In this issue:

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Per diem cuts: IHG and the industry score wins in the fight to repeal reimbursement reductions for military travelers.

Department of Labor overtime rule: Business coalition presses Congress to stop or delay rule impacting small businesses.

Spotlight on sustainability: Obama administration highlights successful conservation efforts at two IHG properties.

Taking a stand for diversity: IHG joins other business leaders in supporting LGBT rights initiatives.

Meeting face-to-faceLarge IHG contingent at Legislative Action Summit helps tell industry story on Capitol Hill – Page 2

SPRING 2016

Power in Numbers

O wners of IHG branded hotels made their presence felt at the 2016 Legislative Action Summit (LAS) in

Washington, D.C., May 17-18, a key annual hotel industry event hosted by the American Hotel & Lodging Association (AH&LA) in partnership with the Asian American Hotel Owners Association (AAHOA).

The IHG contingent included 70 attendees, more than any other hotel company, helping the AH&LA achieve a record 500-plus registrants. The IHG group was recognized by AH&LA for having the most participants and won a private tour of the U.S. Capitol and the Cannon House Office Building, hosted by U.S. Representative Buddy Carter of Georgia.

“We were extremely pleased with the

response this year, which indicates a

growing level of engagement among our

members,” says Doug Denman, Chair of the

IHG Owners Association Industry Advocacy

Committee and owner of Worth Hotels, LLC,

in Wichita Falls, Texas. “Quite a few of the

IHG owners were attending the Summit for

the first time. It was particularly great to

see many owners coming back for a second

time, indicating they received value from

attending last year.”

IHG attendees kicked off the week with a

reception on Monday night, hosted by INN

PAC, the IHG Owners Association political

action committee. The program included

remarks by columnist and Republican

strategist Rich Galen and author and hotel

distribution expert Cindy Estis Green.

The Legislative Action Summit featured addresses by Senator Cory Gardner (R-CO) and Representative and Minority Whip Steny Hoyer (D-MD). AH&LA President & CEO Katherine Lugar provided an overview of key issues impacting the industry, and well-known political analyst Charlie Cook gave his perspective on the 2016 Presidential race.

Attendees were grouped by state for their appointments on Capitol Hill, where they met face-to-face with Members of Congress and staff. AH&LA team members conducted training on how to present to the lawmakers, educate them about important industry issues and ask for their support. A key message carried to Capitol Hill is the positive impact of the hospitality industry on job creation and the nation’s economy.

IHG hosts the largest hotel delegation at

AH&LA Legislative Action Summit 2016

Members of the IHG delegation from Georgia met with Senator David Perdue (center, with red tie) as part of the Legislative Action Summit.

PublicAffairs at IHG®2

In April, INN PAC, the IHG Owners Association political

action committee, hosted a private luncheon with U.S. Senator Brian Schatz (D-Hawaii) benefitting his reelection campaign. Members of the Owners Association Industry Advocacy Committee attended the lunch at the InterContinental Buckhead’s Southern Art restaurant in Atlanta.

Senator Schatz serves as co-chair of the Senate Travel and Tourism Caucus, representing a state that relies heavily on the tourism industry. He is also a champion against cuts to military per diem rates and has urged the Senate

Appropriations Committee, of which he is a member, to repeal reductions implemented in 2014 (see the related article on Page 4).

Hawaii’s governor appointed Senator Schatz to serve in the U.S. Senate in 2012, following the passing of Senator Daniel Inouye. Senator Schatz was elected to a full term in a special election in 2014. He sits on the Senate Appropriations Committee’s Labor, Health and Human Services, Education and Related Agencies Subcommittee, which has jurisdiction over labor issues important to the industry.

The LAS participants also received briefings on the top-priority issues for their meetings, so that they could effectively ask their Members of Congress for support on key policy priorities:

n Online booking scamsParticipants urged policymakers to protect consumers by co-sponsoring the Stop Online Booking Scams Act (H.R. 4526). This bill would help protect consumers from online booking scams by requiring that notice be provided to customers that they are booking reservations on third-party sites. It also directs the Federal Trade Commission (FTC) to investigate this growing problem and empowers state attorneys general to pursue restitution and refunds on behalf of the victims of online hotel booking scams.

n Commercial short-term rentalsOwners discussed the impact to their business of the growing commercial short-term rental market with Members of Congress and advocated for policies that would create a level playing field. Participants asked their Representatives to call on the FTC to gather marketplace data about the commercial operators using short-term rental platforms so

policymakers across the country have the information they need to regulate this segment of the commercial lodging industry.

n Workforce issues

The owners shared the economic and community contributions their small businesses make in the Congressional districts and states and discussed how changes to the franchise business model and new overtime regulations will undermine the growth of these local businesses (see the related article on Page 6). Participants encouraged Members to co-sponsor the Protecting Local Business Opportunity Act (S. 2686 and H.R. 3459), legislation that would protect the franchise business model that their small businesses rely on to thrive.

n Litigation reformParticipants discussed the growing number of lawsuits targeting hotels filed under the Americans with Disabilities Act (ADA). These so-called “drive-by lawsuits” often focus on technicalities and demand thousands of dollars to settle a sometimes meritless case. The owners urged support of the ADA Education and Reform Act of 2015, which would provide a “notice and cure” provision giving owners time to

address an ADA violation before any legal proceedings could move forward. This would ensure businesses comply with the ADA while removing incentives for exploitative and abusive lawsuits.

“We were able to sit face-to-face with our elected representatives and share our stories about working in this business, and about our industry. We could directly ask them to write a letter or support a particular bill. You can’t do that in many countries around the world,” Denman explains. “We take that privilege for granted, and it made me feel proud to participate actively in the American system of government. We encourage every owner to take advantage of this opportunity and make plans to attend the Legislative Action Summit next year.”

Overall, IHG owners and colleagues engaged in 212 meetings with policymakers on Capitol Hill, representing 24 states. Their efforts are already producing dividends: Representative C.A. “Dutch” Ruppersberger (D-MD) has signed on as a co-sponsor of H.R. 4526, the Stop Online Booking Scams Act, as a direct result of his meeting with the LAS delegation and follow-up by Anne Roth, IHG Key Account Director, Groups & Meetings, Americas Sales, in concert with the AH&LA team.

Power in Numbers

StrengtheningRelationshipsIHG Owners Association INN PAC hosts a luncheon for Senator Brian Schatz (D-HI)

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IHG fights to reverse

government per diem cuts.

The battle tokeep governmentrates fair

PublicAffairs at IHG®4

T he hotel industry scored an important victory last month when the U.S. House

of Representatives Armed Services Committee, with unanimous consent and bipartisan support, passed a repeal of the Department of Defense (DOD) per diem rate cuts. An amendment to the Fiscal Year 2017 DOD Appropriations bill was also passed in the House Appropriations Committee to reverse these cuts to Department of Defense per diem rates. With these strong wins in the House as momentum, the repeal is now being debated in the Senate, where IHG Public Affairs and IHG owners continue to advocate for Congress to push back on the Pentagon’s misguided policy.

“Over the past year, these cuts have had a significant and unsustainable impact on military travelers, their families and the hotels and other businesses that serve them,” says Paul Snyder, Vice President of Corporate Responsibility - Sustainability and Public Affairs. “The lowered per diems have led to limited lodging options or reduced levels of service for uniformed guests who are already serving their country through long-term travel. The Navy itself has said the revised policy has resulted in increased costs and inefficiency rather than cost savings (see the sidebar on this page). Government is the No. 1 purchaser of hotel rooms globally. Per diem cuts set a dangerous precedent.”

The DOD in late 2014 announced substantial decreases in per diems for uniform and civilian military travelers on long-term temporary duty—reducing the already below-market rates by 25 percent for stays of more than 30 days and by 45 percent for travel lasting more than 180 days. IHG Public Affairs led a broad coalition of industry groups, including the American Hotel & Lodging Association (AH&LA) and the U.S. Travel Association,

to educate Members of Congress on the impact of these per diem reductions on hotels and military travelers.

In 2015, Congress authorized the Government Accounting Office (GAO) to study and report out on the impact the revised policy is having on the civilian military travelers. IHG Public Affairs met with the GAO, as did IHG owners, to share the impact the cuts have had on the industry and all travelers, military and civilian alike.

”Our two extended stay properties nearest to the U.S. Army’s Fort Leonard Wood, Missouri, saw an immediate 15 to 20 percent loss in revenue. The decrease for 30-plus-day stays was closer to 45 percent,” says Steve Ehrhardt, who is owner and operator of Ehrhardt Properties and SJS Hospitality, which operates 10 limited service and extended stay hotels in Missouri and Oklahoma. He is also the current chair of the IHG Owners Association. “As a result, we held up on hiring in the first part of the year and reduced some employee hours. The cuts haven’t had the same impact everywhere, but the change threatens to hurt all hotels, particularly those near military installations.”

Hotels already operate to secure the best rate for military travelers, but rates that represent an additional 25 percent or 45 percent reduction beyond the already below-market per diem rate are simply not sustainable.

“We appreciate the commitment to obtain the best value for taxpayers’ dollars. However, per diem policies should allow hotels to be fairly compensated for the services they provide,” adds Carla Cannonito, U.S. Government Team Lead/Key Account Director for IHG Americas Sales. “Cuts in reimbursement for longer-term temporary duty lodging leave our hotels no choice but to eliminate some

amenities, such as breakfast. This makes it harder on our service men and women and the civilian employees who support them.”

The battle torates fair

Earlier this year, the Naval Sea Systems Command (NAVSEA), citing multiple problems resulting from the per diem reductions, requested an exemption from the new policy for shipyard workers. A bi-partisan group of Senators sent a letter to Defense Secretary Ash Carter backing the request from NAVSEA.

NAVSEA argues that the cuts have resulted in:

“ costing the Navy more than the intended savings”

“ loss in productivity and potentially impacting the delivery of ships to the Fleet”

“ inefficiencies and hardships for shipyard workers”

“ voluntary travel has significantly declined…means that the most junior employees are often sent to perform highly technical work”

“ forced long-term TDY (temporary duty) is now common and negatively impacts ship maintenance efficiency, employee morale, and performance”

“ employees feel at risk of paying expenses out of pocket”

“ not enough money to cover the TDY worker’s daily expenses”

The Navy responds to per diem cuts

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Department of Laborissues final ruleon overtime

Business community vows continued efforts to stop or delay implementation.

PublicAffairs at IHG®6

T he Department of Labor (DOL) released its long-anticipated final rule updating overtime regulations in

mid-May, despite widespread opposition from many stakeholders.

The new measure doubles the salary threshold below which employees are eligible to receive overtime pay, from $23,660 to $47,476. The rule takes effect December 1, 2016.

IHG joined with the American Hotel & Lodging Association (AH&LA) and a group of small and large employer organizations and companies, the Partnership to Protect Workplace Opportunity, to voice ongoing concern that the regulation has unintended consequences for workers and the U.S. economy.

These grassroots efforts have generated considerable media coverage about the rule’s implications, culminating in the introduction of bipartisan legislation that would delay its effective date and require the DOL to first conduct a comprehensive economic analysis of potential impact on small businesses, nonprofits and public employers. The Partnership to Protect Workplace Opportunity coalition intends to continue pressing Congress to stop or delay implementation of the rule either

through passage of this bipartisan bill or through the Congressional funding process.

“With roughly half the hotels in the U.S. owned and operated by small or independent property owners, this regulation could force many hoteliers to reduce hours and flexibility or cut jobs altogether in order to stay in business,” said AH&LA Vice President of Government Affairs Brian Crawford. “Regrettably, it will ultimately harm the very employees that it purports to help, preventing employee advancement and reducing opportunities in the workplace while impeding industry growth and job creation.”

AH&LA’s recent survey of hotel pay practices shows that the hotel industry provides significant opportunity for upward mobility and promotions. More than half of hotel general managers began their hotel careers in hourly entry-level positions and most employees are eligible for promotion within only one year of employment.

“IHG is committed to our employees, whose contributions are critical to the success of IHG hotels,” says Carole Angel, Director of Corporate Responsibility - Public Affairs and Diversity. “Our industry is proud of the jobs we offer, and we are proud of the role we play in the economy of the communities where we

operate. Hotel industry jobs have enabled countless individuals to climb the ladder of opportunity and build lifelong careers.

“However, this change represents a substantial increase in costs for many IHG owners who are small business operators, and in some cases those wage increases are simply too high and too fast for the industry to absorb. We will continue to educate policymakers on the significant impact these and other extreme wage initiatives have on the growth of small business.”

“With roughly half the hotels in the U.S. owned and operated by small or independent property owners, this regulation could force many hoteliers to reduce hours and flexibility or cut jobs altogether in order to stay in business.”

Brian Crawford – AH&LA Vice President of Government Affairs

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IHG received high-profile recognition by the Obama

administration for its leadership in sustainability when two hotels were singled out for their achievements. The IHG Army Hotels Abrams Hall in Fort Benning, Georgia, hosted a tour for two high-ranking White House officials in recognition of achieving the Gold Leadership in Energy and Environmental Design (LEED) standard. In Washington, D.C., the Willard InterContinental was tapped to be on a green building showcase tour as part of the Department of Energy’s (DOE) 2016 Better Buildings Summit.

Abrams Hall: achieving Gold status

The massive, 860-room IHG Army Hotels Abrams Hall property opened a year ago and attained Gold LEED status in March, prompting the recent visit by

Sustainability leadership in the spotlight

Katherine Hammack, Assistant Secretary for Installations, Energy and Environment, U.S. Army, and Amy Porter, Deputy Chief Sustainability Officer, White House Council on Environmental Quality. Tour participants also included Paul Snyder, Vice President of Corporate Responsibility - Sustainability and Public Affairs; Derek Nelson, Director, Regional Hotel Operations, IHG Army Hotels; Fort Benning Garrison representatives; members of the hotel’s leadership team, and other IHG sustainability team members.

The Abrams Hall hotel was built by the U.S. Army and is managed by IHG. Virtually every aspect of sustainability was taken into consideration in the construction of the property, notes General Manager Shay Baranowski. She co-led the tour with Chief Engineer Michael Thurman, pointing out such features as the software-controlled heating/cooling systems in both common spaces and guest rooms and the use of recyclable materials for construction, including roofing that looks like upscale clay tiles but is made of long-lasting composite plastic. All water fixtures are low-flow; all lighting uses CFL, fluorescent or LED

bulbs, and all building glass is designed with thermal and UV ray protection.

The U.S. Green Building Council’s LEED certification is a leading benchmark in green building. Projects pursuing LEED status earn points across key areas that address sustainability issues, including reduced water and energy use and minimized greenhouse gas emissions. Based on the number of points achieved, buildings are awarded Certified, Silver, Gold or Platinum status.

“This hotel’s Gold LEED designation is a significant achievement, and we fully intend to maintain and improve its sustainability

effectiveness,” Baranowski says.

The Willard: meeting the challenge

The Better Buildings Summit is held annually in Washington, D.C., for participants in the DOE’s Better Buildings Challenge program, which calls on public and private sector leaders to achieve 20 percent energy efficiency improvement by 2020. IHG has participated in the Challenge since its inception in 2011 through the IHG Green Engage® sustainability program, reporting

The Willard InterContinental tour for Better Buildings Summit participants included the hotel’s Tesla electric

car for shuttling guests to nearby destinations.

PublicAffairs at IHG®8

on reductions in energy use at company-owned/managed hotels in the U.S.

The Willard was an ideal choice for the Better Buildings Summit tour because it holds a Level 4 Green Engage certification, the highest that can be achieved, according to Lindsay Wilkinson, Manager, Corporate Responsibility - Environmental Sustainability. “The Better Buildings tour was designed to give Summit participants the opportunity to see how various businesses are putting best practices into action,” she says. “Having the Willard on the tour underscored our ongoing strategy to establish IHG as an expert in business-based environmental stewardship solutions. That helps ensure our voice is heard when regulations are being formulated.”

The Willard’s Green Engage co-leaders, Katrin Motk, Director of Purchasing, and Wesley Gilmer, Director of Engineering, along with Hotel Manager James Ryan, served as tour hosts. They provided the 20-plus attendees a history of the property as well as a first-hand, Heart of House look at the numerous Green Solutions that have helped the hotel minimize its impact on the local environment by reducing energy, carbon and water use, and waste volume.

Among many innovative highlights:

• Replacing existing lighting in the parking garage with LED fixtures, cutting electrical consumption in half, providing brighter lights and generating a $37,000 rebate from the D.C. Sustainable Energy Utility.

• Implementation of a new “Silver Bullet” water treatment system for the building’s cooling towers that uses a photochemical solution to control microorganisms and scale instead of toxic chemicals.

• A comprehensive recycling program that encompasses frying oil, batteries and food and beverage supplies and amenities, among other items.

• Use of an ORCA (organic refuse conversion alternative) food composting machine in the kitchen that converts 35 percent of the hotel’s food waste to reusable gray water.

• Rental of an energy-efficient Tesla electric car to transport guests within a three-mile

radius of the hotel.

Interest generated by the Willard tour and IHG’s presence at the Better Buildings Summit led to the IHG Green Engage implementation model being the “most viewed solution” in the Better Buildings online partner Solution Center in May.

“Having the Willard and Abrams Hall properties on center stage through these tours helps reinforce the real-world viability of the Green Engage program and IHG’s commitment to leading the industry in sustainability,” Wilkinson adds. “We were able to demonstrate how IHG works closely with our hotels and owners to reach shared sustainability goals.”

The IHG Green Engage system is a comprehensive, online sustainability platform that allows hotels to track, measure and report their energy, carbon and water consumption and waste levels and offers more than 200 “Green Solutions” with detailed technical guidance that can be implemented on-property to deliver greater sustainability.

Participation in the IHG Green Engage system and completion of Level 1 certification became a foundational standard for all IHG hotels in January 2015.

The three criteria for compliance are:

1) Completing the 10 Level 1 practice sustainability on-property action items.

2) Ensuring the hotel is set up completely within the Green Engage system, entering correct information regarding square footage and other key property details so the tool can accurately calculate carbon footprint and water use.

3) Making certain hotels keep their energy and water use data up to date, inputting information as they receive monthly bills to maintain accuracy of the tracking data that is key to Level 1 certification.

IHG Green Engage®: tracking IHG’s environmental footprint

The group participating in the Abrams Hall tour at Fort Benning included (from left): Paul Snyder, Vice President, Corporate Responsibility – Sustainability, IHG; Alison Gruber, Assistant Manager of Corporate Responsibility, IHG; Lindsay Wilkinson, Manager of Corporate Responsibility, IHG; Amy Porter, Deputy Federal Chief Sustainability Officer, White House Council on Environmental Quality (CEQ); Shay Baranowski, General Manager, IHG Army Hotels Abrams Hall; Katherine Hammack, Assistant Secretary for Installations, Energy and Environment (ASAIE), U.S. Army; Colonel Andrew C. Hilmes, Fort Benning Garrison Commander; Michael Thurman, Chief Engineer, IHG Army Hotels Abrams Hall, and Derek Nelson, Director, Regional Hotel Operations, IHG Army Hotels.

The leading-edge ORCA composting machine in the Willard’s kitchen was a highlight of the IHG Green Engage tour. 9

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Commitment to equalityIHG furthers its leadership in supporting LGBT rights.

W hen the Human Rights Campaign (HRC) launched its Business Coalition for Equality

in March, IHG signed on as one of more than 60 major companies—including other leaders such as Coca-Cola, Apple and General Electric—who have officially endorsed the bipartisan Equality Act.

This legislation, introduced in Congress in July 2015, would provide the same basic protections to lesbian, gay, bisexual and transgender (LGBT) individuals as are provided to other protected groups under federal law, in employment, housing, education and public services.

A few weeks later, North Carolina Governor Pat McCrory signed into law a controversial bill (House Bill 2 or HB2) that would undermine protections in place for LGBT individuals. IHG again stepped up with other business leaders to oppose the action.

The so-called “bathroom bill” bans transgender individuals from using public restrooms that do not correspond to the biological sex listed on their birth certificate. The law also restricts local governments from passing nondiscrimination laws more broadly.

Together with more than 130 corporate CEOs and business leaders from across the country, IHG signed an open letter to the governor and the North Carolina General

Assembly asking for repeal of these provisions signed into law.

“We are disappointed in Governor McCrory’s decision to sign HB2 into law. The bill does not reflect IHG’s value of inclusiveness and has jeopardized the continued growth of North Carolina’s lodging and tourism industry,” says Carole Angel, Director of Corporate Responsibility

- Public Affairs and Diversity.

These public affairs activities align with IHG’s dedication to diversity and responsible business in all aspects of its operations—a commitment that earned the company a perfect, 100 percent score for the second year in a row on the Human Rights Campaign’s (HRC) 2016 Corporate Equality Index (CEI). The CEI Index rates American businesses on their treatment of LGBT employees, consumers and investors.

Another commitment is IHG’s annual sponsorship of the HRC Atlanta Gala Dinner and Auction, one of the largest such HRC fundraising events in the country. The sponsorship was funded through a joint partnership between Americas Talent & Human Resources, Americas Brand & Marketing and Worldwide Sales.

“Reaching out to the LGBTQ community through support for the HRC fundraiser in our Americas headquarters city sends an important message about IHG’s values

regarding diversity,” says Ivette López, IHG Senior Manager - Communications/Worldwide Sales and a member of HRC Atlanta’s Steering Committee. She also serves as co-chair of the 2016 and 2017 gala events. “The sponsorship publicly underscores our deep and serious commitment to advocate for LGBTQ equality.”

The commitment also reflects one of IHG’s Winning Ways, Celebrate Difference, Angel says. “IHG enjoys a rich tapestry of diversity among our workforce, owners, local communities and guests. We take pride in being one of the industry leaders helping build a welcoming environment for all.”

IHG Senior Communications Manager Ivette López is co-chair of both the 2016 and 2017 HRC Atlanta Gala events.

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Public Affairs Portal The IHG Public Affairs portal (https://me2.ihgmerlin.com/web/political-action-portal/home) is your complete resource for information on government and public policy issues impacting IHG, our employees and our owners. The portal includes the latest updates on the company’s Public Affairs initiatives as well as suggested guidelines for taking action through your state and federal legislators.

Public Affairs Contacts

• Workforce issues, such as healthcare reform, labor, immigration and minimum wage.

• Franchise business model and marketplace issues, including activity affecting the franchise business model, online travel agencies (OTAs) and short term online rental marketplaces (STORMs).

• Protecting our brands, addressing issues such as data privacy and security, intellectual property and tax reform.

• Travel and tourism, including travel promotion and visa and entry reform.

• Corporate responsibility, including sustainability and human rights.

IHG® Public Affairs PrioritiesIHG Public Affairs empowers our owners by providing the support and resources they need to successfully engage with federal, state and local government representatives. Our goal is to collectively inform and influence policy decisions to help create a fair and supportive business environment for our hotels.

The primary areas of focus include:

Americas Carole Angel Director, Corporate Responsibility, Public Affairs +1-770-604-5092 carole.angel@ihg.com

Greater China Jason Wang Sr. Director, Public Affairs +86 10 6481 8757 jasonjian.wang@ihg.com

Katherine Zhao Manager, Public Affairs +86-21-28933245 katherine.zhao@ihg.com

AMEA Jean Tan Head of Communications +65-6395-6109 jean.tan@ihg.com

Public Affairs Go-To Guide