you are dealing only with the COMPANY...Norwegian Cruise Line.

 

Regardless of where a particular crew member may reside, NCL is still an AMERICAN company headquartered in Miami, Florida and they are subject to the rules and regulations of the IRS. If they communicate with American citizens on American soil they need to use the legally accepted terms when it comes to financial matters.

 

Why else do you think NCL's lawyers have them talk about Gratuities and the Service Charge in separate FAQs?

You may want to do more research before proclaiming they are subject to rules and regs of the IRS.

[luvtheships]

The amusing thing is.....

 

.95 pp pd prepaid now for a far off future cruise....

 

Probably means little to the pax....but.....when you multiply it by thousands of pax on hundreds of cruises that might prepay now....

 

That equals a large influx of cash to Ncl by feb 28..... There is no denying that..... But someone will try

 

 

 

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Edited February 16, 2015 by luvtheships

[Turtles06]

The amusing thing is.....

 

.95 pp pd prepaid now for a far off future cruise....

 

Probably means little to the pax....but.....when you multiply it by thousands of pax on hundreds of cruises that might prepay now....

 

That equals a large influx of cash to Ncl by feb 28..... There is no denying that..... But someone will try

 

 

So what if NCL gets a large influx of cash? Good for them. And if it has a positive impact on their bottom line, maybe it will be good for us as well. You seem to want to deny them that opportunity, and that's your choice, but for those of us who have done the math and find that the economics of pre-paying the DSC before it goes up make sense, I see no point in cutting off our noses in order to keep NCL from getting "a large influx of cash."

[LMaxwell]

So what if NCL gets a large influx of cash? Good for them. And if it has a positive impact on their bottom line, maybe it will be good for us as well. You seem to want to deny them that opportunity, and that's your choice, but for those of us who have done the math and find that the economics of pre-paying the DSC before it goes up make sense, I see no point in cutting off our noses in order to keep NCL from getting "a large influx of cash."

 

If you were in my situation with a cruise 22 months away would you prepay?