What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-27 · 333 added, 190 removed, 432 unchanged (55% of the section changed)

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Norwegian commenced operations from Miami in 1966, launching the modern cruise industry by offering weekly departures from Miami to the Caribbean.

In February 2011, NCLH, a Bermuda limited company, was formed with the issuance to the Sponsors of, in aggregate, 10,000 ordinary shares, with a par value of $0.001 per share.

In January 2013, NCLH completed its IPO and the ordinary shares of NCLC, which were owned entirely by the Sponsors, were exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and parent company of NCLC (the “Corporate Reorganization”).

In February 2011, NCLH, a Bermuda limited company, was formed.

In January 2013, NCLH completed its IPO and the ordinary shares of NCLC were exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and parent company of NCLC (the “Corporate Reorganization”).

At the same time, NCLH contributed $460.0 million to NCLC and the historical financial statements of NCLC became those of NCLH.

The Corporate Reorganization was affected solely for the purpose of reorganizing our corporate structure.

As a result of the Secondary Equity Offerings, as of December 2018, the Sponsors no longer owned the ordinary shares they held in NCLH.

In November 2014, we completed the Acquisition of Prestige.

We believe that the combination of Norwegian and Prestige creates a cruise operating company with a rich product portfolio and strong market presence.

Additional Information

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We are a leading global cruise company which operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands.

As of December 31, 2019, we had 27 ships with approximately 58,400 Berths and had orders for 10 additional ships through 2027, subject to certain conditions.

Seven Seas Splendor was delivered in January 2020.

We have one additional Explorer Class Ship on order for delivery in the fall of 2023.

We have two Allura Class Ships on order for delivery in the winter of 2022 and spring of 2025.

Project Leonardo will introduce an additional six ships with expected delivery dates from 2022 through 2027.

These additions to our fleet will increase our total Berths to approximately 82,000.

As of December 31, 2020, we had 28 ships with approximately 59,150 Berths and had orders for nine additional ships to be delivered through 2027.

Due to COVID-19, we have temporarily suspended global cruise voyages through May 31, 2021.

We refer you to “—Impact of COVID-19” for further information.

Our brands offer itineraries to worldwide destinations including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii.

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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.

We have nine ships on order across our portfolio of brands.

For the Norwegian brand, Project Leonardo will introduce six additional ships with expected delivery dates from 2022 through 2027.

For Regent Seven Seas Cruises, we have one Explorer Class Ship on order for delivery in 2023.

For Oceania Cruises, we have two Allura Class Ships on order for delivery in 2023 and 2025.

These additions to our fleet will increase our total Berths to approximately 83,000, which includes additional Berths we plan to add to our Project Leonardo ships, subject to certain conditions.

The impacts of COVID-19 on the shipyards where our ships are under construction (or will be constructed) have resulted in some delays in expected ship deliveries, and the impacts of COVID-19 could result in additional delays in ship deliveries in the future, which may be prolonged.

Impact of COVID-19

Beginning on March 13, 2020, NCLH suspended all cruise voyages in response to COVID-19.

This suspension has been extended through May 31, 2021.

The resumption of operations will be dependent, in part, on our ability to comply with various governmental regulations, the severity and duration of the COVID-19 pandemic, the lifting of various travel restrictions and travel bans issued by various countries and communities around the world, as well as port availability.

We expect a gradual phased relaunch of our ships after the voyage suspension period, with our ships initially operating at reduced occupancy levels.

Our selection of itineraries in the short-term will be predicated by port availability and the safety of the destinations we visit.

We continue to work with our partners at ports as well as governmental agencies to address the impact that COVID-19 will have on future operations, including the ability to receive guests, potential capacity restrictions, and the need for physical distancing and other health guidelines that may be imposed on guests onboard the ship, in port facilities and while in the destinations we visit.

Our goal is to provide a safe and healthy cruise vacation while at the same time keeping the guest experience as authentic as possible.

All three of our brands afford the ability to pre-sell tickets and onboard activities in advance with long lead times ahead of sailing;

however, sales of cruises are subject to consumer discretionary spending levels and may be influenced by geopolitical events and economic conditions.

As a result of COVID-19, there are severe negative impacts on consumer spending as well as our travel advisors’ operations and their ability to book cruises.

While booking volumes since the emergence of the COVID-19 global pandemic have remained below historical levels, there continues to be demand for future cruise vacations, despite reduced marketing investments.

Refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Update Regarding COVID-19 Pandemic” for additional information.

Strategy for COVID-19

The Company has taken several actions in response to the impact on our business brought on by the COVID-19 pandemic.

Swift Execution of Financial Action Plan

Since March 2020, we launched a series of capital markets transactions to bolster our financial position during the voyage suspension period, which in aggregate raised approximately $5.6 billion.

We have also taken several additional measures to improve our liquidity through deferring certain ship milestone payments, deferring certain debt amortization payments and extending certain maturities under our debt agreements, including under our agreements with export credit agencies (“ECAs”) and related governments.

We have also undertaken several proactive cost reduction and cash conservation measures to mitigate the financial and operational impacts of COVID-19, through the reduction of capital expenditures as well as reductions in operating expenses, including ship operating expenses and selling, general and administrative expenses.

Refer to “ Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources ” for more detail regarding our COVID-19 financial action plan.

Addressed Significant Operational Challenges

In response to the COVID-19 pandemic, for the first time in the Company’s history, we implemented a voluntary suspension of global cruise voyages.

All passengers were disembarked from the 28 ships in the Company’s fleet by March 28, 2020.

After our voluntary suspension of sailings, we successfully completed the safe repatriation of our shipboard team members to their home countries around the globe.

We have repatriated shipboard team members to over 120 countries through a combination of chartered and commercial air flights as well as the use of certain of our ships.

In anticipation of a resumption of sailings following the Conditional Order and the amount of time expected to recruit, train and transport crew, we had begun the process of re-staffing a limited number of our vessels.

However, as a result of the resurgence of COVID-19 around the globe, the continued lack of port availability and permission to sail in the destinations we normally serve, along with other factors which make the timing of the resumption of cruise operations uncertain, a portion of those crew members will be repatriated in the near term.

Roadmap to Relaunch

We have developed a comprehensive and multi-faceted health and safety strategy to enhance our already rigorous protocols and address the unique public health challenges posed by COVID-19.

In July 2020, we announced a collaboration with Royal Caribbean Group to form a group of experts called the “Healthy Sail Panel” to guide the

industry in the development of new and enhanced cruise health and safety standards.

The panel is co-chaired by Dr.

Scott Gottlieb, former commissioner of the U.S.

Food and Drug Administration, and Governor Mike Leavitt, former Secretary of the U.S.

Department of Health and Human Services, and consists of globally recognized experts from various disciplines, including public health, infectious disease, biosecurity, hospitality and maritime operations.

On September 21, 2020, the expert panel published a report, which included 74 detailed best practices across five key areas of focus to protect the public health and safety of guests, crew and the communities where our cruise ships visit.

The panel also submitted its recommendations to the CDC, in response to a CDC request for public comment to inform future public health guidance and preventative measures relating to travel on cruise ships.

The panel’s recommendations are informing new detailed health and safety protocols for our return-to-service plan.

The Company continues to work with its expert advisors, the Healthy Sail Panel, and global public health authorities and government agencies to refine its comprehensive and multi-layered health and safety strategy to enhance its already rigorous health and safety standards in response to COVID-19.

On October 30, 2020, the CDC issued a Conditional Order that introduced a phased approach for the resumption of passenger cruises.

These phases include:

a) the establishment of laboratory testing of crew onboard cruise ships in U.S.

b) simulated voyages designed to test a cruise ship operator’s ability to mitigate COVID-19 on cruise ships;

c) a certification process;

and d) a return to passenger voyages in a manner that mitigates the risk of COVID-19 introduction, transmission or spread among passenger and crew onboard ships and ashore to communities.

The Conditional Order replaced the CDC’s No Sail Order that expired on October 31, 2020 and will remain in effect until the earlier of a) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, b) the CDC Director’s rescission or modification of the Conditional Order based on specific public health or other considerations, or c) November 1, 2021.

Additionally, pursuant to the Conditional Order, the CDC may issue additional requirements through technical instructions or orders as needed and the phases described above may be subject to change based on public health considerations, including the trajectory of the pandemic and the ability of cruise ship operators to successfully employ measures that mitigate the risk of COVID-19.

Significant uncertainties remain regarding specific requirements of the Conditional Order including pending technical instructions from the CDC.

We continue to work through the requirements of the Conditional Order and work with the CDC and other federal agencies, public health authorities and national and local governments in areas where we operate to take all necessary measures to protect our guests, crew and the communities visited once operations resume.

We have begun the planning process to implement some of these recommendations, including purchasing related equipment and supplies.

We expect a gradual phased relaunch of our ships after the voyage suspension period, with our ships initially operating at reduced occupancy levels.

The timing for returning our ships to service and the percentage of our fleet in service will depend on a number of factors including, but not limited to, the duration and extent of the COVID-19 pandemic, including further resurgences and new variants of COVID-19, the availability, distribution and efficacy of vaccines and therapeutics for COVID-19, our ability to comply with the Conditional Order, port availability, travel restrictions, bans and advisories and our ability to re-staff our ships and implement new enhanced health and safety protocols.

The following table presents information about our ships and their primary areas of operation based on current and future itineraries, which are subject to change.

Primary Areas of Operation

Project Leonardo 1 (2)

The Bahamas, Bermuda, Canada & New England, Caribbean, Europe

Norwegian Encore

Alaska, Bermuda, Canada & New England, Caribbean

Alaska, Caribbean, Central America

Norwegian Bliss

Alaska, Bahamas, Caribbean, Mexico-Pacific

Alaska, The Bahamas, Bermuda, Caribbean, Mexico-Pacific

Norwegian Joy

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Norwegian Escape

Caribbean, Europe

Bermuda, Canada & New England, Caribbean, Europe

Norwegian Getaway

Bahamas, Caribbean, Europe

The Bahamas, Bermuda, Caribbean, Europe

Norwegian Breakaway

Bahamas, Bermuda, Canada & New England, Caribbean

Bermuda, Canada & New England, Caribbean, Europe

Norwegian Epic

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Norwegian Gem

Bermuda, Canada & New England, Caribbean, Mexico-Pacific

The Bahamas, Bermuda, Canada & New England, Caribbean, Europe, Mexico-Pacific

Norwegian Jade

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Norwegian Pearl

Bahamas, Canada & New England, Caribbean, Europe,

The Bahamas, Bermuda, Canada & New England, Caribbean, Europe

Norwegian Jewel

Alaska, Australia & New Zealand, Hawaii, South Pacific

Alaska, Australia & New Zealand, Central America, Hawaii, Mexico-Pacific, South Pacific

Pride of America

Norwegian Dawn

Asia, Bahamas, Bermuda, Caribbean, Europe

The Bahamas, Caribbean, Europe

Norwegian Star

Europe, South America

Antarctica, Europe, South America

Norwegian Sun

Alaska, Bahamas, Caribbean, Central America

Alaska, Asia, The Bahamas, Caribbean, Central America

Norwegian Sky

Bahamas, Caribbean

The Bahamas, Caribbean

Norwegian Spirit

Africa, Asia, Europe

Africa, Alaska, Asia, Australia & New Zealand, Europe, Hawaii

Oceania Cruises

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Oceania Marina

Europe, South America

Central America, Europe, South America

Oceania Nautica

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Oceania Regatta

Alaska, Asia, Australia & New Zealand, Central America, South Pacific

Alaska, Asia, Australia & New Zealand, South Pacific

Oceania Insignia

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Australia & New Zealand, Canada & New England, Caribbean, Central America, Europe, Hawaii, South America, South Pacific

(1) The table above does not include an additional 9 ships on order.

(2) Seven Seas Splendor was delivered in January 2020.

Our Mission and Competitive Strengths

(1) The table above does not include the additional eight ships on order.

(2) The first of the Project Leonardo ships, which is expected to be delivered in the summer of 2022.

Our Mission, Competitive Strengths & Business Strategies

Our core mission is to provide exceptional vacation experiences delivered by passionate team members committed to world-class hospitality and innovation.

We believe that the following business strengths support our overall strategy to deliver on our mission:

We believe that the following business strengths support our overall strategy to

deliver on our mission.

While the COVID-19 pandemic has impacted our competitive strengths, our core mission remains intact.

Enhanced Product Offering and Guest Experience

Our portfolio of ships is comprised of a young and enhanced 28-vessel fleet.

We have invested in revitalizations to our ships, which provides an enhanced product offering that we believe delivers higher guest satisfaction and, in turn, higher pricing.

Norwegian’s ships offer up to 28 dining options, a diverse range of accommodations and what we believe is the widest array of entertainment at sea.

Oceania Cruises’ award-winning onboard dining, with multiple open seating dining venues, is a central highlight of its cruise experience.

Regent’s all-inclusive offering includes air transportation, shore excursions, pre-cruise hotel stays (for concierge level and above), specialty restaurants, premium spirits and fine wines, gratuities, Wi-Fi and other amenities.

Historically, we have continually looked for ways to enhance our already strong product offering and onboard guest experience across our three brands and in the destinations we visit.

We have done so through ship refurbishments, enhancements to dining and entertainment offerings, expansion of immersive shore excursion offerings and more.

In the current environment, we are focused on enhancing health and safety practices for our guests.

The Norwegian, Oceania Cruises and Regent brands all offer a high level of onboard service.

We collaborate amongst the brands to provide an enhanced guest experience.

Norwegian offers guests the freedom and flexibility to design their ideal cruise vacation on their schedule with no set dining times, a variety of entertainment options and no formal dress codes.

Oceania Cruises and Regent are known for their quality of service, including some of the highest crew-to-guest ratios in the industry and a staff trained to deliver personalized and attentive service.

Upon our return to service, social distancing or other guidelines may impact the guest experience.

Rich Stateroom Mix

The Norwegian, Oceania Cruises and Regent fleets offer an attractive mix of staterooms, suites and villas.

Norwegian’s accommodations include the groundbreaking Studio staterooms designed for solo travelers centered around the Studio Lounge, a private lounge area solely for Studio guests, as well as ocean views, balconies and connecting accommodations to meet the needs of all types of cruisers.

Norwegian’s suites range from two-bedroom family suites to penthouses and owner suites, as well as three-bedroom Garden Villas measuring up to 6,694 square feet.

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On board Norwegian Epic, the Breakaway Class Ships and the Breakaway Plus Class Ships, The Haven also includes a private lounge and fine dining restaurant.

Norwegian’s accommodations also include the groundbreaking Studio staterooms designed for solo travelers centered around the Studio Lounge, a private lounge area solely for Studio guests, as well as ocean views, balconies and connecting accommodations to meet the needs of all types of cruisers.

The spacious and elegant accommodations on Oceania Cruises’ six award-winning ships, the 684-Berth Regatta, Insignia, Sirena and Nautica, and the 1,250-Berth Marina and Riviera, range from 143-square foot inside staterooms to opulent 2,030-square foot owner suites.

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The two newest ships in the Regent fleet, Seven Seas Splendor and Seven Seas Explorer, also feature the Regent Suite, a 4,443 square-foot luxurious suite accommodation that includes an in-suite spa retreat, a 1,300 square-foot wraparound veranda, and a glass-enclosed solarium sitting area.

High-Quality Service

The Norwegian, Oceania Cruises and Regent brands all offer a high level of onboard service.

We collaborate amongst the brands to provide an enhanced guest experience.

Norwegian offers guests the freedom and flexibility to design their ideal cruise vacation on their schedule with no set dining times, a variety of entertainment options and no formal dress codes.

Diverse Selection of Premium Itineraries

We continually look to enhance our already broad range of premium itineraries.

Itinerary Optimization & Premium Itinerary Mix

We manage our ships’ deployments to promote a better breadth of itineraries, sell cruises further in advance and maximize profitability.

We offer a diverse selection of premium itineraries which we continually look to enhance.

Our fleet has a worldwide deployment, offering voyages ranging from three days to a 180-day around-the-world cruise.

Our vessels call on several ports 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 also developed destinations to enhance the shore experience for our guests.

In 2016, we introduced Harvest Caye in Southern Belize.

The destination features Belize’s only cruise ship pier, an expansive seven-acre white sand beach, 15,000 sq.

Our vessels call on ports 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.

Our destination management team reviews deployments across the fleet, either repositioning ships to new

destinations or fine-tuning itineraries, with the goal of diversifying our deployment and creating product scarcity which, in turn, leads to higher pricing.

We are also focused on destination development and have created two private destinations to enhance the shore experience for our guests.

We were the first cruise line to develop a private island, Great Stirrup Cay in the Bahamas.

This private destination is the Company’s 270-acre private island featuring over 1,500 feet of accessible beachfront with white sand beaches;

over 50 cabana and villa options;

an array of shore excursions including a new over water zipline experience that extends nearly 3,000 feet in length;

and on-island food and beverage offerings.

In 2019, we launched Silver Cove, the latest enhancement designed to elevate the guest experience.

This new exclusive oceanfront lagoon area includes private beachfront villas, a Mandara Spa with beachfront treatments as well as the exclusive Moët & Chandon Bar and upscale Silver Cove Restaurant and Bar.

The 38 luxury air-conditioned villas range from studios to larger one-and-two-bedroom villas, all of which include private bathroom, daybed, club chairs, televisions with on-demand entertainment, outdoor patio and lounge seating, retractable glass walls providing unobstructed views and access to the private beachfront lagoon.

In 2016, we introduced Harvest Caye, the Company’s private resort-style destination in Southern Belize.

The 75-acre destination features Belize’s only cruise ship pier, an expansive seven-acre white sand beach, 15,000 sq.

pool with swim up bar, multiple dining options and a nature center with wildlife experiences plus adventure tours.

We were the first cruise line to offer calls to a private destination at Great Stirrup Cay in the Bahamas.

Strong Cash Flow

We believe our business model will generate a significant amount of cash flow with high revenue visibility.

All three of our brands afford the ability to pre-sell tickets, receive customer deposits and sell onboard activities in advance with long lead times ahead of sailing.

In terms of newbuild capital expenditures, the cash flow impact is mitigated as we have obtained export credit financing for the ships which is expected to fund approximately 80% of the contract price of each ship expected to be delivered through 2027, subject to certain conditions.

Highly Experienced Team

Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and hospitality-related industries.

See “Information about our Executive Officers” below.

Our Business Strategies

Driving Demand

We seek to attract vacationers to our products and services in several ways, including:

● delivering an enhanced, value-added vacation experience to our guests relative to other vacation alternatives;

● creating diverse and unique itineraries in new and existing markets;

● utilizing effective marketing and sales initiatives with a market-to-fill strategy;

● strengthening our global footprint.

Our value-added-vacation product, itinerary diversification, marketing and sales initiatives and the strengthening of our global footprint contribute to driving increased revenues for our fleet.

Our market-to-fill strategy maintains pricing integrity by offering both the best price early in the booking cycle and value-added promotions when necessary to mitigate the need to compromise on price.

Our destination management team reviews deployments across the fleet, either repositioning ships to new destinations or fine-tuning itineraries, with the goal of diversifying our deployment and creating product scarcity which, in turn, leads to higher pricing.

Disciplined Fleet Expansion

For the Norwegian brand, Project Leonardo will introduce six additional ships, each ranging from approximately 140,000 to 156,300 Gross Tons with approximately 3,300 to 3,550 Berths, with expected delivery dates from 2022 through 2027.

For the Regent brand, we have one Explorer Class Ship on order to be delivered in 2023, which will be approximately 55,000 Gross Tons and 750 Berths.

For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in 2023 and 2025.

Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

We believe these new ships will allow us to continue expanding the reach of our brands, positioning us for accelerated growth and providing an optimized return on invested capital.

We have obtained export credit financing which is expected to fund approximately 80% of the contract price of each ship expected to be delivered through 2027, subject to certain conditions.

Go-to-Market and Bundling Strategy

Our revenue management function performs extensive analyses in order to determine booking history and uses trends by sailing, stateroom category, travel partner, market segment, itinerary and distribution channel in order to optimize cruise ticket revenue.

The Norwegian brand offers guests the choice of a more inclusive, value-add product offering on certain sailings and in certain stateroom selections by allowing guests to choose from multiple amenities.

Our market-to-fill strategy maintains pricing integrity by offering both the best price early in the booking cycle and value-added promotions when necessary to reduce the need to compromise on price.

This marketing strategy assists in maximizing the revenue potential from each customer contact generated.

We believe these strategies and other initiatives executed by our distribution channels will drive sustainable growth in the number of guests carried and in revenues achieved.

We also seek to increase demand through effective marketing campaigns across various channels such as branding campaigns on nationwide television, robust and varied digital campaigns or targeted mail campaigns aimed at supporting seasonal deployments.

Our sales forces are also drivers of demand, particularly in terms of educating travel advisors on our products and services in order to better sell to potential vacationers.

Lastly, our international efforts are aimed at strengthening our global footprint by increasing brand awareness across the globe which allows us to diversify our guest sourcing.

We maintain numerous sales offices which support sales and marketing efforts in various markets outside of North America including the United Kingdom, Europe, Hong Kong, Australia, New Zealand, Brazil, India, Japan and Singapore.

Maximize Revenue

We focus on growing revenue through various initiatives aimed at increasing ticket prices and Occupancy Percentages as well as onboard spending to drive higher overall revenue.

Our specific initiatives include:

Strategic Relationships.

We have strategic relationships with travel advisors and tour operators who commit to purchasing a certain level of inventory with long lead times.

Bundling Strategy.

Casino Player Strategy

We have non-exclusive arrangements with casino partners worldwide whereby loyal gaming guests are offered cruise reward certificates redeemable for cruises.

Through property sponsored events and joint marketing programs, we have the opportunity to market cruises to these guests.

Through property sponsored events and joint marketing programs, we have

the opportunity to market cruises to these guests.

These arrangements with casino partners have the dual benefit of filling open inventory and reaching guests expected to generate above average onboard revenue through the casino and other onboard spending.

Itinerary Optimization.

We manage our ships’ deployments to promote better breadth of itineraries, sell cruises further in advance and maximize profitability.

Ship Refurbishments.

We have invested in revitalizations to our ships which provides an enhanced product that we believe delivers higher guest satisfaction and, in turn, higher pricing.

Initiatives to Suppress Costs

Strengthening Our Global Footprint

Our international efforts are aimed at strengthening our global footprint by increasing brand awareness across the globe which allows us to diversify our guest sourcing.

Cost Containment Initiatives

We have a flat organizational structure which results in efficient operations with better and faster sharing of best practices.

We continue to leverage the combined purchasing power of our three brands to further reduce costs throughout the organization.

This initiative is bolstered by our Supply Chain and Logistics Management function which supports our three brands as well as our corporate and international offices.

Our new ships are designed to enhance energy efficiency and we have several initiatives in place to improve efficiency on our existing fleet.

Some of these initiatives include LED lighting upgrades, waste heat recovery, new hull coatings and itinerary optimization.

Enhanced Product Offering and Guest Experience

We believe our brands deliver a strong product offering and superb guest experience.

Norwegian’s ships offer up to 28 dining options, a diverse range of accommodations and what we believe is the widest array of entertainment at sea.

Oceania Cruises’ award-winning onboard dining, with multiple open seating dining venues, is a central highlight of its cruise experience.

We continually look for ways to enhance the already strong product offering and guest experience on board our three brands and in the destinations in which we call.

We do so through ship refurbishments, enhancements to dining and entertainment offerings, expansion of immersive shore excursion offerings and more.

Measured Fleet Expansion

Norwegian Encore was delivered in October 2019.

This ship is the largest in our fleet at approximately 169,000 Gross Tons.

With approximately 4,000 Berths, she is similar in design to Norwegian Bliss and includes additional innovative features.

Project Leonardo consists of six ships on order for the Norwegian brand with expected delivery dates through 2027, subject to certain conditions.

Each of the six Project Leonardo ships are approximately 140,000 Gross Tons and 3,300 Berths.

For the Regent brand, Seven Seas Splendor was delivered in January 2020.

We have an order for one additional Explorer Class Ship to be delivered in 2023.

Each of the Explorer Class Ships will be approximately 55,000 Gross Tons and 750 Berths.

For the Oceania Cruises brand, we have orders for two Allura Class Ships to be delivered in 2022 and 2025.

Each of the Allura Class Ships will be approximately 67,000 Gross Tons and 1,200 Berths.

We believe these new ships will allow us to continue expanding the reach of our brands, positioning us for accelerated growth and providing an optimized return on invested capital.

We have obtained export credit financing which is expected to fund approximately 80% of the contract price of each ship expected to be delivered through 2027, subject to certain conditions.

Our new ships are designed to enhance energy efficiency and we have several initiatives in place to improve efficiency on our existing fleet including LED lighting upgrades, waste heat recovery, new hull coatings and itinerary optimization.

We also continue to enhance and expand our use of digital marketing and social media to drive further cost efficiencies.

Refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for information on our current cash conservation measures.

Expand and Strengthen Our Product Distribution Channels

As part of our growth strategy, we continually look for ways to deepen and expand our sales channels.

We have strategic relationships with travel advisors and tour operators who commit to purchasing a certain level of inventory with long lead times.

The retail/travel advisor channel represents the majority of our ticket sales.

Our travel partner base is comprised of an extensive network of approximately 23,000 independent travel advisors worldwide.

Our travel partner base is comprised of an extensive network of independent travel advisors worldwide.

We have made substantial investments with improvements in booking technologies, transparent pricing strategies, effective marketing tools, improved communication and cooperative marketing initiatives to enhance and facilitate the ability of travel advisors to market and sell our products.

We have expanded sales teams who work closely with our travel advisor partners on maximizing their marketing and sales effectiveness across all three of our brands.

We have sales teams who work closely with our travel advisor partners on maximizing their marketing and sales effectiveness across all three of our brands.

Our focused account management is designed to create solutions catered to the individual retailer through product and sales training.

This education creates a deeper understanding of all our product offerings.

We continue to invest in our brands by enhancing websites, mobile applications and passenger services departments including our personal cruise consultants, who offer personalized service throughout the process of designing cruise vacations for our guests.

In 2020, we continued to support our travel advisors by protecting earned commissions on original, fully paid bookings that were canceled due to suspended voyages as a result of COVID-19.

We have invested in our brands by enhancing websites, mobile applications and passenger services departments including our personal cruise consultants, who offer personalized service throughout the process of designing cruise vacations for our guests.

We have also enhanced our capabilities to enable guests to customize their vacation experience with certain onboard product offerings.

We also have an onboard cruise sales channel where guests can book their next cruise or purchase cruise certificates to apply to their next cruise while vacationing on our ships.

When sailing resumes, we will utilize our onboard cruise sales channel where guests can book their next cruise or purchase cruise certificates to apply to their next cruise while vacationing on our ships.

Our meetings, incentives and charters channel focuses on full ship charters as well as corporate meetings and incentive travel.

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Sixthman, a subsidiary company specializing in developing and delivering music-oriented charters, provides a market that enables travel advisors to sell high-quality music experiences at sea to guests.

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.

Marketing Strategy

We significantly reduced our marketing activities in 2020 due to the suspension of cruise voyages as a result of the COVID-19 pandemic.

When timing is determined for relaunch, we expect a disciplined increase in sales and marketing activities to further drive demand.

Additionally, we will continue a deliberate approach on marketing and sales outreach to guests with future cruise credits, as a result of suspended sailings, to encourage redemption of cruise credits towards future sailings.

Building customer loyalty among our past guests is an important element of our marketing strategy.

Past guests create a cost-effective means of attracting business, particularly to our new ships and itineraries as they are familiar with our brands, products and services and often return to cruise with us.

We will continue to optimize our customer databases and targeting capabilities to further enhance our communications with our past guests who receive e-mail, direct mail and brochures with informative destination and product information and promotional amenities.

Our marketing mix includes a balance of initiatives that both allow us to build our brand awareness to attract new-to-brand customers, while also focusing on more targeted marketing communications aimed at retaining our current guest base.

Continued investments in our websites will be key not only to driving interest and bookings, but also to ensuring the optimal pre-cruise planning experience offering guests the ability to shop, reserve and purchase a breadth of onboard products and services.

We have a strong communications stream that provides customized pre-cruise information to help guests maximize their cruise experience as well as a series of communications to welcome them home post cruise to engage them in booking their next cruise vacation.

Our marketing teams work to enhance brand awareness and consideration of our products and services among consumers and travel partners with the ultimate goal of driving sales.

We utilize a multi-channel strategy that may include a combination of print, television, radio, website/e-commerce, direct mail, social media, mobile and e-mail campaigns, partnerships, customer loyalty initiatives, market research, consumer events and business-to-business events.

We continue to enhance and expand our use of digital marketing and social media to drive cost efficiencies.

Travel advisors are crucial to our marketing and distribution efforts.

We provide robust marketing support and enhanced tools for our travel advisor partners through a variety of programs.

Our travel partners can benefit from our online travel partner education programs that include a wide variety of courses about our ships, itineraries and other best-selling practices.

Advisors can also easily customize a multitude of consumer marketing materials for their use in promoting our products through our online platforms.

Guest feedback is also a critically important element in the development of our overall marketing and business strategies.

We regularly initiate guest feedback studies among both travel partners and consumers to assess the impact of various programs and/or to solicit information that helps shape future direction.

Our Commitment to Sustainability

The continued success of our business is linked to our ability to operate and grow sustainably.

We are committed to driving a positive impact on society and the environment through our Sail & Sustain global sustainability program.

Our mission is to continually improve our sustainability culture through fresh innovation, progressive education and open collaboration.

We are committed to maintaining our culture of diversity, equality and inclusion in the workplace.

We also drive social impact through our philanthropy initiatives, partnerships and community engagement program in our local communities and at the destinations we visit.

For additional information regarding our sustainability and stewardship initiatives, please visit our website at www.nclhltd.com.

Highly Experienced Management Team

Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and hospitality-related industries.

Frank Del Rio is our President and Chief Executive Officer.

Del Rio is an over 25-year cruise industry veteran who founded Oceania Cruises in 2002.

Under his leadership, Oceania Cruises grew from a fledgling start-up to a dominant player in the upscale cruise market.

He further led Oceania Cruises’ acquisition of Regent Seven Seas Cruises.

After NCLH acquired Prestige, Mr.

Del Rio led the combined company to many milestones

including expanding its fleet with the newest and most innovative ships at sea, introducing the Company’s latest private destination, Harvest Caye in Belize, and significantly strengthening its global footprint.

Kempa, our Executive Vice President and Chief Financial Officer, has been with the Company for over twenty years holding several positions of increasing responsibility in Norwegian’s finance organization, playing an instrumental role in several of the Company’s key milestones, including its successful IPO and the Acquisition of Prestige.

Robin Lindsay, our Executive Vice President, Vessel Operations, is responsible for Marine & Technical Operations, Hotel Operations, Entertainment, Product Development, Out Islands and Newbuild and Ship Refurbishment for all three of the Company's brands.

Lindsay has been with the Company for nearly two decades dating back to 2003, when he joined Oceania Cruises as Senior Vice President, Hotel Operations.

See “Information about our Executive Officers” below for more information on our highly experienced management team.

Passenger Ticket Revenue

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Our cruise ticket prices generally include cruise fare and a wide variety of onboard activities and amenities, meals, entertainment and port fees and taxes.

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.

In some instances, cruise ticket prices include round-trip airfare to and from the port of embarkation, complimentary beverages, unlimited shore excursions, free internet, valet laundry services, 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.

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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 top shelf liquors, specialty restaurants, Wi-Fi and gratuities.

Onboard and other revenue accounted for 30%, 30% and 31% of our consolidated revenue in 2019, 2018 and 2017, respectively.

Revenue Management Practices

We utilize a market-to-fill strategy to encourage guests to book earlier which extends our booking window and drives higher pricing.

Our targeted and high-frequency marketing campaigns communicate a message of a value-packed cruise offering.

We emphasize communication to keep the travel advisors engaged and informed and utilize call centers to drive high potential targeted customers and increase the effectiveness of these targeted marketing programs.

This marketing strategy assists in maximizing the revenue potential from each customer contact generated.

We believe these strategies and other initiatives executed by our distribution channels will drive sustainable growth in the number of guests carried and in Net Yields achieved.

Our revenue is seasonal and based on the demand for cruises.

Historically, the seasonality of the North American cruise industry generally results in the greatest demand for cruises during the Northern Hemisphere’s summer months.

This predictable seasonality in demand has resulted in fluctuations by quarter in our revenue and results of operations.

The seasonality of our results is increased due to ships being taken out of service for regularly scheduled Dry-docks, which we typically schedule during non-peak demand periods.

Our primary competition includes operators such as Carnival Corporation and Carnival plc, which owns and operates Carnival Cruise Line, Holland America Line, Princess Cruises and Seabourn Cruise Line, among others, and Royal Caribbean Cruises Ltd., which owns and operates Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises among others, as well as other cruise lines such as MSC Cruises, Crystal Cruises, Viking Ocean Cruises and Virgin Voyages.

Our operations are seasonal and results for interim periods are not necessarily indicative of the results for the entire fiscal year.

Historically, demand for cruises has been strongest during the Northern Hemisphere’s summer months;

however, our cruise voyages were completely suspended during the last nine months of 2020 due to the COVID-19 pandemic and such suspension has been extended through May 31, 2021.

Our primary competition includes operators such as Carnival and Royal Caribbean as well as other cruise lines such as MSC Cruises, Crystal Cruises, Viking Ocean Cruises and Virgin Voyages.

In addition, we compete with land-based vacation alternatives, such as hotels and resorts, vacation ownership properties, casinos, and tourist destinations throughout the world.

Sales of cruises and onboard offerings are subject to consumer discretionary spending levels and may be influenced by geopolitical events and economic conditions.

Marketing Strategy

Our marketing teams work to enhance brand awareness and consideration of our products and services among consumers and travel partners with the ultimate goal of driving sales.

Building customer loyalty among our past guests is an important element of our marketing strategy.

We believe that attending to the needs and motivations of our past guests creates a cost-effective means of attracting business, particularly to our new ships and itineraries, because past guests are familiar with our brands, products and services and often return to cruise with us.

We continue to optimize our customer databases and targeting capabilities to further enhance our communications with our past guests who receive e-mail, direct mail and brochures with informative destination and product information and promotional amenities.

Continued investments in our websites is also key not only to driving interest and bookings, but also to ensuring the optimal pre-cruise planning experience offering guests the ability to shop, reserve and purchase a breadth of onboard products and services.

We have a strong communications stream that provides customized pre-cruise information to help guests maximize their cruise experience as well as a series of communications to welcome them home and ultimately engage them in booking another cruise.

Travel advisors are crucial to our marketing and distribution efforts.

We provide robust marketing support and enhanced tools for our travel advisor partners through a variety of programs.

Our travel partners can benefit from our online travel partner education programs that include a wide variety of courses about our ships, itineraries and other best-selling practices.

Advisors can also easily customize a multitude of consumer marketing materials for their use in promoting our products through our online platform.

Guest feedback is also a critically important element in the development of our overall marketing and business strategies.

We regularly initiate guest feedback studies among both travel partners and consumers to assess the impact of various programs and/or to solicit information that helps shape future direction.

Ship Operations and Cruise Infrastructure

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Crew and Staff

Best-in-class guest service levels are paramount in the markets in which we operate, where travelers have discriminating tastes and high expectations for service quality.

We have dedicated increasing attention and resources to ensure that our service offerings on all of our ships meet the demands of our guests.

Best-in-class guest service levels are paramount in the markets in which we operate, where travelers have discerning tastes and high expectations for quality service.

We have dedicated resources to ensure that our service offerings on all of our ships meet the demands of our guests.

Among other initiatives, we have implemented rigorous onboard training programs, with a focus on career development.

We believe that our dedication to anticipating and meeting our guests’ every need differentiates our operations and fosters close relationships between our guests and crew, helping to build customer loyalty.

We place the utmost importance on the safety of our guests and crew.

We operate all of our vessels to meet and exceed the requirements of SOLAS and International Management Code for the Safe Operation of Ships and for Pollution Prevention (“ISM Code”), the international safety standards which govern the cruise industry.

We place the utmost importance on the safety of our guests, crew and the communities we visit.

We operate all our vessels to meet and exceed the requirements of SOLAS and International Management Code for the Safe Operation of Ships and for Pollution Prevention (“ISM Code”), the international safety standards which govern the cruise industry.

Crew members are trained in the Company’s stringent safety protocols, participating in regular safety trainings, exercises and drills onboard every one of our ships to familiarize themselves and become proficient with the safety equipment onboard.

Prior to our return to service, our crew members will be trained on our new health and safety protocols.

Our captains and chief engineers are experienced seafarers.

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Coast Guard, flag state and other port and state authorities.

Refer to “—Strategy for COVID-19” for an update on crew manning.

We maintain insurance on the hull and machinery of our ships, which are maintained in amounts related to the estimated market value of each ship.

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Our insurance coverage, including those noted above, is subject to certain limitations, exclusions and deductible levels.

Trademarks and Tradenames

Trademarks and Trade Names

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

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

We also claim common law rights in trademarks and tradenames used in conjunction with our ships, incentive programs, customer loyalty program and specialty services rendered onboard our ships for each of our brands.

We also claim common law rights in trademarks and trade names used in conjunction with our ships, incentive programs, customer loyalty program and specialty services rendered onboard our ships for each of our brands.

material intellectual property, including trade names, as of May 14, 2020 has been pledged as collateral for the 2024 Senior Secured Notes issued by NCLC.

The Regent ships have been operating under the Regent brand since 2006.

We entered into a trademark license agreement with Regent Hospitality Worldwide, Inc., which we amended in February 2011, granting us the right to use the “Regent” brand family of marks.

The amended trademark license agreement allows Regent to use the Regent tradename, in conjunction with cruises, in perpetuity, subject to the terms and conditions in the agreement.

Regulatory Issues

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

Registration of Our Ships

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Such inspections include verification of compliance with the maritime safety, security, environmental, customs, immigration, health and labor regulations applicable to each port as well as with international requirements.

Economic Substance Requirements

NCLH and NCLC are exempted companies formed under the laws of Bermuda and some of their subsidiaries have been formed in Bermuda, Guernsey, Isle of Man, British Virgin Islands, Cayman Islands or the Bahamas.

In June 2018, the European Union issued a scoping paper which set out economic substance requirements that targeted international financial centers, including the jurisdictions listed above, were required to adopt before 2019 with regard to relevant entities based in those jurisdictions.

Pursuant to the legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out relevant activities as specified in such laws, are required to demonstrate substantial economic substance in that jurisdiction.

In general terms, substantial economic substance means:

(i) the entity is actually directed and managed in the jurisdiction;

(ii) core income-generating activities relating to the applicable relevant activity are performed in the jurisdiction;

(iii) there are adequate employees in the jurisdiction;

(iv) the entity maintains adequate physical presence in the jurisdiction;

and (v) there is adequate operating expenditure in the jurisdiction.

We have evaluated the activities of NCLH, NCLC and their subsidiaries and have concluded that in some cases, those activities are 'relevant activities' for the purposes of the applicable economic substance laws and that, consequently, certain entities within our organization will be required to demonstrate compliance with these economic substance requirements.

We may be subject to increased costs and our management team may be required to devote significant time to satisfying economic substance requirements in certain of these jurisdictions.

If such entities cannot establish compliance with these requirements, we may be liable for penalties and fines in the applicable jurisdictions and/or required to re-domicile such entities to different jurisdictions.

Environmental Protection

Our ships are subject to various international, national, state and local laws and regulations relating to environmental protection, including those that govern air emissions, waste discharge, waste water management and disposal, and use and disposal of hazardous substances such as chemicals, solvents and paints.

Our ships are subject to various international, national, state and local laws and regulations relating to environmental protection, including those that govern air emissions, waste discharge, wastewater management and disposal, and use and disposal of hazardous substances such as chemicals, solvents and paints.

Under such laws and regulations, we are prohibited from discharging certain materials, such as petrochemicals and plastics, into waterways, and we must adhere to various water and air quality-related requirements.

With regard to air quality requirements, the International Maritime Organization’s (“IMO”) convention entitled Prevention of Pollution from Ships (“MARPOL”) has set a global limit on fuel sulfur content of 0.5% beginning January 2020.

With regard to air quality requirements, the IMO convention entitled Prevention of Pollution from Ships (“MARPOL”) set a global limit on fuel sulfur content of 0.5%.

Various compliance methods, such as the use of alternative fuels, or exhaust gas cleaning systems that reduce an equivalent amount of sulfur emissions, may be utilized.

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Ballast water, which is seawater held onboard ships and used for stabilization, may contain a variety of marine species.

The Convention is designed to regulate the treatment and discharge of ballast water to avoid the transfer of marine species to new, different,

or potentially unsuitable environments.

The Convention is designed to regulate the treatment and discharge of ballast water to avoid the transfer of marine species to new, different, or potentially unsuitable environments.

Applicable vessels sailing in specific itineraries have also been upgraded with ballast water treatment systems to further prevent the spread of invasive species.

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Ships are generally required to be equipped with either approved sewage treatment plants, disinfecting systems or sewage holding tanks.

Recently adopted amendments to MARPOL will make the Baltic Sea a “Special Area” where sewage discharges from passenger ships will be prohibited.

Recently adopted amendments to MARPOL will make the Baltic Sea a “Special Area” where sewage discharges from passenger ships will be prohibited unless they comply with Resolution MEPC 227(64) adopted by the Marine Environmental Protection Committee (“MEPC”) of the IMO.

Stricter discharge restrictions went into effect for new passenger ships in 2019, and for existing passenger ships starting in 2021.

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The legislation also provides that repeat violators of the regulations could be prohibited from operating in Alaskan waters.

The European Union (“EU”) has also adopted a substantial and diverse range of environmental measures aimed at maintaining or improving the quality of the environment.

To support the implementation and enforcement of European environmental legislation, the EU has adopted directives on environmental liability and enforcement as well as a recommendation providing for minimum criteria for environmental inspections.

With regard to air emissions from seagoing ships, the EU requires the use of low sulfur (less than 0.1%) marine gas oil in EU ports.

Passenger ships on regular service to EU ports (and not operating in an ECA) are required to use fuels containing a maximum sulfur content of 1.5%.

The EU has set January 2020 as the compliance date for the 0.5% fuel sulfur limit within their jurisdictional waters.

The European Union (“E.U.”) has also adopted a substantial and diverse range of environmental measures aimed at maintaining or improving the quality of the environment.

To support the implementation and enforcement of European environmental legislation, the E.U.

has adopted directives on environmental liability and enforcement as well as a recommendation providing for minimum criteria for environmental inspections.

With regard to air emissions from seagoing ships, the E.U.

requires the use of low sulfur (less than 0.1%) marine gas oil in E.U.

As of January 1, 2020, all non-ECA waters have a 0.5% fuel sulfur limit.

In addition to the existing legal requirements, we are committed to helping to preserve the environment, because a clean, unspoiled environment is a key element that attracts guests to our ships.

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This voluntary standard sets requirements for establishment and implementation of a comprehensive environmental management system which we have adopted for our operations.

Currently we operate under an Environmental Management System that is incorporated into the Company’s SMS and promote environmental awareness among our stakeholders both through our Sail & Sustain program and annual Stewardship Report.

Currently we operate under an Environmental Management System that is incorporated into the Company’s SMS and promote environmental awareness among our stakeholders both through our corporate global sustainability program, Sail & Sustain, and our annual Stewardship Report.

If we violate or fail to comply with environmental laws, regulations or treaties, we could be fined or otherwise sanctioned by regulators.

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We currently hold a concession permit allowing for 41 calls annually through September 30, 2029.

Passenger Well-Being

Passenger and Crew Well-Being

In the U.S., we must meet the U.S.

Public Health Service’s requirements, which include vessel ratings by inspectors from the Vessel Sanitation Program of the Centers for Disease Control and Prevention (“CDC”) and the FDA.

Public Health Service’s requirements, which include vessel ratings by inspectors from the Vessel Sanitation Program of the CDC and the FDA.

We rate at the top of the range of CDC and FDA scores achieved by the major cruise lines.

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Public Health Service have agreed on regulations for food, water and hygiene, aimed at proactively protecting the health of travelers and preventing illness transmission to U.S.

We refer you to “—Strategy for COVID-19—Roadmap to Relaunch” for further information.

Security and Safety

The IMO has adopted safety standards as part of the SOLAS convention, which apply to all of our ships.

The IMO has adopted safety standards as part of the SOLAS convention, which apply to all our 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 our guests and crew.

All of our crew undergo regular security and safety training exercises that meet all international and national maritime regulations.

All our crew undergo regular security and safety training exercises that meet all 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”).

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The SOLAS regulation implemented Long-Range Identification and Tracking.

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

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

In addition to the requirements of the ISPS Code, the U.S.

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while docking at ports in the U.S.

Coast Guard has published MTSA regulations that require a security plan for every ship entering the territorial waters of the U.S., provide for identification

requirements for ships entering such waters and establish various procedures for the identification of crew members on such ships.

Coast Guard has published MTSA regulations that require a security plan for every ship entering the territorial waters of the U.S., provide for identification requirements for ships entering such waters and establish various procedures for the identification of crew members on such ships.

The Transportation Workers Identification Credential is a U.S.

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The guarantee requirements are subject to additional consumer price index-based adjustments.

Also, our brands have a legal requirement to maintain security guarantees based on cruise business originated from the U.K., and certain jurisdictions require us to establish financial responsibility to meet liability in the event of non-performance of our obligations to passengers from those jurisdictions.

As of December 31, 2019, we have in place approximately British Pound Sterling 41.5 million of security guarantees for our brands as well as a consumer protection policy covering up to €110.0 million.

In addition, our brands have a legal requirement to maintain security guarantees based on cruise business originated from the U.K., and certain jurisdictions require us to establish financial responsibility to meet liability in the event of non-performance of our obligations to passengers from those jurisdictions.

As of December 31, 2020, we have in place approximately £39.3 million of security guarantees for our brands as well as a consumer protection policy covering up to £48.3 million.

The Company has provided approximately $30.5 million in cash to secure all the financial security guarantees required.

Compliance with these regulations has had an impact on our financial condition.

From time to time, various other regulatory and legislative changes have been or may in the future be proposed that may have an effect on our operations in the U.S.

and the cruise industry in general.

We cannot estimate the expenses we may incur to comply with potential new laws or changes to existing laws, or the other potential effects these laws may have on our business.

For information regarding risks associated with our compliance with legal and regulatory requirements, see Part I Item 1A-Risk Factors in this annual report on Form 10-K, including the risk factor titled “We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and regulations, which could adversely affect our operations and any changes in the current laws and regulations could lead to increased costs or decreased revenue.”

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(a) it is organized in a qualified foreign country, which is one that grants an “equivalent exemption” from tax to corporations organized in the U.S.

in respect of each category of shipping income for which exemption is being

claimed under Section 883;

in respect of each category of shipping income for which exemption is being claimed under Section 883;

and (b) either:

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Treasury Regulations require a foreign corporation and certain of its direct and indirect shareholders to satisfy detailed substantiation and reporting requirements.

NCLH is incorporated in Bermuda, a qualified foreign country which grants an equivalent exemption, and NCLH meets the publicly traded test because its ordinary shares were primarily and regularly traded on the Nasdaq Stock Market (the “Nasdaq”) until December 18, 2017, and since December 19, 2017, have been primarily and regularly traded on the New York Stock Exchange (“NYSE”).

Both the Nasdaq and the NYSE are considered to be established securities markets in the U.S.

The NYSE is considered to be an established securities market in the U.S.

Therefore, we believe that NCLH qualifies for the benefits of Section 883.

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Any outstanding shares held in excess of the 4.9% limit will be transferred to and held in a trust.

federal income tax purposes, Regent and its non-U.S.

subsidiaries are disregarded as entities separate from their immediate foreign parent and Oceania Cruises was treated as a corporation until December 31, 2017, and a disregarded entity as of January 1, 2018.

For 2020, 2019 and 2018, both Regent and Oceania Cruises relied on NCLH’s ability to meet the requirements necessary to qualify for the benefits of Section 883 as discussed above.

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If we do not qualify for exemption under Section 883, or if the provision was repealed, then any U.S.-sourced shipping income or any other income that is considered to be effectively connected income would be subject to U.S.

federal corporate income taxation on a net basis (generally at a 21% rate) and state and local taxes, and our effectively

connected earnings and profits may also be subject to an additional branch profits tax of 30%, unless a lower treaty rate applies (the “Net Tax Regime”).

federal corporate income taxation on a net basis (generally at a 21% rate) and state and local taxes, and our effectively connected earnings and profits may also be subject to an additional branch profits tax of 30%, unless a lower treaty rate applies (the “Net Tax Regime”).

source shipping income is considered effectively connected income if we have, or are considered to have, a fixed place of business in the U.S.

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Gains from the sale of vessels should generally also be exempt from tax under Section 883 provided NCLH qualifies for exemption from tax under Section 883 in respect of our shipping income.

If, however, our gain does not qualify for exemption under Section 883, or if the provision was repealed, then such gain could be subject to either the Net Tax Regime or the 4% Tax Regime.

If, however, our gain does not qualify for

exemption under Section 883, or if the provision was repealed, then such gain could be subject to either the Net Tax Regime or the 4% Tax Regime.

Certain State, Local and Non-U.S.

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Income Tax Treaty on income derived in respect of our U.S.-flagged operation.

As of December 31, 2019, we employed approximately 4,000 employees worldwide in our shoreside operations and approximately 32,000 shipboard employees.

Regent and Oceania Cruises’ ships also utilize a third party to provide additional hotel and restaurant employees onboard.

We refer you to “Risk Factors—Our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues may materially adversely affect our business, financial condition and results of operations” for more information regarding our relationships with union employees and our collective bargaining agreements that are currently in place.

Human Capital

At NCLH, our culture is defined by our corporate values of flawless execution, dedication to family and community, spirit of entrepreneurship, financial excellence and environmental stewardship.

These values were internally developed and are authentic to our Company as they define success in our culture and establish the foundation upon which it is built.

We believe our culture and commitment to our team members attract and retain top talent, while simultaneously providing robust career development opportunities that ultimately results in significant value to our Company and its shareholders.

As of December 31, 2020, we employed approximately 3,300 full-time employees worldwide in our shoreside operations and approximately 31,000 shipboard employees.

Regent and Oceania Cruises’ ships use a third party to provide additional hotel and restaurant staffing onboard.

We refer you to “Item 1A—Risk Factors—Our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues may materially adversely affect our business, financial condition and results of operations” for more information regarding our relationships with union employees and our collective bargaining agreements that are currently in place.

Diversity, Equity and Inclusion

Our Company is committed to fostering an inclusive workforce, where diverse backgrounds are represented, engaged and empowered to generate and execute on innovative ideas.

Our commitment to diversity and inclusion is demonstrated by our Board of Directors, which is 30% female and 50% diverse.

Our commitment to seeking female and minority candidates as well as candidates with diverse backgrounds is formalized in our Corporate Governance Guidelines.

Our Company operates globally, with team members representing more than 120 countries.

To foster a diverse and inclusive culture, we seek to leverage the talents of all team members, commit to equal employment opportunity (“EEO”) as detailed in our Company’s EEO policy, and deliver unconscious bias, microaggressions and diversity and inclusion training.

We have long-term partnerships with the National Diversity Council, sponsoring the Florida Diversity Council and its South Florida local chapter.

We also partner with the prestigious International Women’s Forum Fellows Program.

As of December 31, 2020, the composition of our workforce was as follows:

Gender diversity (1)

All shoreside team members

Shoreside Managers/above

All shipboard team members

3-stripe/above (equivalent to Manager level)

Ethnic diversity (2)

All shoreside team members in the U.S.

who have self-identified

Shoreside Managers/above in the U.S.

who have self-identified

(1) While we present male and female, we acknowledge this is not fully encompassing of all gender identities.

(2) Under-represented minority (“URM”) is used to describe diverse populations, including Native American, Asian, Black, Hispanic/Latino and Native Hawaiian team members in the U.S.

We do not generally track ethnicity/race for our shipboard team members as the majority are URMs from a U.S.

Compensation and Benefits

Critical to our success is identifying, recruiting, retaining top talent and incentivizing existing and future team members.

We attract and retain talented team members by offering competitive compensation and benefits.

Our pay-for-performance compensation philosophy for our shoreside team is based on rewarding each team member’s individual contributions.

We use a combination of fixed and variable pay components including base salary, bonus, equity, commissions and merit increases.

We maintain a long-term incentive plan for our manager-level team members and above that allows us to provide share-based compensation to enhance our pay-for-performance culture and to support our attraction, retention and motivational goals.

Our compensation programs for our shipboard team are similarly competitive and for the majority of this team, negotiated with various unions and documented in collective bargaining agreements.

The success of our Company is connected to the well-being of our team members, such that we offer a competitive benefits package including physical, financial and emotional well-being benefits.

We offer our full-time U.S.

shoreside team members a choice of Company-subsidized medical and dental programs to meet their needs and those of their families.

In addition, we offer health savings and flexible spending accounts, vision cover, paid time off, employee assistance programs, short term disability and voluntary long-term disability insurance, term life and business travel insurance.

Additionally, we offer a 401(k) retirement savings plan, education assistance including tuition reimbursement and student loan repayment.

Our benefits vary by location and are designed to meet or exceed local requirements and to be competitive in the marketplace.

In response to the COVID-19 pandemic, we repatriated our non-essential crew members and transitioned our shoreside team to a remote work environment, which currently remains in place.

Our crew repatriation was carried out as quickly as possible given constraints presented by travel restrictions, regulatory requirements and other challenges.

We utilized air charters and commercial flights as well as certain of our own vessels to transport crew home.

During this time, our crew were compensated according to their respective Collective Bargaining Agreements and were provided WiFi, medical care, accommodations and a daily onboard stipend when in stand down status after the conclusion of their contract.

They had continual access to medical professionals to support their physical and mental well-being.

The Company also funded housing expenses if quarantine was required upon arrival.

While crew members are at home the Company maintains regular contact and provides business updates on our Company as well as the state of the industry to keep them informed.

Due to the global suspension of our cruise voyages since March 13, 2020, we took certain actions to preserve liquidity.

We reduced our salary and benefit expense to a level more commensurate with our operations by reducing salaries and hours worked by 20% across the board during 2020, furloughing certain shoreside team members and generally not backfilling vacated positions.

The furlough program was chosen over a reduction in force as it facilitated retention of our valued team members while we await a return to sailing.

Consistent with our family-centric culture, we continued the

employer subsidy for medical cover for our furloughed team members, and in addition, funded the team member’s portion for our furloughed team and their dependents.

We also participated in short time compensation programs in Florida and Arizona to support our team members on 20% reduced hours to receive benefits from their state unemployment offices.

Our shoreside offices monitor and follow government legislation and guidance and are prepared to return to our office environments when it is deemed safe to do so.

For the protection of our shipboard team members, guests, and communities we visit, our Healthy Sail Panel has developed a comprehensive and multi-faceted health and safety strategy to enhance our already rigorous protocols and address the unique public health challenges posed by the COVID-19 pandemic.

Training and Development

The opportunity to grow and develop skills and experience, regardless of job role, division or geographic location is critical to the success of the Company as a global organization.

We actively foster a culture of learning and offer a variety of developmental courses for our team members.

We provide a mentorship program where even our most senior leaders actively participate.

Succession planning is part of our culture.

We have a year-round focus on providing team members with opportunities to develop their leadership skills and add to our bench of talent through various training initiatives.

Succession planning and talent review programs allow us to continuously calibrate and evaluate high potential talent, offering talent rotations and investing in development for long-term success.

Shipboard team members have the opportunity to learn the skills and responsibilities of another position in a different department, either to increase their effectiveness in the Company, or to give them the opportunity to shift their career path.

Retention and Engagement

We have a history of strong retention rates across our shoreside and shipboard teams which we attribute to our culture that allows our team members to thrive and achieve their career goals.

Our voluntary retention rate throughout 2020 remained at historical levels despite the impact that the COVID-19 pandemic has had on our Company and industry.

We implemented a Standby Pay program in 2020 to retain our key shipboard officers who are off their normal contract rotation, which will facilitate our return to service with our experienced team.

Exceptional team members are recognized by a robust annual Award of Excellence recognition program which acknowledges and rewards individual team members and teams for their demonstration of Company values.

We recently developed the Kloster Visionary Award which honors the Company’s founder, Knut Kloster, by recognizing a team member whose spirit of innovation follows in the footsteps of this visionary.

Through the shipboard Vacation Hero Awards program, shipboard supervisors and management recognize select shipboard team members that have proven to be outstanding in selected categories.

This award program is designed to provide recognition and promote total guest satisfaction by encouraging and rewarding team members for demonstrating excellence in service, teamwork, attitude and leadership.

Ports and Facilities

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We also operate a cruise destination in Belize, Harvest Caye, which we introduced in November 2016.

We have agreed to develop, in conjunction with PortMiami, a new terminal, which will be our primary facility at the port.

We have developed, in conjunction with PortMiami, a new terminal, which will be our primary facility at the port.

In addition, we have entered into various agreements relating to port or berthing rights for our ships, which include the following:

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● contracts for the Port of New Orleans, PortMiami, Port Canaveral, Manhattan Cruise Terminal, A.J.

Juneau Dock, Ogden Point Cruise Ship Terminal in Victoria, BC, Puerto Costa Maya, Port of Roatan, Puerto Plata, and various Hawaiian ports pursuant to which we receive preferential Berths to the exclusion of other vessels for certain specified days of the week at the terminals.

Juneau Dock, Ogden Point Cruise Ship Terminal in Victoria, BC, Port of Southampton, Puerto Costa Maya, Port of Roatan, Puerto Plata, and various Hawaiian ports pursuant to which we receive preferential Berths to the exclusion of other vessels for certain specified days of the week at the terminals.

● a concession permit with the U.S.

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● an agreement with the Port of Seattle for a 15-year lease through October 2030 with an option to extend the agreement for an additional five years.

● an agreement with the Huna Totem Corporation to develop a second pier in Icy Strait Point, Alaska, which includes preferential berthing rights.

● a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, which allows for construction of a new double ship pier in Ward Cove, Ketchikan, Alaska.

The pier will be built to simultaneously accommodate two of Norwegian Cruise Line’s 4,000 passenger Breakaway Plus Class Ships and is expected to be ready for the summer 2020 season.

● an agreement with the Huna Totem Corporation that includes preferential berthing rights, for which a second pier in Icy Strait Point, Alaska has been developed.

● a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, who has constructed a new double ship pier in Ward Cove, Ketchikan, Alaska.

The pier has been built to simultaneously accommodate two of Norwegian Cruise Line’s 4,000 passenger Breakaway Plus Class Ships.

Available Information

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We also maintain an Internet site at http://www.nclhltdinvestor.com .

We will, as soon as reasonably practicable after we electronically file or furnish our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports, if applicable, make available such reports free of charge on our

Our website also contains other items of interest to our investors, including, but not limited to, investor events, press and earnings releases and sustainability initiatives.

Our website and the information contained therein or connected thereto are not incorporated into this annual report on Form 10-K.

References to our website throughout this annual report and the information contained therein or connected thereto are provided for convenience only and the content thereof is not incorporated into, and does not constitute a part of, this annual report on Form 10-K.

Information about our Executive Officers

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Del Rio has served as President and Chief Executive Officer of NCLH since January 2015 and became a director of NCLH in August 2015.

Del Rio has been responsible for the successful integration of NCLH and Prestige and oversees the financial, operational and strategic performance of the Norwegian, Regent and Oceania Cruises brands.

Del Rio has been responsible for the successful integration of NCLH and Prestige

and oversees the financial, operational and strategic performance of the Norwegian, Regent and Oceania Cruises brands.

Del Rio founded Oceania Cruises in October 2002 and served as Chief Executive Officer of Prestige or its predecessor from October 2002 through September 2016.

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Prior to that, he served as Interim Chief Financial Officer from March 2018 to August 2018 and as NCLH’s Senior Vice President, Finance, from November 2014 to August 2018.

From September 2008 to November 2014, he served as Vice President, Corporate and Capital Planning, and was an instrumental figure in the completion of NCLH’s IPO in 2013.

From September 2008 to November 2014, he served as Vice President, Corporate and Capital Planning, and was an instrumental figure in the completion of NCLH’s IPO in 2013 and the Acquisition of Prestige in 2014.

From January 2007 to August 2008, he served as Director, Corporate and Capital Planning.

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Binder was the President of Meadowoods Consulting, which provided consulting services to the financial and travel services industries.

From 1992 to 2001, he held several executive posts in the cruise industry.

Binder also held senior management positions at JP Morgan Chase, where he was a Strategic Planning

Officer, and at Renaissance Cruises, where he was Vice President of Sales.

From 1992 to 2001, he held several executive positions in the cruise industry.

Binder also held senior management positions at JP Morgan Chase, where he was a Strategic Planning Officer, and at Renaissance Cruises, where he was Vice President of Sales.

Binder earned master’s degrees in both Finance and Marketing from Cornell University and did his undergraduate studies at Purdue University.

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From February 2015 until May 2015, he served as Executive Vice President and Chief Integration Officer for NCLH.

Sommer previously served as Senior Vice President and Chief Marketing Officer of Prestige from October 2013 until February 2015, Senior Vice President, Finance, and Chief Information Officer of Prestige from September 2011 until October 2013 and Senior Vice President, Accounting, Chief Accounting Officer and Controller of Prestige from August 2009 until August 2011.

Accounting, Chief Accounting Officer and Controller of Prestige from August 2009 until August 2011.

Prior to joining Prestige, Mr.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business