Demise of the optional gratuity

Many more places are getting in on the mandatory-fee game. What's a tipper to do?

Author: Laurie Berger
Source: Los Angeles Times

TIPPING is a traveler's last resort for getting and rewarding good treatment.

But now, suppliers are toying with that sacred cow by imposing mandatory gratuities and other charges. The result? Confusion and conflicts on the front lines.

Hotels, cruise ships and restaurants have become the venue for such disputes, but tensions are highest at curbside check-in, where passengers are locked in a struggle with skycaps over tips.

United, American and other airlines say a $2-per-bag curbside fee instituted last year is in lieu of a gratuity, although passengers can still tip for excellent service.

Baggage handlers, on the other hand, complain that they "don't see a dime" of this fee and sometimes campaign for tips, even though they're not supposed to mention the "T" word to customers.

Meanwhile, some passengers — fearing their luggage will end up in Siberia or that they will be refused service — say they feel pressured to tip anyway.

Meanwhile, some passengers — fearing their luggage will end up in Siberia or that they will be refused service — say they feel pressured to tip anyway.

Annette Drey of Pasadena says that on four recent occasions, she felt forced into tipping above and beyond the service charge.

"A United skycap actually went down the line at LAX, telling passengers to tip because they don't get any of the fee," Drey says. And that was shortly after a porter in Portland, Ore., refused to take her bags unless she promised to pay a gratuity.

"Tipping was obviously not optional, as I had been informed by the airlines," Drey says. "I felt like I was being held hostage to a new system I don't understand."

As the rules of tipping change, similar dramas are unfolding around the country. Travelers are not only mad about being forced to tip, but they're also suspicious about where their money is going.

And many, like Drey, are asking: "Should I pay the fee and tip, or am I getting taken for a ride?"

The answer is not clear-cut. It never has been when it comes to this highly fickle practice. But one thing's for sure: The explosion of service fees is mainly to blame.

In Europe and Japan, such charges are common and expected. Tips are included in the charge. But in this country, service fees are new, largely unwanted and very misunderstood.

"When someone adds a service charge in the U.S., it's newsworthy because that's not what people want," says Tim Zagat, founder of the Zagat restaurant guides. "More than 90% of the hundreds and thousands [of people] we've surveyed dislike these charges."

But now that travel providers have discovered how lucrative service fees can be, travelers can expect to see more of them in the future.

PricewaterhouseCoopers estimates that the hotel industry alone will collect $1.6 billion in fees from guests this year, up from $1.4 billion in 2005.

"That's due to new fees, higher fees and more hotels charging them," says Bjorn Hanson, who heads up the consulting firm's hospitality division.

A 2005 poll of top-rated hotels and spas by Michael Lynn, a tipping expert and associate professor at Cornell University in Ithaca, N.Y., revealed that almost 50% of those businesses added mandatory service fees and gratuities to guests' tabs.

"It's much higher than I would have expected in this country," Lynn says. "It clearly seems like upscale hotels and resorts are moving away from voluntary tipping."

Just minutes after speaking with this reporter on the topic, Henry Harteveldt, a travel analyst with Forrester Research in San Francisco, checked into a hotel — the Delamar in Greenwich, Conn. — and got hit with a $15 daily fee.

The hotel told him it was an automatic gratuity that would be distributed among all staff except restaurant workers.

Harteveldt argued that he reserved the right to make that decision. "Tipping is a deeply personal practice," he says.

After some "strong conversation with the clerk," the charge was removed.

Problem is, not all service charges are alike. Some, like the Delamar's, include the tip; others don't.

"I've been in the hotel business 22 years and have always thought service charges and gratuities were synonymous," says Christopher Bragoni of HelmsBriscoe, a Scottsdale, Ariz.-based meeting-planning firm. "But I grew up in Europe, so I knew not to tip on top of that."

Tips about tips

HOW can a traveler tell when tips are included? It's difficult sometimes.

"Service fees," by definition, are charges imposed by and paid to a company. Resort fees fall into this category. "Gratuities," on the other hand, are discretionary and by law must be returned to the tip-earning employees minus any credit-card fees.

Automatic gratuities are the newest wrinkle. "They're closer to a service charge than an actual tip," Cornell's Lynn says.

And they can lead to costly mistakes for those not in the know.

Take room service, for example. Many guests don't know that a service charge and tip are included at many high-end hotels. It's not always on the menu, and waiters rarely mention it.

When presented with the check, guests typically add a tip of 15% to 20% and end up paying almost 50% more for their meal.

"It's so misleading. You end up double tipping," says Kathleen Cochran, general manager of Loews Coronado Bay Resort in San Diego, which has joined Marriott hotels in removing the "gratuity line" from its room service checks.

But that hasn't stopped employees from pressuring guests for tips.

Claire Gould, president of Rx for Catering, an Atlanta-based event-planning consultant, says that she recently got the "stare down" from a bellman and other workers at an upscale Phoenix-area hotel, even though their gratuities were covered by resort fees.

"They have a way of intimidating you because they still expect a handout," she says.

That's because workers don't always get all the tips collected on their behalf, despite laws requiring they receive them.

Typically, hotel workers pool gratuities, which are then divvied up by seniority and hours worked.

But often, workers get shortchanged because they're "kicking back part of the tip to their boss, who is extorting payments without the consent of the employer," says Robert Jarvis, a travel law professor at Nova Southeastern University in Fort Lauderdale, Fla.

In some cases, employees don't get anything. "One non-union operation here in Anaheim keeps all the tips," says Mike O'Brien, a staffer at Local 681 of the hotel workers' union Unite Here.

The union is threatening strikes in major U.S. cities this summer if wage and gratuity issues are not resolved.

Meanwhile, some upscale restaurants have started charging gratuities too. Thomas Keller's Per Se in New York is leading the charge of restaurants that are replacing tips with mandatory 20% service charges.

"It's generally assumed that most of those fees go to workers, but diners will never know exactly how their tips are divvied up," Zagat says.

Some cruise lines have also jumped on the bandwagon, even though online chat boards buzz about employees not getting full tips.

At Carnival, "90% of the amount collected is paid in cash directly to dining room and stateroom teams. The remaining 10% is pooled and paid to back of the house staff," says spokesman Vance Gulliksen.

Forced gratuities

BACK at the curbside, skycaps, who once earned a good living from tips, now get paid hourly wages, benefits and bonuses from bag fees.

They're well paid, says Al Johnson, president of Atlanta-based Premium Services Management, which serves United Airlines customers at eight U.S. airports, including Chicago and San Francisco. "If someone refuses to provide service [or solicits a tip], that's grounds for termination."

Although many consumers fear they'll never see their bags again if they don't tip, Johnson says not to worry.

Any skycap who retaliates by sending a nontipper's luggage astray can be traced by his or her ID number, which must be entered to check in a bag.

Even if a flier gets stuck tipping a pushy skycap, there is recourse. "They should complain to the manager on-site, who is able to intervene," Johnson says.

Customers who don't get tip-worthy service from other travel suppliers that impose mandatory fees and gratuities should also register a gripe.

Carnival, for one, says automatic gratuities are fully refundable and can be adjusted at the purser's office. Hotels have also been known to remove charges disputed at the front desk.

When all is said and done, travelers should not be intimidated by the new tipping rules. It's still an acronym for "to improve service," Zagat says.

"You're judging them. They're not judging you," he says. "Do it to get pleasure, not an anxiety attack."