Norwegian Cruise Line Raising Automatic Gratuities

Norwegian Jade

Norwegian Cruise Line will be raising automatic gratuities added to the cost of a passenger’s ticket starting on April 1.

According to CruiseCritic.com, the daily service charges for passengers in standard cabins and mini-suites will be $14.99 per person, per day, an increase from the previous fee of $14.50. Travellers sailing in The Haven or other suites will see prices jump from $17.50 to $17.99.

For passengers sailing on the Norwegian Sky and Norwegian Sun, the cruise line’s all-inclusive ships, they will now have to pay $20.49 instead of $19.99 when staying in standard cabins and mini-suites. Prices for customers in suites rose from $22.99 to $23.49.

Thankfully for passengers who booked their voyages before April 1, Norwegian will still honour the previous rate as long as the gratuities are paid before the sail date. The price increases come one year after the cruise line last raised gratuity rates.

CruiseCritic.com also noted Norwegian’s Hawaii-based Pride of America ship would continue charging passengers an additional General Exercise Tax of 4.275 per cent.

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Special Report: The great cruise gratuities debate


I took this Photo on the Norwegian Jade, the gentleman in the front has gained a promotion. The crew that you see and don’t see work hard to make sure that we have the best possible cruise experience, they deserve our Gratuities and more.

A hike in rates by Royal Caribbean and Celebrity Cruises reignited the debate about onboard tipping. Amie Keelie and Harry Kemble report

News that Royal Caribbean International and Celebrity Cruises have upped their gratuities by 7% prompted dozens of responses from cruisers on consumer forums (Travel Weekly, January 4).

Some questioned whether the service they receive justified the hike. Some asked if charging gratuities meant cruise lines get away with paying staff low basic salaries. And some wondered if the tips even went to the staff.

Others said they were happy to reward hardworking crew for the long hours they put in to make their holidays as good as possible.

So which lines charge the most, why do gratuities even exist and are they justified?

Why do gratuities exist?

The concept of automatic gratuities stemmed from cruise ships being a cashless environment. Generally, passengers did not carry wads of cash and so were unable to reward crew members for excellent service.

It also became a way to distribute tips fairly to all the crew, including those behind the scenes working just as hard as the butler that passengers saw every day.

Lines justify the cost by claiming a superior level of customer service guests receives on a cruise ship compared with a hotel or resort on land.

“When we do our survey of guests, one of their top reasons they give to cruise is the service levels, so we stand up well against other sectors,” says Andy Harmer, Clia’s senior vice-president for membership.

“In cruise, you get to build up a relationship with the crew – you see them several times a day – compared to a hotel where you might not see the person turning down your bed at all.”

Ben Bouldin, associate vice-president of Royal Caribbean International and managing director for the UK and Ireland, agrees. “Gratuities are something our customers are comfortable with because they understand the outstanding level of service.”

However, as one agent told Travel Weekly: “If a cruise line is going to increase its gratuities, it had better make sure its customer service is impeccable”.

It is accepted that American cruisers are more than happy to pay automatic gratuities, often in advance of their cruise, but Brits much less so. Cruise lines have adapted their policies to reflect the different markets they sell in, allowing cruise customers to opt out of paying auto-gratuities at the end of their cruise when they pay their final bill.

“[In Britain] we don’t have a history of tipping in the way other cultures have,” says Harmer. “What a lot of passengers don’t realise is that if they do have issues, they should raise these on the ship so they can be dealt with and if they’re not happy they can have [the gratuity] taken off.”

Mike Hall, Cruise & Maritime Voyages’ head of marketing, says: “The reason why gratuities are such an issue is because of that cultural difference. Americans will give a staff member $50, while here in the UK, a conversation about gratuities is one we do not want to have.”

Gratuity rates

Royal and Celebrity Cruises’ recent increases now mean passengers pay $14.50 a day in standard accommodation, making it one of the highest in the sector.

“Royal and Celebrity need to be careful because it could put customers off,” the cruise agent added. “For a couple travelling on a 14-night cruise that’s an extra $400, so it needs to be better than a hotel which doesn’t have auto-gratuities.”

The agent also warned that if gratuities continued to rise on mainstream lines, luxury cruise brands, which more often than not include them in the price, would become more appealing.

By comparison, discretionary gratuity fees for P&O Cruises, MSC Cruises, Fred Olsen Cruise Lines, CMV and Carnival Cruise Line range from £4 to €13 per passenger per night and continue to be automatically added to onboard accounts. The majority of river cruise lines suggest a recommended amount to give the crew at the end of their cruise.

Last year, Norwegian Cruise Line became the first mainstream line to incorporate gratuities, among a host of other ‘extras’, into its fares, when it rolled out its Premium All Inclusive concept.

NCL’s Nick Wilkinson said: “Premium All Inclusive has driven greater simplicity for agents having to explain and sell cruises, and greater confidence in consumers having to budget.

“The biggest change since introducing Premium All-Inclusive is double-digit growth we’ve seen in the long-tail of agents we’ve never worked with before, now selling Norwegian. They are comfortable selling us.”

So could other mainstream lines follow suit? Wilkinson added: “I think it’s very telling how many mainstream lines are using the term ‘all-inclusive’ in their wave campaigns as they recognise it appeals to agents and consumers.

“But we are the only mainstream line offering a truly all-inclusive product, including gratuities.”

Full breakdown by cruise line here

Views on gratuities

“Gratuity fees should be phased out, not increased. They are an archaic way of paying salaries, they should be included in the fare.”

David Speakman, chairman, Travel Counsellors

“I wish all cruise companies would include them [gratuities], then everyone would pay the same. It would stop a lot of people asking for them to be taken off once on board.”

Travel agent, name withheld

“As customers, we would never take off service and hotel charges but, in a way, I hope many do. You never know, we might yet see the dawn of non-deductible service or all-inclusive charges on cruises. If all passengers paid their gratuities on a two-week cruise, that would be $578,000 on Eclipse – getting a little silly, don’t you think? The cruise lines are cutting back and increasing gratuities.”

One by one, cruise lines increase gratuities

Photo Credit: Shutterstock

Cruise passengers are paying more in gratuities, as almost all big cruise lines seek to retain and attract good service personnel and remain competitive with each other.

Five lines have raised or announced increases so far this year, with one, Norwegian Cruise Line, raising its gratuities twice.

Princess Cruises was the latest to jump on the bandwagon, saying last week that it would raise gratuities 12.6% starting Jan. 1.

The moves raise the overall cost of a cruise without raising the fares on which travel agents earn commission. But several agents said clients are not noticing or pushing back against higher gratuities and that agents don’t go out of their way to discuss them, other than to say they are automatically billed at the end of a cruise.

“Most of the people, when they are initially booking a cruise, they know they have to pay gratuities,” said Shari Marsh, owner of Cruise Holidays Land and Sea in Raleigh, N.C.

“They know that it’s in that $12 vicinity. They don’t seem to have that much concern about it.”

That kind of accepting attitude on the part of many passengers has opened the door to increases that were harder to pass along during the economic swoon that lasted for several years beginning in 2008.

Princess, which as late as 2007 was at $10 a day, raised the figure by 50 cents in 2008 and then waited until May 2011 to increase it to $11.50. Beginning with cruises departing Jan. 1, the suggested gratuity will jump  to $12.95 a day, with suite guests paying $13.95.

Brian O’Connor, vice president for public relations, said Princess is simply catching up with the field.

“We were not in line with our competition, so these increases bring us in line with other premium brands,” O’Connor said.

While most lines’ gratuities are now at $12.95, Carnival Cruise Line’s are at $12 after raising its rate to that level a year ago.

At the high end of the scale, Norwegian Cruise Line’s suggested gratuity charge is $13.50, having raised it in March from $12 to $12.95 and then again, in August, to the current rate.

At a press luncheon several weeks ago in Papenburg, Germany, where Norwegian is completing construction of its next ship, Norwegian President Andy Stuart declined to go into detail about the line’s rationale for higher gratuities, saying merely that management feels they are now at an appropriate level.

Frank Del Rio, chairman of Norwegian’s parent company, Norwegian Cruise Line Holdings, has made it known that he considers better service one of the keys to improving customer retention at Norwegian.

It isn’t clear exactly how much of crew compensation is derived from tips, since most cruise lines closely guard that information. But O’Connor said that gratuities represent an “important” part of crew compensation.

Estimates of the share of crew salary that tips constitute vary from around 50% to nearly all of it in some positions. Cabin stewards earn from $1,400 to $2,400 a month in wages alone, according to Cruiseshipjob.net, a recruitment site. Waiters earn between $2,500 and $4,000 a month in combined wages and tips, according to another site, Cruiselinesjobs.com.

Throughout the economy, the level of tips in general has been rising, although not at the same rate as gratuities at sea.

“Tips increase over time,” said William Michael Lynn, a professor at the school of hotel management at Cornell University, who said that the average tip at a U.S. restaurant is now approaching 20%.

The most recent Zagat Dining Trends Survey found the average meal tip in the U.S. was 19.3%. That compares with an average of 18.6% in 2004.

Historically, cruise lines have provided breakdowns of where tips go, and some still do. On its website, Carnival says of its $12 total gratuities that $6.10 is allocated to dining staff, $3.90 to stateroom attendants and $2 to kitchen, entertainment, guest services and other hotel staff members.

Increasingly, however, gratuities are being treated as lump-sum service charges added to the bill at the end of the cruise. Guests remain free to adjust the amounts, although Norwegian recently said charges can only be altered after guests depart the ship, not onboard.

“A lot of people will not take the time and be disciplined enough to go through that process,” said Adrienne Greben, a CruiseOne agent in Concord, Ohio, near Cleveland.

Other lines continue to ask that adjustments be made at the guest services office, with some saying amounts are final if undisputed by the time of disembarkation.

Agents say cruise lines have made raising gratuities more palatable with some loopholes.

“They all give a little window of time where you can go ahead and prepay your gratuity” at the old rate, Marsh said. “Clients appreciate that, and a lot of people will go forward as long as they know about it.”

Increasingly, cruise lines are also offering promotions in which free gratuities are one among a choice of three or four options.

Greben said clients seldom pick the free-gratuity option, however.

“When you do the math to see the value of those amenities, gratuities only come out ahead if it’s a longer sailing,” she said. “On a typical seven-night sailing, frankly, that’s the lowest value.”

But most lines also allow onboard credits to be applied to gratuities, and many do that, Greben said. Guests can also apply onboard credits they get from shareholder perquisites, from credit card offers or by booking their next cruise while on the current voyage.

Rising gratuities mean a family of four now pays $336 or more in tips for a seven-night cruise. “It does add up,” Greben said. “People sort of resign themselves to the fact that it is part of the overall cruise price.”

Some travel agents said they were also resigned to the fact that rising gratuities don’t add up to rising commissions. Among them is Amy Fields, owner of Amy’s Total Travel in Towanda, Pa.

“It is what it is,” Fields said. “That’s something we don’t get upset about.”