Royal Caribbean Cruise Lines 2012 Annual Report Download - page 24

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20
PART I
functionality on their respective internet sites for
selecting shore excursions, specialty dining and
amenities prior to embarkation.
In conjunction with our cruise vacations, we offer pre-
and post-cruise hotel packages to our Royal Caribbean
International, Celebrity Cruises and Azamara Club
Cruises guests. Pullmantur offers land-based travel
packages to European vacation travelers including
hotels and flights to Caribbean resorts and sells
land based tour packages to Europe aimed at Latin
American guests. Pullmantur also owns a 49% interest
in an air business that operates four Boeing 747 air-
craft in support of its cruise and tour operations. In
addition, we sell cruise vacation protection coverage,
which provides guests with coverage for trip cancella-
tion, medical protection and baggage protection. We
expect to offer these programs more globally in 2013.
Onboard and other revenues accounted for approxi-
mately 27% of total revenues in 2012, 2011 and 2010.
SEGMENT REPORTING
We operate five wholly-owned cruise brands, Royal
Caribbean International, Celebrity Cruises, Azamara
Club Cruises, Pullmantur and CDF Croisières de
France. In addition, we have a 50% investment in a
joint venture with TUI AG which operates the brand
TUI Cruises. We believe our global brands possess the
versatility to enter multiple cruise market segments
within the cruise vacation industry. Although each
of our brands has its own marketing style as well as
ships and crews of various sizes, the nature of the
products sold and services delivered by our brands
share a common base (i.e. the sale and provision of
cruise vacations). Our brands also have similar itiner-
aries as well as similar cost and revenue components.
In addition, our brands source passengers from similar
markets around the world and operate in similar eco-
nomic environments with a significant degree of com-
mercial overlap. As a result, our brands (including TUI
Cruises) have been aggregated as a single reportable
segment based on the similarity of their economic
characteristics, types of consumers, regulatory envi-
ronment, maintenance requirements, supporting sys-
tems and processes as well as products and services
provided. Our Chairman and Chief Executive Officer
has been identified as the chief operating decision-
maker and all significant operating decisions including
the allocation of resources are based upon the analy-
ses of the Company as one segment. (For financial
information see Item 8. Financial Statements and
Supplementary Data.)
EMPLOYEES
As of December 31, 2012, we employed approximately
62,000 employees, including 55,000 shipboard
employees as well as 6,200 full-time and 750 part-
time employees in our shoreside operations. As of
December 31, 2012, approximately 80% of our ship-
board employees were covered by collective bargain-
ing agreements. Based on employee survey results,
we believe our employees’ satisfaction level with our
organization is strong.
INSURANCE
We maintain insurance on the hull and machinery
of our ships, which includes additional coverage for
disbursements, earnings and increased value, which
are maintained in amounts related to the value of
each ship. The coverage for each of the hull policies is
maintained with syndicates of insurance underwriters
from the British, Scandinavian, French, United States
and other international insurance markets.
We maintain liability protection and indemnity insur-
ance for each of our ships through either the United
Kingdom Mutual Steam Ship Assurance Association
(Bermuda) Limited, the Steamship Mutual Underwriting
Association (Bermuda) Limited or the Assurancefore-
ningen SKULD (Gjensidig). Our protection and indem-
nity liability insurance is done on a mutual basis and
we are subject to additional premium calls in amounts
based on claim records of all members of the mutual
protection and indemnity association. We are also
subject to additional premium calls based on invest-
ment shortfalls experienced by the insurer.
We maintain war risk insurance which covers damage
due to acts of war, including invasion, insurrection,
terrorism, rebellion, piracy and hijacking, on each ship,
through a Norwegian war risk insurance organization.
This coverage includes coverage for physical damage
to the ship which is not covered under the hull poli-
cies as a result of war exclusion clauses in such hull
policies. We also maintain protection and indemnity
war risk coverage for risks that would be excluded by
the rules of the indemnity insurance organizations,
subject to certain limitations. Consistent with most
marine war risk policies, under the terms of our war
risk insurance coverage, underwriters can give seven
days notice to us that the policy will be canceled and
reinstated at higher premium rates.
Insurance coverage for shoreside property, shipboard
inventory, and general liability risks are maintained
with insurance underwriters in the United States and
the United Kingdom.