So, is the free cruise really free?
The best answer is “sort of” or “it depends” because it really does depend upon who issued the free cruise certificate, which certificate the sales rep gives you, and the terms of that certificate. In fact, I have found that the value of a free cruise certificate can be anywhere from $175 to $1000.
I am not qualified to give you tax advise, but keep in mind that, in most cases, you will have to fill out an IRS W-9 form so that the give-away company can write off the value of the certificate and send you an IRS-1099-Misc. You will have to claim the value of the cruise as income on your tax return. Remember to look up, print out and save the information about the cruise you take to argue against whatever the marketing company puts on the IRS-1099 Misc. they send you next January. You don’t want to pay taxes on a free $1500 cruise if its real value is only a couple hundred dollars.
To really answer the question, “Is it really free”, you first need to understand how cruise lines price their cruises. If you go online to www.Carnival.com or www.NCL.com or www.RoyalCaribbean.com, you can get the price for a 3-day, 4-day or a 7-day cruise. When you look at the pricing, remember that the price is per person based upon double occupancy. You also need to know that the advertised price includes the port fees but does not include the government taxes.
Please also remember that Carnival or the other cruise lines don’t have any connection with the “free cruise certificates” at all. These certificates are sold to timeshare companies and auto dealers, etc… as incentives to get buyers into their place of business. The incentive company manages the certificates and the booking of the cruises when the certificates are redeemed. They will also sell you upgrades, travel insurance, etc…
As an example, I will use Carnival Cruise Lines 4-day Mexico cruise. It is the most often found cruise line that is used for free cruises on the west coast. Their 4-day Mexico cruise goes from Los Angeles to Catalina Island, to Ensenada, Mexico then back to Los Angeles.
If you check online you will see that this 4-day Mexico cruise is priced from $229 to $539 depending upon when you take the cruise. In the travel industry the prices are based upon the peak seasons vs. the off-peak seasons. The port fees and travel agent commission are included in the advertised rate. To calculate the cost of the least expensive cruise to an online buyer, just add the taxes, which are $35.43 in this case, for a total cost of $264.43 per person, double occupancy. The cost would be the same if this online buyer had used their personal travel agent.
Also, with either the free certificate or a regular purchase, you should also buy travel insurance so that you don’t lose anything if you cannot make the cruise. And, don’t forget, that unless you live in Los Angeles or Miami, you will have to drive there and that means $$ for gas, or buying two round trip tickets plus the cost of a cab or transfer from the airport to the ship terminal. That will run another $625 for the cheapest tickets I could find on Southwest, round trip from Sacramento to Los Angeles. They may be more or less from your hometown to the port.
Keep in mind that the higher-cost cruises will be during the summer months and Christmas break. Generally, the certificates do not allow you to choose those times unless you pay a premium. The fine print will say that the certificate is good for off-peak sailing dates. Remember, they really want to sell you an upgraded cruise. Often if you check the cruise line directly, the cost for a peak week may only be a few dollars more than a non peak week. Through the incentive company, they will charge you about $199 for almost any week that they consider a peak week, even though it is not more expensive with the cruise line.
The agency handling the free cruise certificate and booking the reservation will charge you a service charge of at least $20 plus the $35.43 for taxes plus the $99 port charges, which means that you really did not get a free cruise. In this example, the cruise, which would have cost you $264.43 per person to buy on the open market, will cost you a minimum of $154.43 per person. In this example, you would only save about $110 per person. So, you could expect a total savings of only $220 over buying the cruise online or from your local travel agent. Remember to print out the online cost so that you can argue if the IRS 1099 you get shows a value of more than $220 for the free cruise.
Now, I can fully appreciate saving the $220, but what do you really pay in frustration and hassle for the $220. Lets read the rest of the small print on the certificate. You have to use the free certificate within 1 year, you have to return the initial document within 30 days, you have to pick a first choice date 60 days from the date your certificate is authenticated and your deposit has been paid, you have to select 3 dates, at least 30 days apart. They will then choose your cruise date and let you know a few weeks before you cruise, and you cannot travel during the peak season or during any holidays without paying an additional fee.
You have to decide if the cruise is really free or not. If I am only saving $220, I will shred the certificate, call my travel agent, and schedule a cruise that really fits my time frames without all the hassle. Vacations should not be a hassle.
On the other hand, if you “won” a 7-day Mexican Riviera cruise, the costs and savings are often more complicated, but could be enough to make the hassle worthwhile. If you book your 7-day Mexican Riviera cruise online or through a travel agent, or even with the free cruise certificate, you will pay about $160 for the port charges and about $56 in taxes, about $220 per person. If you check online, you can find a good 7-day Mexican Riviera cruise for about $750 per person, taxes and port fees included.
Some of the incentive companies sell “free 7-day cruise certificates” to the travel companies or timeshare companies that have more costs hidden in the small print so that more money goes out of your pocket and into theirs.
For example, I have one “free 7-day cruise certificate” that charges the port fees and taxes like all of them do, but also charges an initial $20 processing fee plus a $50 per person agency processing fee to make the reservations plus an additional fee of $55 per person per day. On this “free 7-day cruise certificate” I would have spent about $1330 for a $1500 cruise. We would only save about $172 for two people on this 7-day cruise.
I saw a certificate from another company, which would only cost me about $440 in port charges and taxes for two people and a processing fee of about $20. Since there were no additional per day charges, that certificate would save me over $1000 on that $1500 cruise.
Needless to say, I would shred the first one and consider using the second one if I could get dates that would work for me.
So, in conclusion free cruises are not free. Some save you a little money but are not worth the trouble. Most require you to jump through dozens of hoops, all in the hope that you give up. That way, the incentive company wins because they sold the certificate to the timeshare company, and they don’t have to deliver, even when delivering is usually paltry. The timeshare company probably won too. They got you to come to the presentation and maybe even sold you a timeshare. You are probably better off if you ignore the free offers. If they give you cash money, maybe it is worth spending an hour or two with them, but it is not worth it for a travel certificate that is more trouble than it is worth.
Finally, if you did buy that timeshare week, please use it. Don’t let your travel budget go to waste. You won’t be the only one to have bought the dream of glorious vacations in a timeshare condo resort. We did. We use our timeshare weeks every year or give it to one of our kids to use. We never let it go to waste.
In fact, with the points-based timeshare week, we can book 2 days in the timeshare before we board a cruise out of Miami to enjoy the Caribbean, then book another 2 days upon return to really turn it into a relaxing vacation. No hoping that the plane arrives on time so that we can get to the ship on time, or no booking an expensive hotel the night before the cruise. We can spend a day at Disney World before the cruise and a day at Universal Studios when we return. That still leaves us 3 days for a weekend getaway later in the year.
In my humble opinion, if you really want to take a cruise, I recommend that you give one a try. They are, dollar for dollar, the cheapest vacation you can buy, other than driving to mom’s house for vacation. Call Team Edwards Travel and have us book you on a 3 or 4 day cruise to see how much fun it is, when you do it without all the hassle, with a travel professional covering your back. You will be happy you did and you will be ready to book that 7-day cruise to the Caribbean next year.
Turning Dreams into Memories,
One Vacation at a Time.
As you might guess, this document is a compilation of information from our travels as well as from other travelers. I hope it has been of value to you. Check out the important links below.
Don’t hesitate to email us when you return from your trip with any suggestions that will make this document better for you and your fellow travelers!