OBC vs Money

[AmazedByCruising]

Why do TAs give OBC instead of just money/lower fare/free flights/whatever?

 

OBC can't be cheaper (like $100 OBC for $90)?

[Essiesmom]

Most cruise lines do not allow travel agents/agencies to offer lower fares than the cruise line posts. But the travel agent/agency gets 'paid' a commission on the cruise fare. How much may depend on how much business that agency gives the cruise line. If the TA gives you OBC, it comes out of their commission. If they wish to give you wine, flowers, a meal in a specialty restaurant instead of OBC, it is their choice. Free flights would not come from the agency unless they were putting together a package for a group. EM

[donaldsc]

Why do TAs give OBC instead of just money/lower fare/free flights/whatever?

 

OBC can't be cheaper (like $100 OBC for $90)?

 

Since the OBC is a business expense and is then deductible for tax purposes, it may be easier to track and also easier to show to the IRS if their business is audited.

 

DON

[Jillbu]

Essiesmom nailed the explanation. The majority of those "bonuses" come out of our commissions.

[MagicMike]

A big reason for no cash back is that most cruise lines prohibit agencies from rebating in any form of cash (gift cards etc) and do allow OBC & gifts. They want to make sure that the money travel agents give back to the clients goes back to the cruise line in some form

[Flatbush Flyer]

A big reason for no cash back is that most cruise lines prohibit agencies from rebating in any form of cash (gift cards etc) and do allow OBC & gifts. They want to make sure that the money travel agents give back to the clients goes back to the cruise line in some form

 

 

Also, some TA OBC may come from incentive funds provided by a cruise line for distribution to clients at the TAs discretion. I'm also betting that, because it really boils down to money back in the pockets of the cruise line, there may be situations where the TA can "purchase" discounted OBC (not unlike vendors that provide Amazon gift cards).

[AmazedByCruising]

Most cruise lines do not allow travel agents/agencies to offer lower fares than the cruise line posts.

 

Why's that?

[AmazedByCruising]

A big reason for no cash back is that most cruise lines prohibit agencies from rebating in any form of cash (gift cards etc) and do allow OBC & gifts. They want to make sure that the money travel agents give back to the clients goes back to the cruise line in some form

 

From what I see at CC, the cruiselines actually like TAs. I find it a bit weird that they want to have a say about the TA's money. They can spend it on shoes, whatever, but if they use it to actually attract more customers by giving simple rebates, they want it back by forcing coupons instead of money?

 

I'm also betting that, because it really boils down to money back in the pockets of the cruise line, there may be situations where the TA can "purchase" discounted OBC (not unlike vendors that provide Amazon gift cards).

 

If that's true, I should call my TA. If the discounted OBC is 95$ for 100$ OBC I'd be spending a lot of time in the casino, getting $97 and a bit back at the black jack table :)

[AmazedByCruising]

Since the OBC is a business expense and is then deductible for tax purposes, it may be easier to track and also easier to show to the IRS if their business is audited.

 

DON

 

"I gave my client flowers and chocolate covered strawberries because they booked a really nice suite and I want to keep them as my clientele"

 

"OK. That's fair."

 

"Also, I gave them $300 OBC."

 

"What's that?"

 

"Money. But not really money-money. You can only spend it on the ship, you see. For excursions. And drinks. And for gambling to win real money. It loses all its value after disembarkment! "

 

"I'm a bit confused."

 

"That's when you get off the ship. "

 

"Ah, then it's totally clear. Thank you!"

[Flatbush Flyer]

From what I see at CC, the cruiselines actually like TAs. I find it a bit weird that they want to have a say about the TA's money. They can spend it on shoes, whatever, but if they use it to actually attract more customers by giving simple rebates, they want it back by forcing coupons instead of money?

 

 

 

 

 

 

 

If that's true, I should call my TA. If the discounted OBC is 95$ for 100$ OBC I'd be spending a lot of time in the casino, getting $97 and a bit back at the black jack table :)

 

 

As with many of your past posts, you've got to be "pulling our legs".

 

There's an inherent value for a cruise line to discount any OBC purchases by a TA. on the other hand, casinos are most often contractors. Any savings to them is, in essence, a wash or a loss to the cruise line.

 

Also, what makes you think that discounting cabin prices will somehow attract more customers than providing OBC? As aforementioned, the OBC is money almost assured to go back to the cruise line in one way or another. And whatever the price, the ships will fill.

 

In addition, it seems that you may not be aware that most kinds of TA OBC are refundable after the cruise. So, there's the discount you seek.

 

In another post, you ask why cabin prices are often "fixed" by the line without wiggle room for negotiation. Price controls are common across many industries (e.g., bought an Apple or Mercedes product lately?) Prices set by a manufacturer (or cruise line) controls what could be a very variable factor and, if open to customer haggling, could pit retail sellers against each other for a relatively insignificant amount of money.

 

As I've said before, most of the answers to your questions are common knowledge or common sense. IMO, you really need to think through the obvious or, at least, search past CC threads before asking these questions.

 

Of course, I don't expect you to follow that advice because others, including myself, will probably continue to point out the obvious to you.

 

Nothing personal - just frustrating when questions with obvious answers take up space (yes-shame on me for polluting the site with this long answer - or an answer at all.)

[AmazedByCruising]

As with many of your past posts, you've got to be "pulling our legs".

 

If you think that's the case, which it really isn't, my posts should be ignored. That's common internet etiquette, "don't feed the trolls" and I'm perfectly fine when people decide to ignore me.

 

Price controls are common across many industries (e.g., bought an Apple or Mercedes product lately?)

 

That's simply not true. If I google "iPad" I get bombarded with very different offers and it seems price is the most important thing to advertise with. Which is very logical; "We have the best logistics, so we are cheaper" sounds better than "Your iPad comes with FREE coupons, to buy even more Apple stuff!".

 

Prices set by a manufacturer (or cruise line) controls what could be a very variable factor and, if open to customer haggling, could pit retail sellers against each other for a relatively insignificant amount of money.

 

Yes, that's exactly how TVs were sold here around 1980. Philips said "your little shop shall sell this TV for exactly $1200, and in return we promise you the big shops will also sell it for $1200".

 

36 years ago, that might have seemed logical. Now, the same room in a hotel is sold by 20 different companies on internet, all fighting to be the cheapest. No hotel has "Hotel Only Credit", to be used for food or souvenirs. IMHO It IS weird, and I don't think there will be OBC in 2030. What I want to know is why it exists now.

 

Nothing personal - just frustrating when questions with obvious answers take up space (yes-shame on me for polluting the site with this long answer - or an answer at all.)

 

I don't think the answers are obvious, and I wouldn't spend time asking those silly questions if I'd know what the answers would be. If I really wanted to be a troll on CC, I'd start by asking about lanyards for my card, bare feet on decks, or how to decorate my door. I can't beat those questions, though.

[Flatbush Flyer]

If you think that's the case, which it really isn't, my posts should be ignored. That's common internet etiquette, "don't feed the trolls" and I'm perfectly fine when people decide to ignore me.

 

 

 

 

 

 

 

That's simply not true. If I google "iPad" I get bombarded with very different offers and it seems price is the most important thing to advertise with. Which is very logical; "We have the best logistics, so we are cheaper" sounds better than "Your iPad comes with FREE coupons, to buy even more Apple stuff!".

 

 

 

 

 

 

 

Yes, that's exactly how TVs were sold here around 1980. Philips said "your little shop shall sell this TV for exactly $1200, and in return we promise you the big shops will also sell it for $1200".

 

 

 

36 years ago, that might have seemed logical. Now, the same room in a hotel is sold by 20 different companies on internet, all fighting to be the cheapest. No hotel has "Hotel Only Credit", to be used for food or souvenirs. IMHO It IS weird, and I don't think there will be OBC in 2030. What I want to know is why it exists now.

 

 

 

 

 

 

 

I don't think the answers are obvious, and I wouldn't spend time asking those silly questions if I'd know what the answers would be. If I really wanted to be a troll on CC, I'd start by asking about lanyards for my card, bare feet on decks, or how to decorate my door. I can't beat those questions, though.

 

 

Sorry bud but the answers really are very obvious and repeated over and over again if you search CC for similar questions.

 

As to your misinformation, here in the US, the price of an iPad or "i anything" is a fixed price (except for educational or related "special" circumstances). Even when you see a cellular provider's "buy 1- get 2" deals, the fine print demonstrates that you will (over time or through contract requirements) pay that fixed price for each item. Giving you a cover or cables for that iPad Is where you get a deal (much like OBC). But, the price of the iPad (or the Mercedes) is the price. Perhaps one vendor will include a service contract "free". Kinda good for you. But the money you spend with the dealer (to take advantage of the free/discounted contract) will still go to the dealer (just like non-refundable OBC goes to the cruise line).

 

Speaking of cars: if you do research, you can pay far below the dealer's wholesale invoice price (in the US) if you know what unpublished rebates the manufacturer is providing to the dealers at the time of your purchase. Does that mean the dealers is going to give you cash or otherwise discount his profit? NO- he may decide to just pass the incentive on to you (if you press him for part or all of it). Any cash that might ever go back to you (customer) beyond a car manufacturer's rebate or factory discounted price is lost revenue to the selling dealer - unless, of course, any deal you get is given to you in the form of service coupons (cars) or OBC (ships). In that way, they minimize any profit loss. God bless capitalism!

 

Likewise, there's plenty of fine print regarding third party websites that sell hotel rooms "cheap". Check it out: the big chains' (e.g., HYATT, HILTON, etc) unrestricted cancelable prices are guaranteed to be the lowest AND you get loyalty points, senior/govt/et al. price breaks and other amenities perks not found on the third party sites.

AND, in fact, many of those chains (and even some independents) do offer "hotel only" perks (just stayed at Disneyland Marriott in Anaheim. Room rate included discounted hotel parking, hotel meal discount tix, shuttle coupons, etc. Saved a bundle on "net daily rate" of the trip - just like OBC) Thus, while the "net daily rate" of your travel might be lower (although hotel is giving you no cash), the hotel's own room rate is basically the same (or better) best room rate that the websites are using as the base cost.

 

Think about it: the last customer a cruise line wants is the one that only cares about the lowest cabin price. It's pretty much common knowledge that those folks don't spend much money while on the ship. Profit killers!

 

Now - do some vendors/TAs disregard the rules and advertise lower prices that are not bona fide? Sure, but if they continue to do it and are found out, they may lose their sales territory or other privileges.

 

Finally, do remember that, despite cruise line cabin price controls, TAs may choose to share their commission as a refundable OBC once the cruise is done (actually sort of what you are looking for). But, as mentioned by another poster, that can be a bookkeeping/tax/etc nightmare for that TA.

Edited June 22, 2016 by Flatbush Flyer