The business model absolutely makes sense.
Let's say you want to buy an amazon.com gift card at a shop. You pay $100 for the gift card. The shop owner gets a 10% commission.
You go ahead and purchase an amazon kindle for $100 with said gift card. Where did the $10 suddenly come from?
Would gift cards be classed as pyramid schemes?
Ok, let's apply your business model to the gift card example. So, I come every month to a store and buy $100 amazon gift card, and every time I buy I get $200, which i can't use for another 12 months. After 1 year and spending $1200, now I have $2400 worth of gift cards. I wonder how long will it take for that store to go out of the business? How can that gift card reseller keep up with 100% bonus for every customer?
Two basic characteristics of pyramid scheme are here:
- Big affiliate bonus so people have incentive to do drag their friends and family into this
- Locking up funds to give you some more wiggle room, while new members are paying for the old ones.
In the first 12 months of membership you can use up to 60% of you accumulated Cruise Dollars. That translates to $120 every month. The remaining $80 are not lost but are made available in the following years. So within 5 years you pay in $6000 but receive $12000.
You don't need to wait either, you can start spending your Cruise Dollars straight away. If the vacation is more expensive you are able to pay the difference out of pocket.
In the case of gift cards about 20% is never redeemed. 10% is commission for the shop that sold them. I am certain that gift cards can be sold at a huge discount without the company actually taking a loss.
I used to work at a major airline company for a year. One of the perks was that we could purchase tickets for the price of the real seat cost.
I booked a round-trip from Europe to Mexico to Miami and back in first class with 2 interconnecting business class flights. The price I paid for the ticket was €500. The market price for the same ticket without discounts was over €20,000. This was an "R2 standby code" ticket. They have stopped giving employees R2 tickets for first class but they still exist for business and economy.
Most airlines are usually overbooked but the airlines are really good at estimating the "no shows". For every single flight there is usually a prediction of how many people will never show up. It is scary to see how accurate this prediction actually is.
When you add up bulk discounts, commissions, unredeemed vacations and other commissions you can totally afford to give people huge discounts.