NCL Renames, Retools Onboard Tipping Policy

August 24, 2005

As NCL America's Pride of Aloha began its seven-day Hawaii itineraries last summer, the switch from an automatic gratuity being added to shipboard accounts to what the company called a "service charge" created a huge hue and cry. The non-refundable charge of $10 per day was not considered a "tip," but rather was compared to a "resort fee" similar to those charged by upscale resorts. Passengers were not only upset at the change, but service during Pride of Aloha's initial sailings was so poor that most passengers got at least half of their "service charge" refunded to them. And NCL removed the charge altogether; there is no longer an automatic charge on Pride of Aloha, and passengers offer gratuities the old fashioned way.

At the time, company representatives stated that since NCL America's work rules were American-based and very different from the foreign-flagged ships in the NCL fleet, and since the American crew were paid well enough that tipping was not essential to their livelihood, the service charge would cover their vacation periods and, while not considered a "tip," would still go directly to the staff and crew.

NCL had intended to institute this policy on all of its ships, but resistance to this fee was so strong that it did not. Instead, it quietly changed the name of its automatic $10 per diem addition (kids under 12 pay $5, and under 3 there is no charge) from "gratuity" to "service charge" fleetwide.

Why, we wondered?

"NCL decided to make 'tipping' voluntary," says a company spokesperson, "and to use the 'service charge' as an added incentive compensation. We encourage passengers to offer gratuities for exceptional service, but it is not necessary."

But the cruise line, which initiated the industry-standard, $10-per-day automatic gratuity with the advent of its Freestyle program, also still touts "cashless cruising" on its Web site. Most NCL ships feature at least four surcharge-free restaurants -- thus no bill or receipt to sign -- so how does one tip individual staff members for exceptional service if not with cash?

Cory and Drew Swonetz, of Carlsbad, California, had no problem with this policy as they sailed on Norwegian Sun in Alaska in July. "We just tipped as we went," Cory told us. "We just took cash with us like we do to any restaurant and left tips on the table. It wasn't difficult, and the service was so good in most venues that we felt a tip was appropriate."

Is a "service charge" -- rather than the self-explanatory "gratuity" -- going to be the wave of the future on other lines as well? And, although for now it's treated the same way as the automatic gratuity was, will it become mandatory and non-refundable? Norwegian Cruise Line representatives take pains to state that less than 5 percent of all passengers ever request a reduction in the automatic fee, and they hope that by calling it a "service charge," passengers won't wait until the end of the cruise to voice dissatisfaction with any aspect of their experience. This way, NCL -- and any other cruise line that adopts this policy -- will be able to assess where problem areas lie and address them at once, hoping to turn around the attitude of unhappy passengers before they leave the ship.

As for cashless cruising, that may become a thing of the past as well, since, like Ms. Swonetz, most Americans want to tip for excellent service.

"A 'tip' for anything other than spa or bar services is neither necessary nor expected," claims a company spokesperson (bar tabs and the spa service on NCL ships tack on a 15 percent gratuity; NCL's Mandara Spa, run by Steiner of London, is an outside vendor and runs its operation independently of the cruise line). "The crew onboard NCL and NCL America ships are well compensated."

We hope that the hard-working service personnel agree.