NCL Service Charge Adjustment

[sparks1093]

I'm not challenging that the few are passing along information they were told or heard, but I'm not sure what they were told or heard is correct or just a way for some crew members to garner additional cash tips by saying they are making less. As I said above: Did NCL look at what the bartenders were making and give them their highest salary as a constant?. If it is true that the bartenders are making the same every month, are they making more or less than they were making before? Do they also get bonuses for hero cards, hard work, etc.?

 

I have never said that the DSC I pay goes to my Cabin Steward or servers who serve me. I think the DSC is put into a pool and it pays first the contractual rate to each employee that is in the pool and then anything left over goes to incentives (bonuses, etc.). I also don't believe that every Cabin Steward receives the same overall salary; a new employee is not going to get the same salary as a Cabin Steward who has been with the company for 10 years or an Cabin Steward who gets a ton of accolades from passengers. That is one reason why I question those cruise lines that publish that $X goes to Cabin Steward and $X goes to this position, etc., but it is just an opinion.

 

I agree, I don't care how the crew gets paid, only that they are paid a salary that they are happy with and if they were not, I'm sure it would be all over the internet, which I'm not seeing, or we wouldn't see crew members who have been with the line for 10, 15 and 20 years. If Sparks1093 is correct, the answer should be in the annual report and, hopefully one way or another, we will all have the answer and we must act how we feel is appropriate based on the answer.

 

I just looked at the 2015 annual report and it looks like they aggregate onboard revenue and income without outlining the source of the income. Maybe it's another annual report format that was being discussed (I'm no financial guru so I haven't a clue what reports get filed).

 

I agree that for the most part it doesn't matter where the money comes from for employee income since it all ultimately comes from us anyway. The only exception to that in my view is for tips- those belong to the employees, period. I don't care that it's called a service charge, it's supposed to go to the employees and not the company. And I will say again that while I have seen threads that cause me to wonder I haven't seen anything to suggest that the employees don't get all of the service charges one way or another.

[SuiteCruiser]

If they throw dsc into a pool to pay the contractual rate to employees then it becomes taxable revenue to Ncl.

 

Lol

 

As long as they pay it all out to the staff, it's an equal expense, therefore no tax...

Edited May 19, 2016 by SuiteCruiser

[DadOfCuteMessMaker]

Here is what NCL's quarterly SEC report says Dated may 10, 2016:

http://www.nclhltdinvestor.com/sec.cfm

 

Passenger ticket revenue primarily consists of revenue for accommodations, meals in certain restaurants on the ship, certain onboard entertainment, and includes revenue for service charges

operating expense is classified as follows:

 

• Commissions, transportation and other primarily consists of direct costs associated with passenger ticket revenue. These costs include travel agent commissions, air and land transportation expenses, related credit card fees, costs associated with service charges

 

 

"costs associated' with service charges" usually refers to the cost associated with collecting" not the actual revenue because otherwise if it said simply "service charges", then revenue from DSC would all be part of operating expense.

 

Having said that, I agree that there is some formula that NCL uses where part of the service charge goes to crew.

 

My guess is that its either:

 

1) a reward for good performance/ anniversary bonus/crew parties/gifts etc. and since the company is controlled by a hedge fund I would guess that percent is very low (10%-20%)

 

and/or

 

2) A bait-and-switch scheme where they are giving DSC revenue to crew but adjusting crew salary lower when they renew crew contracts so that crew gets the same amount of salary whether DSC revenue is high or low. So essentially DSC goes into the general fund. (Similar to the Lottery, that promises that all money goes to support education but the state legislators underfund education to nearly the amount the lottery is expected to generate.)

[luvtheships]

As long as they pay it all out to the staff, it's an equal expense, therefore no tax...

 

 

No if they feed it into Ncl revenues then it feeds to Ncl taxable bottom line

 

 

If they feed it directly from pax to crew.... like a tip should go...as an "optional dsc" then there is zero effect on Ncl revenues and expenses

 

There certainly might be some tax consequence to the crew in the Philippines of course but who knows

[Responder]

Here is what NCL's quarterly SEC report says Dated may 10, 2016:

http://www.nclhltdinvestor.com/sec.cfm

 

2) A bait-and-switch scheme where they are giving DSC revenue to crew but adjusting crew salary lower when they renew crew contracts so that crew gets the same amount of salary whether DSC revenue is high or low. So essentially DSC goes into the general fund. (Similar to the Lottery, that promises that all money goes to support education but the state legislators underfund education to nearly the amount the lottery is expected to generate.)

 

This is a distinct possibility since in Florida, the lottery works exactly like that.

 

However, whatever the real answer is, the same employees contract year after year so their salaries are most likely guaranteed and that seems to work.

 

In the big picture, posts with this kind of theme always rack up hundreds of posts and views and replies.

I'm not sure NCL even knows..but one thing they do know....is how to charge and make lots of money.

 

A number of years ago HAL tried this idea stating "Tips not necessary." . It lasted a few months and bit the dust. Regent, a line we cruised on for 10 years, "included' tips and did post in their suggestions that additional tipping was not required. This was when FDR was the top gun at Regent before the merging.

 

The world of service has done an admirable job over the years convincing their customers that their concept of tipping is the only way. Almost like the Manchurian Candidate.

It's a pastime reading these threads and one needs to understand the feelings of those posting and finish up doing whatever one thinks is the right thing to do for each event that occurs in life.

You can't tell someone how to feel or behave. Only how you feel about an issue and maybe stop pounding on it as it will not change a thing.

[Shawnino]

If I send in the form to get the service charge reimbursed and they don't process it until 6 weeks later, how do they get the money back from the crew? What about the people who don't work there anymore? Something does not seem right.

 

Exactly.

It's just a way to pad NCLH's bottom line.

[Cauzneffct]

The issue for me is the perception (rightly or wrongly) that I'm being conned. The perception I've gotten is that the DSC goes, in its entirety, to the crew, so that by removing it, I am in some way injuring the crew financially. If that is not the case and NCL is taking a portion off the top, then I'd be far more likely to reduce the DSC and tip in cash (assuming, of course, NCL doesn't skim there as well) rather than be played a sucker.

[sjbdtz]

No if they feed it into Ncl revenues then it feeds to Ncl taxable bottom line

 

 

If they feed it directly from pax to crew.... like a tip should go...as an "optional dsc" then there is zero effect on Ncl revenues and expenses

 

There certainly might be some tax consequence to the crew in the Philippines of course but who knows

 

I do, I do.

 

 

Also, whatever is accruing to the bottom line is offset by an equal expense.

 

They're not doing this for US tax reasons. There's simply no reason for them to do so.

 

 

.

[swedish weave]

The issue for me is the perception (rightly or wrongly) that I'm being conned. The perception I've gotten is that the DSC goes, in its entirety, to the crew, so that by removing it, I am in some way injuring the crew financially. If that is not the case and NCL is taking a portion off the top, then I'd be far more likely to reduce the DSC and tip in cash (assuming, of course, NCL doesn't skim there as well) rather than be played a sucker.

 

Many have posted here that NCL monitors the cash tips from those who remove the DSC, and make the crew turn in the cash. That is not true, nor is it possible. They have no way to know who gives cash tips to any crew member.

 

If I felt they could monitor the cash tips, I would simply give the money to another guest who has not removed the DSC so he could pass it on to the crew member.

 

First, you cannot adjust or remove the DSC onboard as you could in the past. You must request a form to send in after the cruise. The requests are not processed until well after the cruise is over.

 

Only a few on Cruise Critic make this out to be a big problem and try to lay guilt trips on those who choose to adjust or remove the DSC.

[ColinIllinois]

Okay kids, has anything been solved or has anyone changed anyone else's views yet?

 

Let's just meet for next weeks DSC/tipping thread. Time: to be announced.

 

All of you regulars be sure to be there. ;)

[luvtheships]

I do, I do.

 

 

 

 

 

Also, whatever is accruing to the bottom line is offset by an equal expense.

 

 

 

They're not doing this for US tax reasons. There's simply no reason for them to do so.

 

 

 

 

 

.

 

 

The only reason reason for them to have a dsc is so that they can make us think we need to tip the engine room crew!!! Lol

 

It's optional and I can't get my head around that because as a financial person the optional issue absolutely means something

 

Regardless those that think it's stealing can and should just remove it

 

I dont remove it but I also don't tip more than $20 in cash to the steward

 

I could care less if the bartender remembers me

 

And never anything tithe mdr staff

 

I don't use the specialties any longer but when we did we left $10 but with the 18% now if we went to a specialty I'll leave zero extra

Edited May 19, 2016 by luvtheships

[luvtheships]

Exactly.

 

It's just a way to pad NCLH's bottom line.

 

 

But the padding gets removed once Ncl cut the pax the refund check

 

Of course this only really matters at the end of month/quarter/fiscal year. Lol

[luvtheships]

I do, I do.

 

 

 

 

 

Also, whatever is accruing to the bottom line is offset by an equal expense.

 

 

 

They're not doing this for US tax reasons. There's simply no reason for them to do so.

 

 

 

 

 

.

 

 

How do you know the dsc and expense are equal?

 

Dsc could be $2 and the related "crew incentive" expense could be $1.

 

Just saying

 

There are positive and negative tax issues for Ncl any which way you look at it

[kathybelcher2433]

Can my butler remove my D.SC. Charges for me? Oops. Wrong thread!

[NLH Arizona]

How do you know the dsc and expense are equal?

 

How do you know that the DSC and expense are not equal?

[valleyvillage]

Okay kids, has anything been solved or has anyone changed anyone else's views yet?

 

Let's just meet for next weeks DSC/tipping thread. Time: to be announced.

 

All of you regulars be sure to be there. ;)

Colin, you have refreshed my spirit. These threads usually make me SMH but I do read them hoping for a voice of sanity.

Your post made me think about how, when I am mediating a small claims case for the courts here, there usually comes a point where I can see that the parties either need to settle or move on to court.

I will ask them, so, do you think either party is going to be able to change the other party's views with simply the force of your argument? Generally they say, no. So then I ask, so when are you going to stop trying?

Of course here on CC we don't see much cogent argument, rather we are treated to a whole host of logical fallacies.

And failing that, we are introduced to invisible witnesses, anecdotal "evidence" from someone I met on the ship who knows someone who worked on a ship once.

Thanks for the breath of fresh air!

[Fred the ferret lover]

Okay kids, has anything been solved or has anyone changed anyone else's views yet?

 

Let's just meet for next weeks DSC/tipping thread. Time: to be announced.

 

All of you regulars be sure to be there. ;)

 

This whole thing smells fishy to me. Why else would an optional fee be kept a secret? Most charities say how much goes to administrative costs if you ask. We will be sending in the form as soon as we can and dispute the charge on the credit card the same day. I think they get charged for that as well. At least I hope so.

 

We will be tipping the people who serve us directly.

[Zabetty]

Can my butler remove my D.SC. Charges for me? Oops. Wrong thread!

 

 

You win the Internet tonight!

 

 

Sent from my iPhone using Forums mobile app

[hawkeyetlse]

We will be sending in the form as soon as we can and dispute the charge on the credit card the same day. I think they get charged for that as well. At least I hope so.

I think there are consequences for cardholders that deliberately file illegitimate disputes like this one. At least I hope so.

[atomax]

Out of curiosity, does your friend work as a server or room steward? At a meeting on the Pearl with the senior hotel staff, I asked where the DSC goes, and the HD said that it only goes to the front of house hotel staff (e.g., people who interact directly with cruisers such as servers and stewards). Bar staff gets the 18% grat, and everyone else is excluded from either mandatory service charge because their contracts are different.

 

Hopefully he was well-informed and telling us all the truth...

 

I have a friend who works on the Epic and she says she never really sees a difference in her check. I have always wondered if they really do get that money.:rolleyes::rolleyes: that is why i leave extra tips whenever possible.

Edited May 20, 2016 by atomax

[kathybelcher2433]

You win the Internet tonight!

 

 

Sent from my iPhone using Forums mobile app

 

 

Why thank you. I am honored. I will wear the crown with dignity and honor, until I get a few drinks under my belt. Then all bets are off!

[fshagan]

The second reason is exactly why Ncl makes dsc optional and exactly why they say it for crew incentives funded by pax dsc....so it doesn't flow into Ncl taxable revenues. But I digress

 

I'm still at a loss how, following GAAP and the code, NCL could have any income tax benefit from collecting and paying the DSC as tips or as wages.

 

They either accrue it as for the crew, and don't deduct the payment to the crew as an expense. Or they declare it as income and deduct the payment to the crew as an expense. Either way it is a zero sum game as far as the corporation's income tax liability.

 

NCL pays no tax at all on "revenue", as "taxable revenue" does not exist. Taxes are assessed on the net profit of the corporation which is revenue less expenses.

[fshagan]

If they throw dsc into a pool to pay the contractual rate to employees then it becomes taxable revenue to Ncl.

 

Lol

 

LOL is right. There is no such term as "taxable revenue".

[fshagan]

No if they feed it into Ncl revenues then it feeds to Ncl taxable bottom line

 

 

If they feed it directly from pax to crew.... like a tip should go...as an "optional dsc" then there is zero effect on Ncl revenues and expenses

 

There certainly might be some tax consequence to the crew in the Philippines of course but who knows

 

You need to fire your accountant.

 

If it goes in as income, and paid out as an expense, what is the taxable impact of that? Zero. $12.95 income minus $12.95 expense equals 0. They might claim it in their gross income.

 

If it goes into an account and is accrued, is it counted as income? No. When it is paid out can it be claimed as an expense? No. It is only taxable if they do not pay it out for the purpose it was intended for, then it is reclassified as income.

 

I still don't see any way for there to be a tax benefit for NCL either way. It's either "income - expense = zero" or "accrued and paid = 0" in terms of taxable income.

[Clarissa01]

I read in detail, my cruise Contract terms and Conditions. It reads Quote "

The Service Charge is added t your account, and Subject to Adjustment AT YOUR DISCRETION '

Terms and Conditions. Paragraphs 3c Service Charge.

 

It is my Discretion WHO and IF I decide to remunerate for service. I come from the belief that US wages are discriminately / Purposely LOW as to pass on Cost's of below average salary, to the paying customer.

 

When was the last time you tipped: A flight Attendant.

A Pilot. Check in agent at the airport. The Captain of a Ship?

 

Answer: NEVER.

That's because they are covered by their employer under a Fair wage agreement. Unlike the shipping companies that employ largely Third World staff, who give their right arm for employment to support their ,family back home.

 

Don't be fooled or Guilt tripped about the Tipping.

Boycott the companies that do not treat ALL of their staff with Fair Wages.:eek: