The Tipping Point

What is an appropriate gratuity for your charter yacht crew? The question seems simple, but an international debate rages on.

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About a year ago, a single line of type began appearing on charter yacht spec sheets and databases. Few people beyond charter insiders knew this line existed or even what it meant. Its simple message-"Support MYBA Guidelines Tipping Policy: Yes or No"-capped years of confusion, anger, and frustration about charter crew gratuities. It's hard to say when the trouble started, but civilized discourse began to unravel around 2006, when charter rates spiked. Money was everywhere, and yacht owners who once requested $150,000 per week could suddenly demand, and often get, rates approaching $300,000. While clients from lower-tipping cultures might leave five-percent gratuities, clients from other cultures-especially Americans-would casually drop 25 percent. A crew of 12 might walk away with $6,000 apiece, cash money, in addition to salary, for a single week's work.

Word spread as quickly as the market skewed, and some captains began to demand 20-percent gratuities in exchange for top-notch service. Stories emerged of yachts refusing to book clients with "average" tipping histories. One oft-referenced tale had a captain chasing a client down the dock post-charter and asking-in front of the man's family and friends-what the crew had done wrong, and why the stack of bills hadn't been taller.

Some brokers responded by refusing to book yachts with captains they deemed unreasonable. Other brokers-sometimes because of cultural taboos, sometimes for fear of losing bookings on increasingly expensive yachts-failed to tell clients a tip was expected at all. There were captains who accused brokers of taking commissions without properly informing clients to spread the wealth. And meanwhile, some yacht owners reduced crew pay. Their thinking: If a deckhand is making $6,000 a week in tax-free tips, and he lives on my boat without paying room or board, he doesn't need a decent salary. A number of sales brokers began pushing this theory on yacht buyers before they even entered the charter industry, saying gratuities could all but eliminate crew salaries-so go ahead and buy a bigger boat. And there were plenty of crew who happily took those lousy-paying jobs in anticipation of big-gratuity paydays.

Then, the recession hit.

Some charter yachts slashed rates by 30 to 40 percent to try to maintain business. The ripple effect felt like an aftershock to that deckhand with an already-reduced pay stub, since what few charter bookings there were, now came with gratuities based on a lowered rate. Some of the brokers who previously defended large gratuities advised scaling back, to keep costs low for longtime clients now hesitant to charter at all. And some owners cut crew salaries even further as the businesses funding their yachts experienced unprecedented declines.

By about the middle of 2008, what had devolved into predictably annoying finger-pointing escalated into survival-instinct attacks that threatened lasting harm to the industry.

That's when the Mediterranean Yacht Brokers Association, after years of publicly avoiding the growing storm, suggested that 5 to 15 percent is a customary gratuity scale.

It is the first time in the history of the yacht charter industry that such a guideline has been put into print, widely accepted, and internationally circulated. It is also the first time that charter yacht managers have been able to go to captains, ask whether they support a specific gratuity range, and then clearly say as much to brokers and, in turn, charter clients.

"The guidelines are a very reluctant response by MYBA to continued demands to suggest some kind of scale," says association president Neil Cheston, a sales broker with Camper & Nicholsons International. "The MYBA tipping guidelines are between 5 and 15 percent depending on the level of satisfaction the charterer feels toward the crew. The range is considered normal, suitable, and appropriate, and it does not in any way preclude a very generous gesture."

Interestingly, while the MYBA guidelines have calmed some waters, they also have led to a discussion about whether a percentage is appropriate at all. An alternate idea of "per-diem" crew gratuities is beginning to emerge.

"If you look at it as a per-diem," Cheston says, "suddenly the client can put the percentage into perspective. Ten to 20 percent of a weekly rate might be $600 or $700 per crew member, per day, on larger yachts. The client might feel that is excessive."

Mark Elliott, an American who served as captain aboard the 170- foot charter yacht Nadine before becoming a top sales and charter broker with International Yacht Collection, tells clients that MYBA's top-end suggestion-15 percent-is actually a customary average for yachts charging $100,000 per week or less. "I was a charter captain," he says. "I worked from dawn till midnight. I wanted to be rewarded according to my efforts. I didn't feel 15 percent was unusual."

On yachts with weekly rates higher than $100,000, though, Elliott says a 15-percent gratuity can be "crazy money." With those bookings, he suggests a per-diem bonus for each crew member, say $200 or €200 per day.

"If the owner is on board and the workday is eight hours, on charter the typical day is 16 to 18 hours," Elliott says. "That's what the $200 extra per day pays for. The crew are working an extra shift."

Sarah Piggin, a British native who was a stewardess aboard the 246-foot charter yacht Leander before becoming a MYBA Board member and senior charter broker with Yachting Partners International in Antibes, shares similar opinions.

"From my experience working on yachts for 10 years, if we received an average of 10 percent in gratuities over the season, we were happy. That was the 1990s," Piggin says. "Now, at Yachting Partners, we follow the MYBA guidelines of 5 to 15 percent, which we think are fair. But personally, having worked on the smaller, older yachts and right up to what, at the time, was the biggest and most expensive yacht for charter, I feel that it might be right to look at a gratuity figure, per head, regardless of the price of the yacht. If you are working on a small yacht that isn't at the top end of the market, you're still expected to give top-level service."

Crew aboard large yachts might disagree with the per-diem argument, based on their possible years of experience and the licensing they often must earn to get jobs on the biggest boats. And charter clients booking smaller yachts at entry-level prices might chafe at the thought of gratuities rivaling daily food expenses.

The conversations continue, but MYBA's guidelines seem to have focused the debate, at least. Ironically, it appears the answer to the question of how much you should tip remains "Whatever you think is reasonable."

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New Math

Here's how MYBA guidelines stack up against a per-diem gratuity. Note how each yacht's base rate can skew crew tips.

Fabiola II, 55 Fleming

****4 guests, 2 crew, lowest weekly base rate $9,500.

A 5% tip is $475, or about $238 per crew member, or about $34 per crew member, per day.

A 10% tip is $950, or $475 per crew member, or $68 per crew member per day.

A 15% tip is $1,425, or about $712 per crew member, or about $102 per crew member, per day.

If you had tipped a per-diem $200 per crew member, the total gratuity for the week would be $2,800, nearly twice as much as 15 percent of the base rate.

Harmony, 115 Crescent

8 guests, 6 crew, lowest weekly base rate $70,000.

A 5% tip is $3,500, or about $583 per crew member, or about $83 per crew member, per day.

A 10% tip is $7,000, or about $1,167 per crew member, or about $167 per crew member, per day.

A 15% tip is $10,500, or about $1,750 per crew member, or $250 per crew member, per day.

If you had tipped a per-diem $200 per crew member, the total gratuity for the week would be $8,400, or about 12 percent against the base rate.

Mine Games, 164 Trinity

12 guests, 9 crew, lowest weekly base rate $265,000.

A 5% tip is $13,250, or about $1,472 per crew member, or about $210 per crew member per day.

A 10% tip is $26,500, or about $2,944 per crew member, or about $421 per crew member, per day.

A 15% tip is $39,750, or about $4,416 per crew member, or about $630 per crew member, per day.

If you had tipped a per-diem $200 per crew member, the total gratuity for the week would be $12,600, or less than 5 percent against the base rate.