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It’s one of the most contentious payments cruise lines demand from their guests: gratuities have sparked debates for years about how high they are, and where the money goes.

Cruise lines say gratuities reward and recognise the men and women who do so much to make cruising special: the room attendants, waiters and waitresses, and an army of workers behind the scenes.

But questions around how much of their wages are made up of tips are never officially answered.

Some say it can be as much as 95% – and one staff recruiter told Cruise Passenger cabin attendants can receive just $50 a month before gratuities are factored in.

New reports released recently by the US Securities and Exchange Commission (SEC) reveal the 2018 median annual salary of the three largest cruise companies. They actually show, once conditions are taken into consideration, cruise crew wages are are at least equivalent to shore pay, and can be better.

But these figures always include gratuity payments. That’s what makes the difference.

Website Business Insider reported the 2018 median annual salary of the three largest cruise companies:

  • Carnival Corporation: USD$16,622 ($23,850)
  • Royal Caribbean Cruises: USD$19,396 ($27,831)
  • Norwegian Cruise Line Holdings: USD$20,101 ($28,842)

Carnival Corporation states in its submission to the SEC: “This figure includes gratuities directly billed to our guests, but excludes any cash gratuities paid directly to the employee by guests.

“It also excludes room and meals, transportation to and from the ship and medical care, which are provided to our crew members without charge.”

Norwegian Cruise Line (NCL) states that the salary includes gratuities, fixed cash pay, overtime pay and shipboard pension.

Some reports have compared these salary figures to legislated minimum wage figures. But that’s not comparing apples with apples, as cruise lines are quick to point out.

Crews come from all over the world, so which minimum wage applies? And anyway, ships are subject to the laws of the country of registration – often chosen because they don’t impose such legislation.

Crew members are also provided with benefits like room and board, meals, medical care and other benefits.

That’s hard to quantify. But let’s take an average hostel cost in Australia of $30 per day plus $10 per day for food for a year, totalling $14,600. This figure, added to the median annual salary of Carnival Corporation’s staff, gives you $38,450, which is just over the Australian annual minimum wage of $37,398.40.

But that still means those gratuity payments are essential to ensure crews get a reasonable wage.

How are gratuities handed out and percentages calculated? No-one will say.
The Carnival website states: “100 per cent 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.”

When sailing abroad, many cruise lines automatically apply gratuities to the final bill, although some give guests the option to remove or change the figure should they wish.
Each line has its own guidelines on the appropriate amount of gratuities.

How much money is involved? Again, we don’t know.

But a ship with 3,000 passengers where guests pay $20 a day in gratuities would accumulate $840,000 on a 14-day sailing.

So a crew of 1,800 should receive $932 in gratuities a month if all the money were divided equally. If the crew worked 10 months a year, $9320 of their annual salary would be made up of gratuities.

According to the crew handbook by Cruise Staff, a cruise ship employment service, the expected salary range for cabin stewards is US$700 to US$1800 ($1004 to $2583).

Cruise Staff explains that the figure depends on the percentage of gratuities. The gratuities received are also a combination of those redistributed by the cruise line as well as tips received directly from passengers.

The salary of a service crew who works behind the scene like a laundry helper starts from US$500 to US$800 a month ($717 to $1148).

According to MSN Lifestyle, 9.7 per cent of the average passenger spend on Royal Caribbean goes to crew payroll.

In 2018, the average passenger spent US$1,560 ($2229) on their cruise vacation with Royal Caribbean, of which USD$151 ($215) went to the crew.

The line booked nearly 6.1 million passengers on their ships worldwide and passengers spent roughly US$9.5 billion. The crew payroll portioned out and divided across their 77,000 employees arrives at US$11,967.

Cruise Lines International Australia (CLIA) assures that “A highly skilled, highly satisfied crew is key to providing an exceptional cruise experience for passengers. Cruise lines accomplish this by investing heavily in their crew, offering extremely competitive packages of wages and benefits and ensuring they have the training to improve their skills and advance their careers.”

“In addition to their salary, crew members are provided with medical care, room and board, meals and other benefits.

“Crew members show a high level of satisfaction with their jobs and opportunities for career advancement, and employee retention rates in the cruise industry are upwards of 80 per cent.”

Norwegian Cruise Line Holdings says that it does not comment on crew salary information. Carnival declined a request for comment and Royal Caribbean did not respond to requests for comment.

So next time you question gratuities, remember how critical they are to the men and women who work hard to make cruise holidays special.

Australia and New Zealand’s homeported fleet largely don’t break out gratuities because, as cruise lines explain, tipping is not part of Australia’s culture.
So the money is consolidated into cruise fares.

Perhaps this is a fairer and more sensible way to handle this sometimes sensitive issue.

What do you think? Should gratuities be consolidated into cruise crews pay? Let us know in the comments below.

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