My wife and I have been cruising to Australia for nearly 25 years. During that time, we have never paid gratuities on any ship we’ve sailed. Some have been luxury lines, such as Silversea, where gratuities are never charged; others have been mid-priced, such as Azamara and Celebrity, where tipping is customary despite the fact they are (or were) owned by the same corporate entity.
The reason is explained in an article by Sally Macmillan, Tipping on Ships: An Australian Culture Clash, which starts off:
Are Australians stingy or is our reluctance to tip a cultural thing? In Australia, we don’t generally tip taxi drivers, hairdressers, hotel porters or bartenders. We will tip for dinner in a restaurant, but an automatic service charge added to a bill is not always appreciated, particularly if we don’t feel the service deserved a personal reward.
However, as Australians are cruising the world in ever-increasing numbers, we’re discovering that the culture of tipping is embedded in many fare structures. When used to seeing the total price stated upfront, it can come as a surprise to first-timers that many cruise lines add a recommended daily gratuity charge to passengers’ accounts. In fact, having gratuities automatically charged to their accounts was so unpopular with local cruisers that in 2010, Australia-based P&O Cruises decided to stop it completely. Now P&O leaves it up to each passenger to decide whether to tip for outstanding service or not… and do it personally with cash. Other cruise lines, such as Princess, Carnival, Celebrity and Royal Caribbean soon followed this no-tipping policy on their Australia-based ships.
How has it worked out? A P&O Cruises spokesperson says: “We don’t track tipping habits, but anecdotally we believe many of our passengers continue to tip our cruise staff for good service. In the Australian way, they like the freedom to do this at their discretion.”
We sailed on the Viking Mars from Sidney to Bali a few weeks ago. We were hit for close to $1,000 in gratuities charged to our stateroom. Was this because Viking chose to ignore this longstanding practice, or because they gambled they could get away with it in this post-Covid era? I don’t know but, especially on this self-proclaimed luxury line, we would have greatly preferred tipping as Aussies have done it for decades.
Some travel writers and PR flacks have said this is not the time for the cruise lines to pay everyone a living wage since they have incurred so much debt during the pandemic. There are severe problems with this argument.
Let’s compare how the ships’ crew members are paid to the cruise line’s top executives.
Business Insider wrote an article last week, “Royal Caribbean’s CEO made over $10 million in 2022 – 705 times more than company’s median worker.” It noted that Royal Caribbean’s CEO will make $10.6 million in compensation this year, whereas the median annual wage of crew members was $15,264 That includes the monies withheld from guests’ accounts for gratuities. The CEO could earn more than 1,000 typical crew members, if the guests’ tips are backed out of these calculations! The CEOs of the other major cruise lines’ compensation packages (including the Big 3 and Viking) are likely very similar.
If Royal Caribbean’s stock prices and balance sheet were stellar, some rationales for the difference could be argued. But Royal is more than $24 billion in debt, and its stock is down 29% over the past five years. Who most deserves to be fully paid for a successful day’s work in the cruise industry: The executives or the crew members?
Why not try to balance the scales? Put all crew members on a full salary, not reliant on tips, and do what the tech industry does with its top executives: Have most executive compensation be in the form of stock options that can be cashed in only if the stock prices markedly improve?
While it’s difficult to argue that any executive’s contribution to the bottom line equals those of 1,000—or even 705 crew members and staff—let this happen if stock prices return to the levels of 3-5 years ago and corporate debt levels show a steep decline. In the meantime, shifting compensation from executive to crew members will produce measurable benefits:
- Bookings should improve on cruise lines that eliminate prepaid or coerced gratuities.
- Hiring will become easier and less expensive.
- Staff retention will improve.
- Staff loyalty and morale will go through the roof!
Travel advisors’ jobs will also become easier as we don’t have to explain to guests that gratuities are a hidden cost that cruise lines would just as soon not explain.
Guest Question / Travel Advisor Response
“Are gratuities voluntary?” — “Well, not really.”
“Do prepaid gratuities go to those I like?” — “No, they’re pooled.”
“Why should I pay them?” — “Do you want families to starve?”
At a minimum, the cruise line should fully price the cost of “suggested prepaid gratuities” for each cruise and stateroom level whenever total cost estimates are given. The only exception should be cruise lines that adopt The Australian Way of stating the tips are included at no cost in the cruise price and, if guests want to tip staff, this is entirely voluntary.
As noted earlier, revamping executive compensation would considerably reduce this cost, but some remainder would probably result in fare increases. Who cares? Guests probably pay more as a “Suggested Prepaid Gratuity,” even if many don’t realize it until they board the ship.
Not too long ago, that cruise lines didn’t have to include Port Fees & Taxes in the total advertised price of a cruise. Then, one day, they had to include this as an itemized cost in the total cruise price listed.
Now is the time to treat Suggested Prepaid Gratuities in the same manner. They should be listed as an itemized cost included in the Total, unless it’s clearly stated that these costs are entirely voluntary and are not prepaid unless a guest asks for this. This would go a long way towards eliminating tipping as a coercive practice that now contributes to cruise lines’ bottom lines. Let’s opt for The Australian Way of tipping only when guests feel exceptional service was rendered.
Dr. Steve Frankel and his wife have cruised on most of the Seabourn, Silversea, Crystal, Azamara, Oceania, Regent, and Windstar ships. Steve is the founder of Cruises & Cameras Travel Services, LLC. He has been recognized as a “2021 Top Travel Specialist” by Conde Nast Traveler magazine and a “Travel Expert Select “by the Signature Travel Network. His specialties are luxury small-ship cruises and COVID-19 safety measures, and has a doctorate in Educational Research with minors in Marketing and Quantitative Business Analysis. He’s also earned a Certificate in Epidemiology from Johns Hopkins University. Previously, he managed qualitative and quantitative research in the private & public sectors. He’s a member of the Los Angeles Press Club, and has written 13 books and hundreds of articles. His email address is steve@cruisesandcameras.com.
