Service Charges - And So Much More That You Didn't Expect

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The daily service charges added to cruise guest folios has been around for decades now. So why is it still the most talked about subject, with varying responses from crew, the cruise lines, and passengers in 2024?

Stay with us as we share some facts that may seem irrelevant to the service charges, because it will come together as we get into the details of why you pay service charges, and where they go. It may come across as boring or irrelevant, but it is a wealth of information that we as crew, and former crew, need shared. We aren't anti - cruise industry. In fact, we want it to flourish because so many crew need these jobs. However, it is constantly buried and overlooked that there are issues with crew well being. And service charges are a part of them, but don't worry. This isn't solicitation or condemnation for those who pay and don't pay. It is the big picture, and we thank you for reading ahead.

Firstly, let's start with the fact that cruise lines register their companies in one country and flag their vessels in others, therefore they evade labor laws amongst other things, like paying lower taxes and even getting away with criminal activities. It is called Flags of Convenience. It is very difficult, if not impossible, for a crew member to sue. They are only hired one contract at a time and can work for 20 years and then not be called back for a next contract one day out of the blue. No explanation needed, no severance pay due and quite often, they don't even bother telling the crew members. They just ghost them.

It is also important to note that the Labor Maritime Convention says that crew should work no more than 14 hours in a 24 hour period and no more than 72 hours in a week if the basis chosen of the country is maximum hours of work. Or, at least ten hours in any 24-hour period; and 77 hours in any seven-day period; if the basis chosen by the country is minimum hours of rest. (Maritime Labour Convention, 2006 (MLC, 2006)Frequently Asked Questions (FAQ)Fourth edition, 2015. P.41)
However, MLC, (Maritime Labor Convention 2006) safeguards the right of the master of a ship to require a seafarer to perform any hours of work necessary for the immediate safety of the ship, persons on board or cargo, or for the purpose of giving assistance to other ships or persons in distress at sea. It allows the master to suspend the schedule of hours of work or hours of rest and require a seafarer to perform any hours of work necessary until the normal situation has been restored. As soon as practicable after the normal situation has been restored, the master must ensure that any seafarers who have performed work in a scheduled rest period are provided with an adequate period of rest. In short, the crew can end up working extremely excessive hours. (Maritime Labour Convention, 2006 (MLC, 2006)Frequently Asked Questions (FAQ)Fourth edition, 2015. p.42)

For years, so many crew continually report that they are working an excess of these hours, without an abnormal safety issue or situation. These "flags of convenience" allow for many loopholes, or the companies simply violate the MLC and crew are too afraid to report it because there is a trend of retaliation. In spite of company posted values and encouragements to speak up if something isn't right, many, many crew face some form of differential treatment once they do. The most common retaliation is that they begin to receive a number of documented performance issues and poor evaluations, or they finish their contract and are not called back. They often have a hard time getting hired by another cruise line as well, indicating some form of flagging or communication between the cruise lines. As stated above, they are only hired one contract at a time, therefore this cannot be deemed unfair dismissal like it could be in countries that have better labor laws.

So, now that you know how hard the crew are working, let's get into the salaries and the service charges. There are a few cruise lines that do not charge service charges, they are included in your fare and you are likely paying a higher price for your cruise. The crew on these ships are paid a significantly higher base pay. An example is a stateroom steward. On ships with service charges, the average contracted pay for them is $1250 - $1500 USD per month. After service charges, most crew across the industry reported making about $2500 USD per month. Virgin, who doesn't have service charges, pays their stateroom stewards around $2200 USD per month, keeping it line with the other companies. A takeaway from this is, yes, you are supplementing the crew salary. However, you paid for a cheaper cruise and you do affect many crew when service charges are removed.

There is a pool of people included in the service charge program, and we did a survey and most crew reported that they do receive the service charges. The only cruise line that we didn't get a response from was NCL. We did get anonymous reports that crew are not getting service charges, but there is yet to be proof of this.

This service pool is where the industry designs it to be highly confusing as to who you are tipping. The bar staff are not included in the service pool. On many cruise lines, the bar staff are paid only in gratuities (that 18% gratuity you see on all of your bar checks) and commissions on drink packages. Some cruise lines have a base pay for the bar plus whatever cash tips they get. Technically, all cash tips are supposed to be pooled. All of the 18% gratuities are pooled and split to the teams. The same applies to the spa teams, who are usually paid 3% commission on services, 10% commission on retail, and have a guaranteed base salary of about $1500 USD per month, but they do not receive both. They receive their commissions, and only if their commissions fall short of $1500 does the company top them up.

Each cruise line seems to have a slightly different policy as to where the service charges go.
RCCL says that these go to dining, bar (in spite of still charging 18% on all bar checks, but this could mean back of house bar help that you don't interact with), stateroom attendants, culinary service staff, hotel services teams and others onboard who work to enhance the overall cruise experience. This leaves a lot of questions marks as to who those "other" positions are, however, RCCL crew that wrote to us confirmed they are receiving their service charges. We also spoke to a payroll purser who confirmed this.

Princess cruise lines says, "All of the Crew Appreciation and Service Charge payments made by all guests on all ships in our fleet are pooled, net of credit card transaction fees (except Service Charges for spa services which are not pooled for the fleet). The pooled funds are distributed throughout the year in the form of compensation, including bonuses, to crew members fleetwide who interact directly with guests and/or behind the scenes throughout every cruise, including those in the Bar, Dining, Entertainment, Housekeeping, Guest Services, Galley and Onboard Revenue areas." This makes it unclear if crew receive an added percentage to every paycheck or if they are somehow compensated "throughout the year" and is very vague about who is getting bonuses.

We won't quote every cruise lines policy, they can be found on each companies website.

We can confirm that the removal of service charges hurts many crew, who may live for free onboard but have mortgages, bills and families to support at home. Yet, the industry also pays some positions extremely low and doesn't include them in the pool. One of the lowest paid positions is a Galley Utility, who makes an average of $850 USD per month and is not in the service charge pool. This position, if broken down into working 14 hours per day, 7 days per week for about 8 months straight, is working for $1.95 per hour. The cruise lines hire people from lesser developed countries who will accept this contract, because the USD goes further for them at home and better than the jobs they could get in their country. If the cruise lines do happen to hire a North American or European into this position, they pay them a higher wage. This is why you hear people call cruise ships "modern day slavery".

Many crew have reported getting their schedules late at night for early morning shifts, with little time to rest. There needs to be more awareness to this so if you have kept reading until this point, we thank you on behalf of the crew we are advocating for. They won't tell you this on your cruise. They know that it will result in penalization and they also don't want to ruin your vacation with rants. However, there is a severe impact on the mental health of many crew. There are a great number of suicides that you never hear about, but the crew mourn for them. The point here, is not to condemn you for removing your service charges, tipping in cash, or not tipping at all. It is to broaden your thinking about the people who are serving you, and asking for your kindness, respect and genuine appreciation for how hard they work for you. Meeting new people every week is a part of what enhances crew morale. Authentic connections with guests help crew to remember why they are there, how it's providing a better life for their family and it helps bandaid the homesickness. Crew aren't always after your wallet, they are sincerely dedicated to your enjoyment.

The Galley Utility we spoke with said he works his 12-14 hour day and then uses most of his break time to "side hustle". There are a number of "second jobs" crew can pick up onboard, albeit against all safety codes. Crew shouldn't be fatigued, they need to be prepared for an emergency at any time, and they are also more at risk of hurting themselves when they are tired. However, they need more money. Some side hustles are helping cabin stewards clean rooms, being a crew barber, and then there are several hustles that we won't mention here, but let's just say that a lot more happens below deck and makes it way onboard than you think it does. The facade of K9 dogs and security belts mean nothing when money is involved. This is the crew's home, they make up a small city and like any city there are politics, leaders, rebels, corruption (but also a lot of love and support too - this isn't meant to portray all ships as major crime scenes. Especially in US ports). Perhaps one day, we will do a more detailed article about the secrets below deck. In the earlier years, prostitution amongst the crew was common and we don't know if this is still happening, but it's fairly safe to assume that it continues. There is actually a podcast called "Decktales" where a crew member admits to pimping out women on the ship. The producer also has a tell all book, Seems Like Smooth Sailing, that shares more of the crew secrets.

We have tried to get clarity if the service charges make up the base pay as well, and if the cruise lines have to top up the crew salary if for some reason the service charges were adjusted by so many guests, that the basic salary wasn't met. Although, it is highly unlikely there would ever be enough adjustments for this to happen. We have not been able to confirm anything, our inquiries have gone ignored or were met with "I don't handle these, I am not sure" (from a highly senior position in a corporate role that surely knows. Or in the least, knows who to ask.)

On a completely different note, the dancers, singers, art directors, concierge's and even bar staff can bring home more money than most passengers make. On one of the larger ships, it was a good month when a Concierge made $20k after tips. An Art Director can pull in the same. Carnival Bartenders recently wrote to us and said they pulled in $5k a month being paid only on gratuities and commission, and that they have made up to $8k a month on the three and four day itineraries. These positions are extremely difficult to obtain for anyone from a lesser developed country unless they have relations with someone influential. How often do you see a Filipino Art Director? Promotions are often granted based on favouritism, or relationships. Men from lesser developed countries have an even harder time as it's not as common for a female officer to take interest in them, but it isn't unheard of. Sexual harassment is a massive problem on cruise ships, but I will leave that for an article that can be fully dedicated to the priority it deserves.

Simply doing the math tells us a lot.
A ship with 5000 plus guests, and approx 1500-1700 crew (let's say only 1200 of them are entitled to service charges), that would still leave each crew member with $83 per day each, in gratuities. Multiply that by the month, and add it to their basic salary, and the service charge crew should be getting $2500 just in gratuities alone, plus $1250-$1500 per month. $2500 gross is what most service charge crew reported getting in salary per month.

Using NCL as an example, with 19 ships, and most new ones being big, let's generously assume an average of $60k per ship, per day in gratuities. That is $1.14 million per day that the company receives in advance. Popped into a good investment account and the additional income from interest is massive. Based on crew getting paid at the end of the month or a contract, NCL could be holding onto approximately $34m every month, earning interest before they pay anything out.

So does it hurt the crew when you remove your service charges? Yes, because the companies only guarantee them a basic wage and if too many service charges are removed, they don't have to top up the crew beyond the basic wage. You certainly help the companies out when you prepay your service charges and help that interest grow. But as to "who" that help is going to, it is more likely that it is helping senior execs with fat bonuses.

People always want to know if tipping the crew directly is better, and the problem is, unless it was a mass amount of people doing the same thing and every single person tipped all of the service charge pool people in cash, the service charge removals likely do hurt a greater amount of crew than they help. You don't get to see or interact with everyone in the pool. By keeping them in place you are also not helping every person behind the scenes as many crew and officers don't get service charges. There is nothing you can do as the guest, to absolutely ensure that everyone who took care of you, is awarded by you.

It would take a mass amount of honesty from the industry to crew and guests and the numbers don't add up to honesty. The best advice would be to leave these charges in place if you can, and provide extra to anyone who went above and beyond. If you can't, take care of the people that took care of you. We will always advocate to keep these charges in place, because although there is a lack of transparency as to where these all go, we want the crew taken care of the best that they can be. However, don't over think it, as there is no simple number or explanation that will make you feel that you have shown the amount of gratitude that you likely feel towards the crew. When broken down into hours per month, they are working for under $10 per hour. We are sure you appreciate them more than this when you watch how hard they work and then consider that they do this every day for up to eight months or more.

Preserving their mental health is critical while they are away, and ships still run in a very hierarchy driven fashion. Often, it is you the guest, that keeps crew motivated and engaged and helps pass the time. Your respect and kindness towards them is most important of it all. They may not be getting the same appreciation below deck, so if you can't or don't believe in tipping, come with gratitude. It too goes a long way.

So, back to what this was about, where do the service charges go? We know that some of them definitely go to crew. However, the fact that no one can absolutely confirm who these "others are" in all of the companies policies, leaves us all scratching our heads. Clearly, the cruise lines see the benefit to keeping these rather than raising fares and paying crew a higher wage. Recalling a quote from a company we won't name and shame, "Charge cheap fares to fill the ship, and let's get their money onboard. We need them to spend, spend, spend!" Filling the ship and having passengers paying for overpriced drinks, casino, bingo, go karts, specialty restaurants etc, plus the service charges for every guest equals a lot of money.

Decades and many paragraphs later, service charges are still the top subject of every group forum online and everyone thinks they have the right answer. Would we really all be asking about this for 20 plus years if anyone actually knew? We know some go to the crew, so we thank you if you pay your service charges. We aren't judging you if you do not, we are grateful if you read to the bottom of this and learned more about the crew life onboard. Our ultimate goal is to draw awareness to the excessive work that crew are subjected to, rally for the industry to prioritize their health, and advocate for their rights. There are a number of other issues that we hope you will read when our blogs come out. Cruising is a wonderful experience and it is highly profitable! Taking care of the crew means they can take better care of you too!

P.S. If you register for our forum www.crewscritics.com you can see the list of salaries crew reported and who claimed to get service charges.

Our sincere gratitude for reading.
Crews Critics