2017 Annual Report for Norwegian Cruiseline Holdings - 26

Amendments to the collective bargaining agreements for crew members of our fleet and other employee relation issues may materially adversely affect
our financial results.
Currently, we are a party to eight collective bargaining agreements. Four of these agreements are in effect through 2018 and four through 2020. Any future
amendments to such collective bargaining agreements or inability to satisfactorily renegotiate such agreements may increase our labor costs and have a
negative impact on our financial condition. In addition, although our collective bargaining agreements have a no-strike provision, they may not prevent a
disruption in work on our ships in the future. Any such disruptions in work could have a material adverse effect on our financial results.
Our inability to obtain adequate insurance coverage may adversely affect our business, financial condition and results of operations.
There can be no assurance that all of our risks are fully insured against or that any particular claim will be fully paid by our insurance. Such losses, to the
extent they are not adequately covered by contractual remedies or insurance, could affect our financial results. In addition, we have been and continue to be
subject to calls, or premiums, in amounts based not only on our own claim records, but also the claim records of all other members of the protection and
indemnity associations through which we receive indemnity coverage for tort liability. Our payment of these calls and increased premiums could result in
significant expenses to us. If we were to sustain significant losses in the future, our ability to obtain insurance coverage at all or at commercially reasonable
rates could be materially adversely affected. Moreover, irrespective of the occurrence of such events, there can still be no assurance that we will be able to
obtain adequate insurance coverage at commercially reasonable rates or at all.
We rely on external distribution channels for passenger bookings, and major changes in the availability of external distribution channels could
undermine our customer base.
The majority of our guests book their cruises through independent travel agents, wholesalers and tour operators. In the event that these distribution
channels are adversely impacted by an economic downturn, or by other factors, this could reduce the distribution channels available for us to market and
sell our cruises and we could be forced to increase the use of alternative distribution channels we are not accustomed to. If this were to occur, it could have
an adverse impact on our financial condition and results of operations.
Additionally, independent travel agents, wholesalers and tour operators generally sell and market our cruises on a non-exclusive basis. Although we offer
commissions and other incentives to them for booking our cruises, there can be no guarantee that our competitors will not offer higher commissions and
incentives in the future. Travel agents may face increasing pressure from our competitors, particularly in the North American market, to sell and market
our competitors' cruises exclusively. If such exclusive arrangements were introduced, there can be no assurances that we will be able to find alternative
distribution channels to ensure that our customer base would not be affected.
Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and damage our reputation.
Our business is subject to various U.S. and international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or the
assertion of litigation claims and damages. In addition, improper conduct by our employees or agents could damage our reputation and/or lead to litigation
or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines. In certain circumstances, it may not be economical
to defend against such matters, and a legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to an adverse impact on
our financial condition or results of operations.
As a result of any ship-related or other incidents, litigation claims, enforcement actions and regulatory actions and investigations, including, but not limited
to, those arising from personal injury, loss of life, loss of or damage to personal property, business interruption losses or environmental damage to any
affected coastal waters and the surrounding area, may be asserted or brought against various parties, including us and/or our cruise brands. The time and
attention of our management may also be diverted in defending such claims, actions and investigations. Subject to applicable insurance coverage, we may
also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims,
actions or investigations are adversely determined.
A failure to keep pace with developments in technology could impair our operations or competitive position.
Our business continues to demand the use of sophisticated systems and technology. These systems and technologies must be refined, updated and replaced
with more advanced systems on a regular basis in order for us to meet our customers' demands and expectations. If we are unable to do so on a timely
basis or within reasonable cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our
business could suffer. We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel abatement technologies,
and a failure to do so could result in higher than anticipated costs or could impair our operating results.

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