Gratuities on HAL

[Lis2065]

There are cruise lines sailing out of Aus who incorporate the hotel service charge in the up-front fare.

 

I choose to cruise with HAL out of Aus and factor in the hotel service charge when booking my cruise.

 

Yes the $Aus is dropping at the moment - perhaps you could pre-purchase enough on board credit prior to departure to cover the service charge? Or if your cruise is far enough out, perhaps you can transfer your booking to one of the lines who incorporate it in the overall fare?

[DaveOKC]

It would be interesting to see a comparison of cruise prices on ships where you pay a daily service charge vs one where it is built into the price and you never see it directly. I bet the two are fairly close. After all, there is no such thing as a "free lunch" - you pay for it one way or another.

[Randyk47]

It would be interesting to see a comparison of cruise prices on ships where you pay a daily service charge vs one where it is built into the price and you never see it directly. I bet the two are fairly close. After all, there is no such thing as a "free lunch" - you pay for it one way or another.

 

The problem is that for the most part the lines including gratuities or service charges in the fare price not only do it in a transparent way but the majority of them are the upscale luxury lines so there's already a sometimes significant price difference. That said I'm in the "include it in the fare" group. Last few years we've been cruising with a line that does that and I have no problem with it. If the occasion arose where I thought I was getting subpar service I'd have no problem addressing that right there and then. I actually think waiting until the end of a cruise and removing the service charge for perceived poor service is near on to useless as it's now too late for management to address the issue in a proactive and immediate way. I won't even address removing it for other reasons, enough has been said about that.

[kiwijohn]

I come from New Zealand and our exchange rate is probably one of the lowest in the western world (1 NZ dollar = 0.63USD). Even though tipping is not the custom in NZ I gladly pay the gratuities and always give the good HAL stewards and waiters something extra. I cruise on HAL ships because of the excellent service given by the crew.

[OVgirl]

The Canadian dollar is also dropping fast and is expected to drop to $0.65 over the next year.

Proactively, since it is dropping, I might buy some OBC at the current rate so that by the time we cruise I will be ahead of the game. Bonus is that any extra OBC will be refunded to me at the better exchange rate. Looks like a win/win to me.

This might also work for the AUS$, but I don't know if it is also expected to continue dropping.

[doublebzz]

When I was in your wonderful country a few years ago, the Aussie dollar was trading at a premium to the U.S. dollar so I guess you increased your tips accordingly.

[Roz]

I follow the tipping protocol of the country I'm visiting, regardless of where their currency is in relation to the US dollar.

 

Roz

[avian777]

It would be interesting to see a comparison of cruise prices on ships where you pay a daily service charge vs one where it is built into the price and you never see it directly. I bet the two are fairly close. After all, there is no such thing as a "free lunch" - you pay for it one way or another.

 

The problem is that for the most part the lines including gratuities or service charges in the fare price not only do it in a transparent way but the majority of them are the upscale luxury lines so there's already a sometimes significant price difference. That said I'm in the "include it in the fare" group. Last few years we've been cruising with a line that does that and I have no problem with it. If the occasion arose where I thought I was getting subpar service I'd have no problem addressing that right there and then. I actually think waiting until the end of a cruise and removing the service charge for perceived poor service is near on to useless as it's now too late for management to address the issue in a proactive and immediate way. I won't even address removing it for other reasons, enough has been said about that.

 

I also would prefer to have the HSC folded into the cruise fare. However, it is my understanding (from some Threads on here months ago) that the cruise lines use "tips" to pay the bulk of the ships crew wages/salaries in order to avoid adverse tax and commission consequences. (A Forum search should lead you to the relevant Threads.) Assuming the tax/commission bugaboo is accurate, I seriously doubt that HAL will do away with the HSC and adjust cruise fares accordingly. JMO

[Randyk47]

I also would prefer to have the HSC folded into the cruise fare. However, it is my understanding (from some Threads on here months ago) that the cruise lines use "tips" to pay the bulk of the ships crew wages/salaries in order to avoid adverse tax and commission consequences. (A Forum search should lead you to the relevant Threads.) Assuming the tax/commission bugaboo is accurate, I seriously doubt that HAL will do away with the HSC and adjust cruise fares accordingly. JMO

 

After actually talking to an accountant friend about tips and wages, those are above the line costs of business and are taken off at the corporate level so not taxed as profit revenue, and thinking about paying commissions on included gratuities I think that using that as an excuse or reason for not including them is basically corporate-speak hogwash. The commission aspect just doesn't pass the common sense test. Let's assume a 10-day cruise and say the average gratuity add-on is $25 a day for a couple. That's $250 for the cruise and the commission on that would average a whole $25 at a pretty standard 10% commission rate. Even then there are ways a line could counter the commission offset and obviously the cruise lines that include the gratuities in the basic fare seem to have found a way. It can be done.

Edited September 3, 2015 by Randyk47

[TheEmerson]

While not going into the whole should I tip or not thing, as it has been fully covered. There is something you can do in regards to the currency valuation.

 

If you truly believe that the value of the AUD and USD will not recover before your cruise you can buy today shipboard credits. That can be used to offset the cost while on the cruise. Yes, by doing so you are giving HAL an interest free loan on your money but you can use such fluctuations to your advantage. Also depending on your bank exchange fees you can buy USD hard currency then when you board. Goto the front office and ask for the money to be applied directly to your account.

[kazu]

After actually talking to an accountant friend about tips and wages, those are above the line costs of business and are taken off at the corporate level so not taxed as profit revenue, and thinking about paying commissions on included gratuities I think that using that as an excuse or reason for not including them is basically corporate-speak hogwash. The commission aspect just doesn't pass the common sense test. Let's assume a 10-day cruise and say the average gratuity add-on is $25 a day for a couple. That's $250 for the cruise and the commission on that would average a whole $25 at a pretty standard 10% commission rate. Even then there are ways a line could counter the commission offset and obviously the cruise lines that include the gratuities in the basic fare seem to have found a way. It can be done.

 

Just to clarify - the taxes that I have seen referred to on the threads are the taxes that the crew have to pay. Apparently a certain percentage of their income must be sent to the Government (theirs) no matter what their tax bracket as they are out of the country. Tips or HSC are not a requirement so it leaves the crew with more disposable income to send home to their families. At least, that has been my understanding.

Edited September 3, 2015 by kazu

[avian777]

After actually talking to an accountant friend about tips and wages, those are above the line costs of business and are taken off at the corporate level so not taxed as profit revenue, and thinking about paying commissions on included gratuities I think that using that as an excuse or reason for not including them is basically corporate-speak hogwash. The commission aspect just doesn't pass the common sense test. Let's assume a 10-day cruise and say the average gratuity add-on is $25 a day for a couple. That's $250 for the cruise and the commission on that would average a whole $25 at a pretty standard 10% commission rate. Even then there are ways a line could counter the commission offset and obviously the cruise lines that include the gratuities in the basic fare seem to have found a way. It can be done.

 

Everything you said makes sense to me, but no less an authority on all things sailing than BruceMuzz said in a May 5, 2015 CC post:

 

"Many Asian countries require the cruise lines to send a percentage of the tipped crew's salary (not their tips) back to their home country - through the manning agent - for tax purposes.

If the gratuities become part of the fare, they also become part of the crew salary. That forces the cruise lines to send a much higher percentage of the crew earnings back to their government, who then takes a much deeper cut of those earnings.

In the process, the manning agent who is handling those funds, fiddles with the exchange rates and skims a nice percentage off for himself.

 

Depending on many factors, adding the gratuities to the fare can result in a net loss for the service staff."

 

So assuming the accuracy of BruceMuzz's analysis, it appears that the "commission" issue relates to fees extracted by "manning agent" from ship crew wages/salaries and not to commissions paid to TAs. According to BruceMuzz, the manning agent fees apply to wage/salary income but not to tip income. Mind you, I am not endorsing BruceMuzz's analysis, just passing it on as a possible explanation for the current system.

Edited September 3, 2015 by avian777

[SetAnOpenCourse]

Thank you for being the only person to respond that has not been rude and does not realise the cost of cruising in Aus compared to the US. If I remove the gratuities (that as far as I am concerned the companies should be paying their staff appropriately anyway) I pay the good staff that have given me wonderful service directly and in a very quiet way. My last cruise on Diamond Princess, I wondered why the queues to get to reception where huge for the first 3 days. I was then told that they were passengers lining up to have the gratuites taken off. Given the service on that voyage I can't say I blame them. And just for the record all you Canandians complaining, I just looked up your dollar and it is .75 against the uUSD. Try the AUD under .70 and dropping fast.:D

 

A few thoughts about this thread:

 

The tone of some responses ought to have been less rebuking and more informative.

 

While I never, and probably never will, remove or decreased the HSC, I must admit it took a few cruises to get used to seeing that extra $170 at the end. Was it going totally to the crew? Were the crew also getting a wage? If so, what % of their income was the HSC? Had I ignored some documentation that would have answered these questions?

 

I've seen up-close the areas of poverty where some of the crew has likely come from (there is, however, a remarkably common cheerfulness despite the poverty). There's a good chance that the $170 is going back to their families for life's necessities.

 

I consider it more ethical for employers to pay a living wage. I'm not saying the society that tips is wrong, or unethical (I did enjoy the fat wad of bills in my pocket when I was a waiter!), but I simply find the wage-only tradition more admirable. This added context, per the nationality of the OP.

[sail7seas]

Just to clarify - the taxes that I have seen referred to on the threads are the taxes that the crew have to pay. Apparently a certain percentage of their income must be sent to the Government (theirs) no matter what their tax bracket as they are out of the country. Tips or HSC are not a requirement so it leaves the crew with more disposable income to send home to their families. At least, that has been my understanding.

 

I think they also have to pay a percentage to their unions.

 

 

 

[wander]

If the OP was serious, then I do not think one factor has been made clearly enough. Several mentioned it - but I would like to be a bit more direct.

 

IF you choose to alter or eliminate your daily service charge (or whatever it is now called), and IF you tip some crew directly - THEY MUST turn in the $$ you gave them to the tip pool, they do NOT get to keep it. They have a list of passengers who have removed their "service charge" so they are well aware of what you did. (YES - I have personally seen the list. The first time it was just by accident when I entered the crew space on my deck - where they get the ice, water, etc. I went in to talk with my cabin steward.) Since then on at least one cruise (several years ago now) I intentionally looked in the room and yes there was a list posted toward the end of the cruise.

 

I had and interesting social conversation with a HAL Security Officer at a neighbor's home. (At the time I was home and he was on his time-off.) He said that most crew will turn-in any money they get from folks on the list as they are concerned that it could be a set-up. He would not say whether or not HAL has folks who intentionally do this for HAL, but he did say crew was concerned it could be happening. If one were found to be pocketing the $$ from folks who remove (or reduce) their automatic charge, it was grounds for possible dismissal. Not worth the risk for most - overall the job pays more than the few dollars they would personally get in lieu of their daily allocation from the service charge.

[avian777]

I think they also have to pay a percentage to their unions.

 

According to the May 19, 2015 issue of SKIFTTAKE, "The cruise industry, in which the lowest-paid workers don’t belong to labor unions ..." But while ship crew may not pay union dues, they do pay fees/commissions to "manning agents, so your point IMO is valid ...

[sail7seas]

According to the May 19, 2015 issue of SKIFTTAKE, "The cruise industry, in which the lowest-paid workers don’t belong to labor unions ..." But while ship crew may not pay union dues, they do pay fees/commissions to "manning agents, so your point IMO is valid ...

 

It is wrong.

The Filipinos and Indonesians on the ships belong to seafarer unions.

 

Don't believe everything you read just because you 'found it on the web.'

 

Edited September 3, 2015 by sail7seas

[InTheWASide]

According to the May 19, 2015 issue of SKIFTTAKE, "The cruise industry, in which the lowest-paid workers don’t belong to labor unions ..." But while ship crew may not pay union dues, they do pay fees/commissions to "manning agents, so your point IMO is valid ...

 

Your information is wrong. The Indonesian and Filipino staff on board each belong to a union in their home countries. Additionally, I believe most of the European officers do as well but I'm not AS certain on that

[dogo88]

The HSC should be folded into the cost of the cruise by HAL. If it was then these discussions would not be needed and no one could remove or reduce it. It's not so that the cruise lines can list a lower price.

 

Because it isn't, you have the option of removing or reducing it. You can argue all day long til the cows come home and it doesn't mean much. I seriously doubt all the browbeating will not change a persons mind if they want to reduce or remove it because they can.

 

Dan

[sail7seas]

The HSC should be folded into the cost of the cruise by HAL. If it was then these discussions would not be needed and no one could remove or reduce it. It's not so that the cruise lines can list a lower price.

 

Because it isn't, you have the option of removing or reducing it. You can argue all day long til the cows come home and it doesn't mean much. I seriously doubt all the browbeating will not change a persons mind if they want to reduce or remove it because they can.

 

Dan

 

That could/might do two things:

 

Make it commissionable to TA's and make HAL's prices appear less

competitive as compared to other cruise lines in their category.

 

While I do not know the tax laws in Philippines or Indonesia, it is possible tax consequence could be adverse to crew members' best interest.

 

 

 

Edited September 3, 2015 by sail7seas

[kazu]

 

<snip>

 

Because it isn't, you have the option of removing or reducing it. You can argue all day long til the cows come home and it doesn't mean much. I seriously doubt all the browbeating will not change a persons mind if they want to reduce or remove it because they can.

 

Dan

 

You're absolutely right I fear. I'd like to see a requirement to for those that want to remove it to complete a document as to why, meet with the supervisor to explain why, etc. It's too easy IMO with the current system.

[Host Walt]

The topic is reprinted below. Please stay on topic.

 

Gratuities on HAL

As the Aussie Dollar in dropping really fast it makes it extremely expensive to pay for gratuities in USD. I know on Princess you can organise to have them removed. Being Australian and tipping not in our culture I think that cruising for us will become a very expensive option for holidaying. Can you have this payment removed with Holland America??

Edited September 3, 2015 by Host Walt

[Host Walt]

To answer a question, we Hosts will never edit a post for any reason except in rare cases where a member requests a correction. Otherwise the only action we will take is to remove a post completely if it contravenes our posting guidelines.

 

By the way, personal attacks in posts are in contravention of our guidelines and will guarantee removal of the entire post regardless of the content of the rest of that post.

Edited September 3, 2015 by Host Walt

[doublebzz]

The commission aspect just doesn't pass the common sense test. Let's assume a 10-day cruise and say the average gratuity add-on is $25 a day for a couple. That's $250 for the cruise and the commission on that would average a whole $25 at a pretty standard 10% commission rate. Even then there are ways a line could counter the commission offset and obviously the cruise lines that include the gratuities in the basic fare seem to have found a way. It can be done.

 

I doubt cruise lines pay commission on tips or why would lines now be encouraging guests to pre-pay their tips.

[dogo88]

That could/might do two things:

 

Make it commissionable to TA's and make HAL's prices appear less

competitive as compared to other cruise lines in their category.

 

While I do not know the tax laws in Philippines or Indonesia, it is possible tax consequence could be adverse to crew members' best interest.

 

 

 

 

 

As long as it is optional people will be able to remove or reduce it and threads like this will continue to beat this dead horse.

 

Dan