Carnival Cruise Line just increased its automatic gratuities on drinks (both alcohol and non-alcohol) from 15% to 18%.

Automatic gratuities result in money being deducted directly from the guest’s accounts.

A Carnival employee sent a copy of a letter from Richard Morse, Carnival’s Senior Vice President of Hotel Operations, explaining that from the the 3% increase, 1.5% will go to the Carnival server and the remaining 1.5% will go into a pool to fund Carnival expenses including the costs of  uniforms and return airline tickets for crew members.

This development was first reported in an article by the popular Crew-Center website. When I posted this information on our Cruise Law News’ Facebook page, this is how cruise passengers reacted:

• Greedy bastards! So WE are paying their increased salary, not the rich cruise lines! 😡 
• They should be paying for benefits and employees uniforms, etc., not us!
• Raise prices. Tips should be part of fare.
• Next we will have to pay for the fuel you nickel and dime us guests more and more every year to pay for all your new ships you keep building.
• Total and utter rip-off.
• CEO will get how many million $$$$$$$ bonus for increasing profit??
• . . . so where is that increase going ? uniforms and return ticket lol….

The letter (image above), dated November 29, 2018, sent to all beverage positions is itemized below:

“We are pleased to announce effective on sailings starting on or after December 1st, the automatic gratuity added to the guests’ check for all beverage sales and a la carte dining outlets will increase from 15% to 18%. In addition the extra tip line will remain on all the guests’ checks. This enables our guests to add any additional extra gratuity they deem appropriate. This increase will reflect your first paycheck of December 2018.

From this 3% increase, 1.5% will go to server and remaining 1.5% will go into the ASP pool. As you know the ASP pool funds employee compensation and benefit programs that you receive; including bar level pay, itinerary stipend pay, as well as free uniform and return airline tickets.

Our Bartenders and Bar Waiters lead the cruise industry in compensation. This is a result on everyone’s hard work and efforts to increase overall bar sales as well as the success of the Working Smarter program. As we look forward to 2019, we expect this trend to continue and this will ensure that Carnival Cruise Line remains the employer of choice.

As you know the Beverage Team plays a vital role in creating Fun Memorable Vacations for our guests. I want to take this opportunity to thank you for your Positive Attitude and for the Pride you show in our company.”

It is rather amazing to watch a cruise line, incorporated in Panama where it registers its cruise ships in order to avoid U.S. income taxes, requiring its U.S. guests, who pay their taxes, to pay gratuities which are going to pay for the crew employees’ uniforms and airline tickets!

Automatic gratuities is an issue involving all of the major cruise lines.  Whereas the luxury lines like Azamara, Crystal, Seabourn, Regent and SeaDream do not charge automatic gratuities, the mass lines like Carnival, NCL and Royal Caribbean do. We have written about this issue many times, including Royal Caribbean, NCL and Carnival.

November 2, 2018 Update: We received the following statement from Carnival:

“We have increased the bar gratuity to 18% which is in line with the industry and hotel and restaurants on land.  Those funds are shared across all crew members who support the beverage operations, including those our guests may not see but are working to stock, clean and run equipment and support tasks.  A very small portion of the gratuity pool funds items that crew members normally cover beyond what the company pays for in travel and uniform costs.

Our crew appreciate everything our guests do for them. They work very hard and understand the policies in place. The salary Carnival pays them and the gratuities our guests give allows our crew to provide a better for life for themselves and their family.  And they are also supportive of how we administer the pool portion of the gratuity which fully and exclusively benefits our shipboard employees.”

November 4, 2018 Update: Carnival’s website claims that: “It is customary for our guests to extend gratuities to the shipboard staff in appreciation for their hard work and exceptional service. 100% of your gratuities are distributed to the crew who you interact with, such as your stateroom attendants, dining, bar and culinary services staff, as well as others who work behind the scenes to enhance your overall cruise experience.”

This appears to be false considering that Carnival is using half of the increase in the drink gratuities to pay for things like uniform and travel costs. It also appears questionable whether customers can remove pre-paid gratuities on drink packages.

The Sun newspaper reported on the gratuity increase today.

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