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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Shortly after the new year, Royal Caribbean will again increase the automatic gratuities which it charges its passengers. Royal Caribbean will hike the automatic gratuities which it adds onto its guests’ accounts (by more than 7%) to $14.50 per person, per day. Passengers who stay in suites will pay even more, $17.50 per person, per day.

USA Today explains that a family of four will now pay more than $400 in automatic gratuities on a 7 night cruise which is one of the highest gratuities in the cruise business. 

The increase is the third in three years at the line. In early 2015, the Royal Caribbean’s gratuity fee Royal Caribbean Automatic Gratutieswas $12.

Like rival cruise lines, Royal Caribbean has been drastically increasing its automatic gratuities. USA Today says that Royal Caribbean’s gratuity charge has now jumped by nearly 21% since May 2015 (more than five times the rate of inflation). 

Cruise lines suggest that the extra gratuities go to the hard working crew members, but that’s hardly true. Crew members used to receive substantially more when passengers used to directly hand them money as tips. Cabin attendants and waiters have stated that the auto gratuities go to the cruise lines which take a cut and distribute some of the money to non-tip earning crew members. 

The Swiss TravelNews site rightly contends that "the passengers indirectly pay a massive wage component of these employees."

Royal Caribbean says that passengers can lower or remove the automatic gratuities by by visiting the Guest Services desk. Expect this to happen, as many passengers don’t like to pay gratuities when the service is average or to pay what the cruise lines should already be paying in wages. The same thing happened when Carnival hiked its auto gratuities. Carnival Hikes Pre-Paid Gratuities But Will Passengers Secretly Remove Tips?

We reported on a prior automatic gratuity increase in 2015 in Loyal to Royal? Expect to Pay Higher Gratuities! (And the Money’s Not for the Crew). Not coincidentally, CEO Richard Fain has RCL stock now worth over $110,000,000. 

Matt Hochberg’s Royal Caribbean Blog as the first to announce the gratuity increase. 

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 USA TODAY published an article today titled USA TODAY’s Guide to Cruise Ship Gratuity Charges

This is a topic which we write about quite often, as the cruise lines try to maintain their high profits while building bigger and bigger cruise ships which are getting more expensive to operate.  

Any discussion involving cruise ship gratuities really involves three issues, in my view: (1) cruise lines are dictating that everyone pay a gratuity of a certain amount, regardless of the level of the services, (2) cruise line are diverting monies paid in gratuities to fund the salaries of crew members "behind the scenes" (like cooks, cleaners, etc.) who typically do not receive gratuities, and/or (3) cruise lines are Carnival Cruise Gratuitiesdiverting the income paid in gratuities into the cruise lines’ profits?

The article addresses the first issue head-on and points to the general belief of the public that "tipping is a personal matter that should be left to passengers." Many critics of mandatory/automatic gratuities say that a gratuity must be earned; if the guest receives excellent service, they will tip well (sometimes more than the recommended amount), but if the guest believes the service is bad, they will pay a lower amount or perhaps nothing at all. 

But many crew members such as waiters or cabin attendants do not receive any salary at all. They earn 100% of their income from passenger gratuities. For the longest time, Royal Caribbean paid its waiters and cabin attendants received a salary of only $50 a month, although hard working waiters and motivated cabin attendant could collect several thousands of dollars a month from tips and gratuities. But the tips are tighter now and, with the auto-gratuities, less likely to end up with the waiters and cabin attendants. It is unfair for them to work for a pittance. 

Many cruise lines permit the guests to adjust or remove the gratuities while they are on-board the ship. NCL requires its guests to go through a onerous process of filling out forms after the cruise before a gratuity can be lowered or removed. 

Many crew members complain that many passengers wait until the last day of a cruise to remove all of the gratuities from their bills. 

Last year, Carnival crew members published a Facebook post (since taken down) showing the names (subsequently redacted) and cabin numbers of Carnival passengers who removed their automatic tips. Some of these people may have removed the pre-paid gratuities and paid cash but many may have stiffed the crew.

The real problem as I see it is that cruise lines are not being transparent with who exactly receives the automatic gratuities. The USA TODAY article writes that cruise lines say that the increased gratuities "will be passed on to crew members in recognition of their service." But many guests do not want to tip crew members who they never see (such as a galley worker). Many also believe that the cruise lines should pay their crew members decent wages and not require the passengers to be responsible for the crew’s salary.

The USA TODAY article touches upon this issue, writing that "some see the charges as a thinly disguised method for cruise lines to push the responsibility for paying crew members to their customers." Disguising the real purpose of a gratuity is a type of fraud, in my opinion, where a cruise guest may believe that he or she is paying the extra gratuity to their wonderful waiter or cabin attendant who went above and beyond for their family for a week, but the reality is that their gratuities are spread throughout the housekeeping and dining room departments to pay salaries as well as for "alternative services," according to Carnival. (See Carnival’s explanation of where the tips go here; and Royal Caribbean’s explanation here; NCL does not disclose any details as far as I can tell). The USA TODAY article says that "as much as 95% of pay for some cruise ship workers now comes from automatic gratuities, according to CruiseCritic."

And does anyone really trust that the cruise lines are not pocketing the gratuities as part of onboard revenue? The USA TODAY article does not touch this topic. Over 25 million people will sail on cruise ships this year. 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. If 15 million passengers are charged at a rate of several hundreds of dollars a week in auto-gratuities, there are many hundreds of millions of dollars at play over the course of a year. (Carnival charges an average of over $360 a week for a family of four staying in a standard stateroom). 

NCL’s CEO Frank Del Rio said during an earnings conference in 2015 that for every dollar collected in an increased gratuity, NCL earns an extra $15,000,000. Does anyone really think that the crew members are enjoying this extra income?

Between the greedy cruise executives and the miserly passengers who remove gratuities, the hard-working crew members seem to be stuck between a rock and a hard place.

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April 3, 2017 Update: A crew member wrote today, to me saying: Yes cruise lines are diverting tips to pay salaries of . . . even managers . . they use the tips to pay the bar manager, asst bar manager, housekeeper chief, asst housekeepers manager and food and beverage manager – they all get a slice of the tips."

Travel Weekly and Cruise Critic are reporting that Norwegian Cruise Line (NCL) is raising gratuities on April 1st from $13.50 per person, per day, to $13.99, on all ships except the Norwegian Sky. Daily gratuities for standard cabins on the Norwegian Sky will increase to $18.99 (an increase over 40%). 

Travel Weekly says that NCL will increase daily gratuities for suites from $15.50 to $16.99 on all of its ships except for the Sky where it will charge $21.99. 

It seems that there is no limit to the greed of cruise executives. NCL CEO Frank Del Rio just spoke at Seatrade Global about how the stock market was at all time high and fewer regulations and President Trump’s pro-business tax cuts were good for his business. Del Rio collected nearly $32 million in Miami Cruise Ship Capital of the World2015

Del Rio’s NCL has gouged its customers before, with extra charges, including increased room services charges, automatic gratuities and restaurant cover charges. He made this statement at an earning conference in 2015: "… we have looked across the fleet to identify areas where marginal changes … can be implemented to improve performance. A few examples include a 6.7% average increase in beverage prices, the introduction of a nominal room service fee and lower costs from renegotiated shore excursion agreements. To put into perspective how these small changes can add up quickly, every dollar increase in yield translates to approximately $15 million to the bottom line."

Of course, all the major cruise lines nickel-and-dime their customers. Royal Caribbean just began charging for room service and, in the past, increased its gratuities while attempting to create the appearance that the increases were for its hard-working crew members (Read: Loyal to Royal? Expect to Pay Higher Gratuities! And the Money’s Not for the Crew). Carnival Corp. did exactly the same thing while it also pocketed the increased gratuities (Read: Carnival Hikes Pre-Paid Gratuities But Will Passengers Secretly Remove Tips?)

Today, I read an article by David Grace Author titled When Greed Is Thought To Be A Virtue – When More Is Never Enough. He discusses what he calls the "more-more-more-until-it-all-blows-up" business phenomenon. The cruise executives, Del Rio in particular, put on quite a demonstration of unbridled greed at the Seatrade Cruise conference last week. The CEO’s have an unhealthy, unchecked pursuit of profits in an industry which has always overreached into the American public’s pockets.  The cruise industry pays virtually no taxes, exploits their workers from around the world, and still nickle-and-dimes their tax-paying customers whenever they have a chance. 

When is enough, enough? 

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Photo credit: Marc Averette – CC BY-SA 1.0, commons / wikimedia.

Carnival Cruise Line is hiking its gratuity charge by nearly 8 percent, according to an article in Travel Agent Central today. The charge will rise to $12.95 per person, per day for passengers in most cabins, or $13.95 per person, per day for passengers staying in suites, effective September 1, 2016. There is a question posed on the comments section of the article: "does the charge actually go to the staff as a tip? or is it just a fare increase?" The question remain unanswered.    

Carnival said that passengers can lock in the current gratuity rate by pre-paying before Monday, May9, 2016.Carnival Pre-Paid Gratuity Removed

The gratuity charge, which crew members tell me does not all go to the crew members but is diverted to pay salaries or is considered revenue (profit) for the cruise line, is only a suggested amount. Carnival says that passengers can adjust it, or remove it entirely, by visiting the Guest Services desk while onboard the cruise ship.

You can read the Carnival tipping policy here.

Earlier this week, a Facebook page called "Complaining Crewship" complained that Carnival passengers were not paying tips and posted about 30 pages of photographed pages showing the names and cabin numbers of Carnival passengers (from an unidentified ship) who had their prepaid tips removed. There were hundreds and hundreds of passengers who removed their tips. Some of these people may have removed the pre-paid gratuities and paid cash but I was left with an unpleasant feeling that they were largely stiffing the crew.

I then shared the posting and photos on my Facebook page and started a discussion regarding the problem of passengers not tipping the crew members.  A firestorm of controversy then erupted. Some passengers did not like the fact that the names of passengers who removed the tips were revealed. Others expressed their feelings that it was outrageous that many people refused to pay any tips to the hardworking crew members.

Some readers seemed not to care at all about the crew and seemed concerned only with protecting the identity of those removing the tips. I guess the power of Wikileaks, Julian Assage and the Panama Papers escapes them. Several people complained to John Heald, the Carnival head cruise director and blogger at Carnival, about the release of confidential data. Others may have complained to Facebook about the "Complaining Crew ship" page, which may have been a page operated by either current or former Carnival crew members who were tired of being cheated by the guests.

The reality of the matter is that Carnival pays crew members like waiters. bartenders and stateroom attendants a small pittance by the cruise line (around $50 a month) and then requires them to work incredibly long hours, relying on tips for the majority of their compensation.  It’s quite a business model. Carnival incorporated in Panama and registered its cruise ships in Panama and the Bahamas to avoid virtually all taxes and then requires U.S. taxpaying public to pay the bulk of the crew member compensation. But many passengers view a gratuity as reserved only for spectacular and far-beyond-normal service. These guests obviously don’t tip at all or only occasionally and say that it’s the cruise line’s responsibility to pay the ship employees.        

Well, the original post by "Complaining Crewship" seem to have been taken down (as well as the entire Facebook page), voluntarily or involuntarily I can’t tell, and so did the photos I shared in the process.  But I had previously copied them all and am posting a few here (with the names redacted of those who removed their tips) to show the large number of tips removed.

Cruise lines do not like their ship employees to "out" the guests or to name and shame them, although these type of people seem to be largely deadbeats in my view, or to reveal the cruise line’s unfair treatment of the hard working crew members. For example, when a Royal Caribbean created a You Tube video a few years ago showing that the cruise line was in essence stealing automatic gratuities from the crew, Royal Caribbean threatened the crew members with legal action and petitioned You Tube to ban the video. Read: "Screw the Crew" Video: Banned By Royal Caribbean & YouTube!      

So the cruise line gratuity scam continues.  Carnival will create the impression that the increased gratuities are for the crew who, in reality, will never see a penny of the increase. Many passengers will remove all of the gratuities in their entirely and hide their cheapness behind their anonymity.

Carnival Pre-Paid Gratuity Removal

 

Loyal to Royal Caribbean - Cruise Line GreedLoyal to Royal?

Expect to pay more in gratuities.

Effective June 1st for all sailings departing on or after July 1st, the new gratuities charged by Royal Caribbean to its passengers will be $12.95 per day, per guest in standard accommodations, and $15.95 per day, per guest in suites. 

There seems to be a trend across the cruise industry to nickel & dime the customers. NCL, for example, just started charging a room service fee.  

NCL’s CEO Del Rio said this while reporting on last quarter:  "… we have looked across the fleet to identify areas where marginal changes that are commensurate with market conditions can be implemented to improve performance.

A few examples include a 6.7% average increase in beverage prices, the introduction of a nominal room service fee and lower costs from renegotiated shore excursion agreements. To put into perspective how these small changes can add up quickly, every dollar increase in yield translates to approximately $15 million to the bottom line." 

Royal Caribbean’s increased gratuities is designed to increase profits and put more money in the executives pockets. 

What RCCL is not telling you: not all the gratuities go to the hard-working crew members.

Royal Caribbean, like Carnival and NCL, has been diverting tips from the crew into revenue ever since it began the pre-paid gratuities. Remember when you used to hand your cabin steward cash at the end of the cruise? Most cruise lines stopped that practice in order to grab a good chuck of the money intended for the crew for themselves.

Cruise lines like Royal Caribbean do a poor job taking care of their crew members. You see evidence of it everywhere. Carnival canceled the meager retirement plan for its crew a couple of years ago. NCL is Richardd Fain - Royal Caribbeancharging for room service and is charging higher prices for drinks and excursions but there’s no indication that it will pass any more money along to the crew. The crew members’ benefits have been cut and they are still working insane hours every day.

I have never heard of any cruise line making changes designed to benefit the crew in the last decade.

Some passengers say they are fed up and will no longer be loyal to their favorite cruise line. So the "Loyal to Royals" will switch to NCL, and the "Loyal to Norwegians" will switch to Carnival and so forth and so on. Around and around the guests will spin as the cruise lines suck up their nickels and dimes while the cruise executives pocket millions and millions without a thought of their hard-working crew. 

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May 15, 2015 Update: USA TODAY’s Cruise Log says that "with the increase, a family of four will pay more than $350 in service charges on a typical seven-night cruise — one of the highest levies in the business.

Several readers have contacted me complaining about Norwegian Cruise Line’s new charges on certain cruise ships (Breakaway and Getaway)

One passenger wrote: "Ncl started (secretly) charging $7.95 for room service now?!?  . . .  enough is enough . . .  So to go up from $0 to $8 is huge. I’ve never been on a cruise that charges for room service. (Other than the late night charge). This plus the increased gratuities plus increasing the auto gratuities on drinks, it’s getting crazy."

NCL Cover Charges Automatic GratuityThis passenger sent me a list of the extra charges, with room services charges, automatic gratuities and so forth together with the cover charges.

A meal for two at the chef Geoffrey Zakarian’s fancy Ocean Blue restaurant on the Breakaway with the $39 cover charges (per person) and the 18% automatic gratuity quickly turns into a $92 bill without wine.  

Wow. For that price, I’d rather go slumming on the Carnival Triumph and eat pizza for a week. 

NCL fans are suggesting that the room service charge is just on a trial basis. We shall see . . .   

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