How Much to Tip on a Liveaboard

[BDSC]

When an operator calculates a higher rate in order to pay dive staff and boat crew higher salaries, a whole range of effects can be tripped, and the chances of this kind of strategy backfiring or creating unintended consequences is huge:

• Potentially pricing themselves out of a market (boat X is offering the same itinerary and creature comforts as boat Y, but is 10% more expensive--let's save that 10% and stay at a nicer hotel before and after).

• 
  
  I don't buy into this is a real possibility. If boat Y is 10% less but there is a no tipping policy on boat X, people will see that it's a wash but may actually prefer boat X. I know a lot of people that would prefer boat X.
  
  

  [*]Declaring the additional revenue as taxable income (with all the accounting costs and tax burdens this entails) and therefore having the amount available that will "trickle down" to the staff/crew be more in the range of 5%.

  
  I can see this as a possibility but if you tip with a credit card at the end of the week, then it's in the accounting system as well. The way I see it is the only way you can be sure the crew receives the entire tip amount is to do it with cash.
  
  

  [*]Adding to the taxable income of the employees' earned income, again possibly diluting the effect of the "forced tip" that has been folded into the base price.

  
  The only way I see to avoid this is to tip in cash.
  
  

  [*]Alienating customers who may balk at paying a 10% service charge regardless of whether the "service" they have received is indifferent or caring.

  
  Not likely. Like I have said, I know many people that would would prefer to just pay the service charge upfront as the base cost of the trip and not have to deal with the "How much should I leave" at the end of the week. Folks don't like the hassle of asking others, (and people do this all the time), "How much are you guys leaving, cause I don't want to look like the cheapskate".
  
  

  [*]Removing the additional incentive to strive to do a great job since being uncaring in the job will NOT result in lost tips.

  
  This will take care of itself. If a dive boat gets the reputation that the crew is no good, doesn't care, is indifferent, or the service sucks, then folks will not book with them. There will be too many other operations out there with great reviews that people will be able to go with.
  
  All in all I don't think the industry will ever change the tipping practice and how it's set-up. There's really no reason to because for the most part, it works the way it is now. I'd just like to see one outfit try something different to see what the response would be from the diving community. I think it would be positive.

 

[Quero]

Thanks BDSC for those views. I think, however, that they represent a distinctly American perspective based on boats sailing primarily in North America with a clientele that is mainly American. Because so few of our customers in SE Asia come from the US and might therefore see a 10% more expensive boat with a no tipping policy as "a wash," the marketing perspective you offer simply doesn't work for boats/destinations that are not heavily frequented by Americans.

I've been on literally dozens of liveaboards, both as a paying customer and as staff, and I've yet to see one that allows for the payment of tips with a credit card (I admit that I've never had the money to sail on an Aggressor or a Dancer, though). A very few boats in my region will let you pay for dive-related extras like courses or Nitrox, maybe even souvenir t-shirts, with a credit card, but even then it's the exception rather than the rule here, and only the rare boat even has a credit card machine aboard (they're expensive to maintain since they rely on cellular data transfer). I always advise my customers to bring local currency cash for marine park fees, alcoholic beverages, any Nitrox they haven't pre-paid in a package, and tips.

As an American who has lived on four continents and traveled as a tourist to two more, I've experienced the entire spectrum of tipping/no tipping/included service charges. I have to say that I personally disliked every single instance of having a 10% service charge added to my hotel and restaurant and tour bills the whole time I lived in Europe and South America. I prefer to tip. I don't have tons of money for the most expensive boats, but I simply do what Nick suggests:

When I book a trip, I mentally add in a 20% tip when I'm calculating my budget.

That's a maximum figure, and I can always trim it in the case of awful service, but I'm generally prepared to contribute that amount. I figure that if I can't afford the tip, I can't afford the trip.

 

[vondo]

Declaring the additional revenue as taxable income (with all the accounting costs and tax burdens this entails) and therefore having the amount available that will "trickle down" to the staff/crew be more in the range of 5%.

Labor costs offset the revenue, there is no additional tax burden.

Adding to the taxable income of the employees' earned income, again possibly diluting the effect of the "forced tip" that has been folded into the base price.

At least in the US, you are legally obligated to report all tip income. So I don't really see cheating your fellow citizens as behavior to be encouraged.

I agree with the rest of your points though.

What people often don't take into account is the actual reason that the average tip is low, which is cultural for sure, but not as you would expect due to the culture of the place the services are performed--it's because of tourists from nationality groups who come from countries where tipping is not the norm and who therefore refuse to tip when elsewhere. Because these non-tippers drag the averages down, the tippers put a smaller amount in the pot. Doesn't seem fair to the workers who appreciate the tips.

I presume in those places, the money that might come through "mandatory" tips is replaced with salary on the average therefor increasing the base cost of the trip. I always tip, but as a "gratuity" rather than a "service charge" where appropriate. Your point about people from non-tipping countries coming to tipping areas (Caribbean mostly) is spot on.

 

[Quero]

Labor costs offset the revenue, there is no additional tax burden.

Of course there is! There are the percentages for social encumbrances, getting pushed into a different tax bracket based on gross income, etc. And there are the additional accounting costs to be taken into consideration as well. My business is only a very small one, but even as such, every single additional sort of document my accountant has to produce and administer pushes my monthly retainer up.

At least in the US, you are legally obligated to report all tip income. So I don't really see cheating your fellow citizens as behavior to be encouraged.

This is not the case in most of the world, to begin with. Additionally, does your teenaged son/daughter who cuts your neighbor's grass or rakes their leaves or shovels their snow or babysits for them report the cash "rewards" they were paid for those services in their income tax declarations?

I presume in those places, the money that might come through "mandatory" tips is replaced with salary on the average therefor increasing the base cost of the trip.

Yes. But the customer has no recourse to withhold the reward since it's added to the bottom of the bill regardless. So if a boat were to do this, you could have a DM who was always hung over or grumpy all the time or (as I often see here) paying special attention only to one or two favorite customers and virtually ignoring the rest, and s/he'd still get the same salary as one who really works hard at customer service. I think there's a qualitative difference between the customer service when it comes to hotel/restaurant workers, who really only need to be polite and efficient, as opposed to liveaboard dive staff, who need to be personable and "connect" with people in order to enhance their customers' experiences.

I always tip, but as a "gratuity" rather than a "service charge" where appropriate. Your point about people from non-tipping countries coming to tipping areas (Caribbean mostly) is spot on.

I'm completely with you! When it gets added automatically to the price either as a "service charge" or as a higher price on a "no tipping allowed" trip, it ceases to be a gratuity.

 

[diver 85]

It's a service industry, so just like in a restaurant, I tip 15-20%. If service is terrible (and I'm thinking less than 15%), it's MY job to speak up and let it be known that the service isn't up to my standards. Only after I've done that, if service is still bad, will I drop below 15%.

I worked for a liveaboard and our base pay was US$100 per week. We averaged about 17% and after splitting the tips amongst the crew, I was slightly above the poverty level. Granted, I had no living expenses, but I also didn't have any kind of benefits.

When I book a trip, I mentally add in a 20% tip when I'm calculating my budget.

I guess you would not have enjoyed the tip I've occasionally left, "Don't ever bet on a 3 legged horse".........You think I care what these fools would say about me after leaving(any place) with that kind of a tip---if deserved??.....A tip is earned ----not an automatic expected amount that is tacked on....

And YES, it can go the other----higher than '15%' if the service was above average......Bottom line is, act & work right & you'll get rewarded in the end.....

 

[BDSC]

Thanks BDSC for those views. I think, however, that they represent a distinctly American perspective based on boats sailing primarily in North America with a clientele that is mainly American.

Very true. That's where I am coming from. I've got to save a few more, actually many more pennies to make it to your side of the world but I'll get there. Hope to maybe come that way in 2011 or 2012.

 

[vondo]

Of course there is! There are the percentages for social encumbrances, getting pushed into a different tax bracket based on gross income, etc. And there are the additional accounting costs to be taken into consideration as well. My business is only a very small one, but even as such, every single additional sort of document my accountant has to produce and administer pushes my monthly retainer up.

You pay income tax on net income, not gross, at least in the US. Point well taken about payroll taxes, though. Don;t know if these taxes even exist in many dive destinations.

This is not the case in most of the world, to begin with. Additionally, does your teenaged son/daughter who cuts your neighbor's grass or rakes their leaves or shovels their snow or babysits for them report the cash "rewards" they were paid for those services in their income tax declarations?

What any one person does is up to them, their conscience, and the tax authority. My point is that I have no obligation to help them evade taxes. And for what it's worth, when I was that teenager with a paper route and cutting lawns, yes, I filed taxes when I needed to. (There is an amount below which you don't file let alone pay anything. I hope neither of us are in that place again.)

 

[Tropicalwolf]

The fact that it is "expected" on the sole basis that it is a "service" industry is CRAP.

Do you tip fire fighters? How about police? How about other civil "servants" who are in the public "service" industry?

Oh, I see, it is different because food, diving, bars, etc are "private" industry. Double standard and I will not participate.

 

[beautybelow]

haha...great...now DMs are civil servants.

 

[Tropicalwolf]

haha...great...now DMs are civil servants.

They are there for your "safety", right?

They are doing their "duty", right?