Since the loyalty levels are individually awarded, it shouldn't be part of the rationalization that "I paid for 5 people, so we all should be awarded a higher level."
While I realize it's only my thoughts, I think "loyalty" should be determined by how long you've cruised with any given cruise line (number of nights cruised, not number of cruises). Because number of cruises makes things really unequal - one 4 night cruise being equal to a 15 night cruise.
Just tracking number of nights cruised, equals the playing field more, IMO.
If I pay $20 dollars for a meal at one restaurant, and $50 for the same meal at another restaurant, who am I "loyal" to? For me, I'd be loyal to the restaurant that only charges me $20, as I will choose to return there again. The $50 meal? I'd probably only do that once.