2017 Annual Report for Norwegian Cruiseline Holdings - 10

For information regarding risks associated with our international operations, see Part I Item 1A-Risk Factors in this annual report on
Form 10-K, 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 a few days 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 world.
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 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 Joy homeports year-round in the Asia Pacific region with itineraries that include many of the region's ports.
Additionally, all three of our brands sail to the Republic of Cuba. These sailings began in the spring of 2017, and offer U.S. travelers the
opportunity to visit the culturally rich country on select Caribbean sailings that include calls in the historic city of Havana.
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, as well as 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, free internet, pre-cruise hotel packages,
and on some of the exotic itineraries pre or post land 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 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, some internet services 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 31%, 30% and 28% of our consolidated revenue in 2017, 2016 and 2015, respectively.
Revenue Management Practices
Our revenue management function performs extensive analyses in order to determine booking history and trends by sailing, stateroom
category, travel partner, market segment, itinerary and distribution channel in order to determine cruise ticket pricing. We concentrate on
improving early booking occupancy rates to drive higher Net Yields. We execute targeted and high-frequency marketing campaigns that
communicate a message of a value-packed cruise offering in both North American and select international markets. To increase the
effectiveness of these targeted marketing programs, we emphasize communication to keep the travel agents engaged and informed and utilize
call centers focusing on both inbound calls and outbound calls to high potential targeted customers. This marketing strategy assists in maximizing

Table of Contents for the Digital Edition of 2017 Annual Report for Norwegian Cruiseline Holdings