Royal Caribbean Cruise Lines 2013 Annual Report Download - page 34
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PART I
Environmental, labor, health and safety, financial
responsibility and other maritime regulations could
affect operations and increase operating costs.
The United States and various state and foreign gov-
ernment or regulatory agencies have enacted or are
considering new environmental regulations or policies,
such as requiring the use of low sulfur fuels, increas-
ing fuel efficiency requirements, further restricting
emissions, or other initiatives to limit greenhouse gas
emissions that could increase our cost for fuel, cause
us to incur significant expenses to purchase and/or
develop new equipment and adversely impact the
cruise vacation industry. Some environmental groups
have also lobbied for more stringent regulation of
cruise ships and have generated negative publicity
about the cruise vacation industry and its environ-
mental impact. See Item 1. Business-Regulation-
Environmental Regulations. An increase in fuel prices
not only impacts our fuel costs, but also some of
our other expenses, such as crew travel, freight and
commodity prices.
In addition, we are subject to various international,
national, state and local laws, regulations and treaties
that govern, among other things, safety standards
applicable to our ships, treatment of disabled persons,
health and sanitary standards applicable to our guests,
security standards on board our ships and at the ship/
port interface areas, and financial responsibilities to
our guests. These issues are, and we believe will con-
tinue to be, an area of focus by the relevant authori-
ties throughout the world, especially in light of several
recent incidents involving cruise ships. This could
result in the enactment of more stringent regulation
of cruise ships that could subject us to increasing
compliance costs in the future.
Conducting business globally may result in increased
costs and other risks.
We operate our business globally. Operating interna-
tionally exposes us to a number of risks, including
unstable local economic conditions, volatile local
political conditions, potential changes in duties and
taxes, including changing interpretations of existing
tax laws and regulations, required compliance with
additional laws and policies affecting cruising, vacation
or maritime businesses or governing the operations
of foreign-based companies, currency fluctuations,
interest rate movements, difficulties in operating
under local business environments, U.S. and global
anti-bribery laws or regulations, imposition of trade
barriers and restrictions on repatriation of earnings.
If we are unable to address these risks adequately,
our financial position and results of operations could
be adversely affected, including potentially impairing
the value of our ships, goodwill and other assets.
Operating globally also exposes us to numerous and
sometimes conflicting legal and regulatory require-
ments. In many parts of the world, including countries
in which we operate, practices in the local business
communities might not conform to international busi-
ness standards. We must adhere to policies designed
to promote legal and regulatory compliance as well
as applicable laws and regulations. However, we might
not be successful in ensuring that our employees,
agents, representatives and other third parties with
which we associate throughout the world properly
adhere to them.
Failure by us, our employees or any of these third
parties to adhere to our policies or applicable laws or
regulations could result in penalties, sanctions, dam-
age to our reputation and related costs which in turn
could negatively affect our results of operations and
cash flows.
Our attempts to expand our business into new markets
may not be successful.
While our historical focus has been to serve the
North American cruise market, we have expanded
our focus to increase our international guest sourcing,
including sourcing from the Latin American, Asian
and Australian markets. In addition, in early 2014,
Pullmantur opened a regional head office in Panama.
Expansion into new markets requires significant levels
of investment. There can be no assurance that these
markets will develop as anticipated or that we will
have success in these markets, and if we do not, we
may be unable to recover our investment, which could
adversely impact our business, financial condition and
results of operations, including potentially impairing
the value of our goodwill.
Ship construction, repair or revitalization delays
or mechanical faults may result in cancellation of
cruises or unscheduled drydocks and repairs and
thus adversely affect our results of operations.
We depend on shipyards to construct, repair and revi-
talize our cruise ships on a timely basis and in good
working order. The sophisticated nature of building
a ship involves risks. Delays in ship construction or
revitalization or mechanical faults have in the past
and may in the future result in delays or cancellation
of cruises or necessitate unscheduled drydocks and
repairs of ships. These events and any related adverse
publicity could result in lost revenue, increased oper-
ating expenses, or both, and thus adversely affect our
results of operations.