Norwegian Cruise Line Holdings Stock

Norwegian Cruise Line Holdings Ltd. (Norwegian) operates as a global cruise company, which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands.

The company's brands offer itineraries to worldwide destinations, including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. Norwegian's U.S.-flagged ship, Pride of America, provides the industry's only entirely inter-island itinerary in Hawaii.

All of the company's brands offer an assortment of features, amenities and activities, including a variety of accommodations, multiple dining venues, bars and lounges, spa, casino and retail shopping areas and numerous entertainment choices. All brands also offer a selection of shore excursions at each port of call, as well as hotel packages for stays before or after a voyage.

As of December 31, 2023, the company had 32 ships with approximately 66,500 Berths. During 2023, the company took delivery of three ships. In April 2023, the company took delivery of Oceania Cruises' Vista, in August 2023 the company took delivery of Norwegian Viva, and in November 2023 the company took delivery of Seven Seas Grandeur. The company has orders for five additional ships to be delivered. For the Norwegian brand, the company has four Prima Class Ships on order, with currently scheduled delivery dates from 2025 through 2028. For Oceania Cruises, the company has one Allura Class Ship on order for delivery in 2025. These additions to the company's fleet are expected to increase the company's total Berths to approximately 82,500.

In 2023, the company would improve the connectivity for guests and crew at sea by offering Space X's Starlink high-speed internet on the company's ships, which is expected to be completed for the entire fleet in 2024.

Strategy

As part of the company's growth strategy, the company continually looks for ways to deepen and expand the company's sales channels. The company maintains numerous sales offices, which support sales and marketing efforts in various markets outside of North America, including the United Kingdom, Europe, Asia, Australia and Brazil.

Passenger Ticket Revenue

The company offers its guests a wide variety of options when booking a cruise. The company's cruise ticket prices generally include cruise fare and an array of onboard activities and amenities, meals, entertainment and government taxes, fees and port expenses. In some instances, cruise ticket prices include round-trip airfare to and from the port of embarkation, complimentary beverages, unlimited shore excursions, internet, valet laundry services, pre-cruise hotel packages, as well as pre- or post-cruise land packages at many destinations the company sail to around the world. Prices vary depending on the particular cruise itinerary, voyage length, stateroom category selected, added inclusions and the time of year that the sailing 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, shore excursions, gift shop purchases, spa services, Wi-Fi services and other similar items. Food and beverage, casino operations and shore excursions are generally managed directly by the company while retail shops, spa services, art auctions and internet services may be managed through contracts with third-party concessionaires. These contracts generally entitle the company to a percentage of 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. To maximize onboard revenue, all three brands use 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' ticket prices may include air transportation and certain other amenities. Regent's ticket prices typically include air transportation, unlimited shore excursions, a pre-cruise hotel night stay (for concierge level and above), premium wines and liquors, specialty restaurants, Wi-Fi, valet laundry and gratuities.

Seasonality

The company's operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year (year ended December 2023). Historically, demand for cruises has been strongest during the Northern Hemisphere's summer months, which has resulted in fluctuations by quarter in the company's revenue and results of operations. The seasonality of the company's results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which the company typically schedule during non-peak demand periods.

Competition

The company's primary competition includes operators such as Carnival and Royal Caribbean as well as other cruise lines such as MSC Cruises, Viking Ocean Cruises and Virgin Voyages.

Ship Operations and Cruise Infrastructure

Ship Maintenance and Logistics

Sophisticated and efficient maintenance and operations systems support the technical capabilities and modern look of the company's fleet. In addition to routine repairs and maintenance performed on an ongoing basis and in accordance with applicable requirements, each of the company's ships is generally taken out of service, approximately every 24 to 60 months, for a period of one or more weeks for scheduled maintenance work, repairs and improvements performed in Dry-dock. Dry-dock interval is a statutory requirement controlled under IMO requirements reflected in chapters of the International Convention of the Safety of Life at Seas ('SOLAS') and to some extent the International Load Lines Convention. Under these regulations, it is required that a passenger ship Dry-dock once in five years (depending on age of vessel) or twice in five years (depending on flag state and age of vessel) and the maximum interval between each Dry-dock cannot exceed three years (depending on flag state and age of vessel). However, most of the company's international ships qualify under a special exemption provided by The Bahamas and/or Marshall Islands (flag state), as applicable, after meeting certain criteria set forth by the ship's flag state to Dry-dock once every five years. To the extent practical, each ship's crew, catering and hotel staff remain with the ship during the Dry-dock period and assist in performing repair and maintenance work. Accordingly, Dry-dock work is typically performed during non-peak demand periods to minimize the adverse effect on revenue that results from ships being out of service. Dry-docks are typically scheduled in spring or autumn and depend on shipyard availability. The company typically takes this opportunity to upgrade the vessels in all areas of both guest-facing services and innovative compliance technology.

Trademarks and Trade Names

Under the Norwegian brand, the company owns a number of registered trademarks relating to, among other things, the names 'NORWEGIAN CRUISE LINE' and 'FEEL FREE,' the names of the company's ships (except where trademark applications for these have been filed and are pending), incentive programs and specialty services rendered on the company's ships and specialty accommodations such as 'THE HAVEN BY NORWEGIAN.' In addition, the company owns registered trademarks relating to the 'FREESTYLE' family of names, including, 'FREESTYLE CRUISING,' 'FREESTYLE DINING' and 'FREESTYLE VACATION.' These trademarks are widely recognized throughout North America, Europe and other areas of the world.

Under the Oceania Cruises brand, the company owns a number of registered trademarks relating to, among other things, the names 'OCEANIA CRUISES' and its logo, 'REGATTA,' 'INSIGNIA,' and 'YOUR WORLD. YOUR WAY.'

Under the Regent brand, the company owns registered trademarks relating to, among other things, the names 'SEVEN SEAS CRUISES' and 'AN UNRIVALED EXPERIENCE', as well as the names of the company's ships (except where trademark applications have been filed and are pending).

The company entered into a trademark license agreement with Regent Hospitality Worldwide, Inc., which the company amended in February 2011, granting the company the right to use the 'Regent' brand family of marks. The amended trademark license agreement allows Regent to use the Regent trade name, in conjunction with cruises, in perpetuity, subject to the terms and conditions in the agreement.

Regulatory Matters

The company's ships registered in The Bahamas and the Marshall Islands are inspected at least annually pursuant to Bahamian and Marshall Islands requirements and are subject to International laws and regulations and to various U.S. federal regulatory agencies, including but not limited to, the U.S. Public Health Service and the U.S. Coast Guard. The company's U.S.-registered ship is subject to laws and regulations of the U.S. federal government, including, but not limited to, the Food and Drug Administration ('FDA'), the U.S. Coast Guard, and the U.S. Department of Labor.

For the company's affected ships, all of the U.S. National Pollutant Discharge Elimination System requirements are set forth in the Environmental Protection Agency's Vessel General Permit ('VGP').

The Oil Pollution Act of 1990 (OPA 90) requires that in order for the company to operate in the U.S. waters, the company must have Certificates of Financial Responsibility ('COFR') from the U.S. Coast Guard for each ship. The company's continued OPA 90 certification signifies its ability to meet the requirements for related OPA 90 liability in the event of an oil spill or release of a hazardous substance.

In connection with certain Alaska cruise operations, the company relies on concession permits from the U.S. National Park Service to operate the company's ships in Glacier Bay National Park and Preserve. The company holds a concession permit allowing for 41 calls annually through September 30, 2029.

In the U.S., the company must meet the U.S. Public Health Service's requirements, which include vessel ratings by inspectors from the Vessel Sanitation Program of the CDC and the FDA.

The company continues to work directly with the CDC Maritime Unit, as well as other health regulatory authorities, such as E.U. Healthy Gateways, to adjust the company's infectious disease (COVID-19, influenza, noro virus) response protocols.

The IMO has adopted safety standards as part of the SOLAS convention, which apply to all the company's ships. SOLAS establishes requirements for vessel design, structural features, construction methods and materials, refurbishment standards, life-saving equipment, fire protection and detection, safe management and operation and security in order to help ensure the safety and security of the company's guests and crew. All the company's crew undergo regular security and safety training exercises pursuant to international and national maritime regulations.

SOLAS requires that all cruise ships are certified as having safety procedures that comply with the requirements of the International Management Code for the Safe Operation of Ships and for Pollution Prevention ('ISM Code'). All of the company's ships are certified as to compliance with the ISM Code.

All the company's ships are in compliance with the requirements of SOLAS as amended and/or as applicable to the keel-laying date.

History

Norwegian Cruise Line Holdings Ltd. was founded in 1966. The company was incorporated in 2011.