One by one, cruise lines increase gratuities

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.”