2016 Annual Report for Norwegian Cruiseline Holdings - 10

Our entry into the Chinese market includes a multi-pronged strategy to expand our presence in what we believe is positioned to become the
world's second largest cruise market. We began with the opening of sales and marketing offices in Shanghai, Beijing and Hong Kong that will
serve dual purposes. These offices will look to source Chinese guests for international cruises across our three brands, which together combine
to form a broad portfolio of voyages and itineraries to every corner of the globe that a Chinese cruiser would look to sail. These offices will
support our travel partners to source locally for our China-dedicated venture, Norwegian Joy, being launched in the spring of 2017, which will
be purpose-built for Chinese consumers. The ship will be designed to deliver a blend of the Norwegian brand's offering of freedom and
flexibility with amenities and features that will resonate with Chinese guests.
For information regarding risks associated with our international operations, see Part I Item 1A-Risk Factors in this annual report on Form 10K, including the risk factor titled "Conducting business internationally may result in increased costs and risks."
Meetings, Incentives and Charters. This channel focuses on full ship charters as well as corporate meetings and incentive travel. These sales
often have very long lead times and can fill a significant portion of the ship's capacity, or even an entire sailing, in one transaction. The
acquisition of Sixthman in 2012, a company specializing in developing and delivering music-oriented charters, opened up a new market for
travel partners enabling travel partners to sell high-quality music experiences at sea to guests.
Itineraries
We offer cruise itineraries ranging from one to 180-days calling on worldwide locations, including destinations in Scandinavia, Russia, the
Mediterranean, the Greek Isles, Alaska, Canada and New England, Asia, Tahiti and the South Pacific, Australia and New Zealand, Africa, India, South
America, the Panama Canal, and the Caribbean. We have developed, and are continuing to develop, innovative itineraries to position our ships in new
and niche markets as well as in the mainstream markets throughout the Americas and Europe.
We believe that these destination-focused itineraries, complemented by a comprehensive shore excursion program (which is included in the all-inclusive
fare for cruises on the Regent ships), differentiate our brands from many of our competitors. We call on varied destinations, many of which include
overnight stays in port, allowing guests to have more in-depth experiences than would otherwise be possible in only a single day port call.
For some of our longer itineraries, we strive to maximize profitability by selling segments of the longer itineraries as shorter cruises (i.e., which last 7 to
20 days) in order to capture more time-constrained customers. We believe the deployment flexibility created by the use of longer itineraries translates
off-peak seasons into more profitable portions of longer cruises.
We have bolstered our presence internationally by opening sales offices in Shanghai, Beijing, Hong Kong, Sydney, Singapore, Tokyo and Mumbai
which will further increase sourcing from these source markets for all three brands.
In addition to expanding our international sourcing efforts, we are in the process of deploying our vessels to new destinations around the world.
Norwegian Star and Norwegian Jewel will homeport year-round in the Asia Pacific region with itineraries that include many of the region's ports.
Additionally, all three of our brands have received approval from the government of the Republic of Cuba to operate cruises to the island beginning in
2017. These historic sailings will begin in March 2017, and offer U.S. travelers the opportunity to visit the culturally and historically rich country on
select Caribbean sailings that include calls in the historic city of Havana through December 2017.
Passenger Ticket Revenue
We offer our guests a wide variety of cruise fare options when booking a cruise. Our cruise ticket prices generally include cruise fare and a wide variety
of onboard activities and amenities, including meals and entertainment. In some instances, cruise ticket prices include round-trip airfare to and from the
port of embarkation, complimentary beverages, unlimited shore excursions and pre-cruise hotel packages. Prices vary depending on the particular cruise
itinerary, stateroom category selected and the time of year that the voyage takes place.
Onboard and Other Revenue
All three brands generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino
operations, certain food and beverage, gift shop purchases, spa services, photo services and other similar items. Food and beverage, casino operations
and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and some internet services may be managed
through contracts with third-party concessionaires. These contracts generally entitle us to a fixed percentage for the gross sales derived from these
concessions. Norwegian's ticket prices typically include cruise accommodations, meals in certain dining facilities and many onboard activities such as
entertainment, pool-side activities and various sports programs. Norwegian generates additional revenue on our ships from casino operations, food and
beverage, shore excursions, gift shop purchases, spa services, photo services and other similar items. To maximize onboard revenue, Norwegian uses
various cross-marketing and promotional tools which are supported by point-of-sale systems permitting "cashless" transactions for the sale of these
products and services. Oceania Cruises' offerings may include air transportation and certain other amenities. Regent's offerings typically include air
transportation, a pre-cruise hotel night stay (for concierge level and above), premium wines and top shelf liquors, gratuities and unlimited shore
excursions. Both Regent and Oceania Cruises generate additional revenue from casino operations, gift shop purchases, premium shore excursions and
spa services.
Onboard and other revenue accounted for 30%, 28% and 30% of our consolidated revenue in 2016, 2015 and 2014, respectively.
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