In this issue:

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Hosting Georgia’s Trade Mission To Asia: IHG Takes A Turn In The Diplomatic Spotlight

Strengthening the Industry’s Voice in Washington: AH&LA Reinvents Itself

Corporate Responsibility and Public Affairs at Conference: Learning More About Issues & Implications

Healthcare Reform: Preparing For Rollout Of The Affordable Care Act pg. 2

Healthcare Reform: What IHG Employees and Owners Need To Know

AUTUMN 2013

PublicAffairs at IHG®2

Healthcare Reform: Preparing For Rollout Of The Affordable Care Act

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W hether you know it as “Obamacare” or its more formal name, the Patient

Protection and Affordable Care Act or more simply, the Affordable Care Act (ACA), the massive new U.S. healthcare legislation is now a reality.

Despite more than 40 attempts by members of the House of Representatives to repeal or alter parts or all of the legislation, this law, aimed at increasing the quality and affordability of health insurance in America, began open enrollment for health insurance exchanges as scheduled October 1.

The word to the wise consumer and business owner from most industry experts is to do your homework, learn as much as you can about how the new law will affect you and your business, and take steps now so that you will be in compliance as various components of the ACA take effect.

Though InterContinental Hotels Group (IHG®) does not offer legal advice to its employees, owners or operators, the Public Affairs team is supporting these stakeholders as they come to terms with healthcare reform by making available information such as this article, which provides an overview of the ACA and its potential implications. In addition, IHG hosted a special workshop at the IHG Investors and Leadership Conference October 30 where industry experts provided owners with a more in-depth review and answered questions (see the details on Page 11).

So, to help owners and employees navigate the ocean of information, from traditional media coverage to direct-to-consumer

advertising to the huge amounts of material on the Internet, here is a primer on the basics of the ACA:

Requirements for Individuals• The individual mandate — Under the

ACA, individuals must be covered by an acceptable health insurance policy—either provided through their employer, privately purchased or obtained through the new Health Insurance Marketplaces (“exchanges”). Insurance coverage must be in place by January 1, 2014, or individuals will be charged a minimum annual tax penalty of $95. This tax will rise to a minimum of $695 ($2,085 for families) by 2016.

• Impact on IHG employees — “The law requires all Americans to have health insurance coverage, and IHG, which is self-insured, offers health insurance options that meet the affordability and minimum actuarial value requirements under ACA for large employers,” says Chasity Miller, Vice President, Americas Human Resources Compensation & Benefits.

• Health insurance exchanges — The open enrollment period for health insurance exchanges offered through the new online Health Insurance Marketplaces is under way in all 50 states and runs through March 31, 2014.

• Changes in coverage — Beginning in 2014, provisions in the ACA prevent insurance companies from denying coverage to anyone due to pre-existing conditions as well as imposing lifetime dollar limits and annual limits on essential health benefits. Since the bill’s passage, approximately

3.1 million young adults have received coverage through a provision that allows children up to the age of 26 to stay on their parents’ plan. Also, more than 50,000 Americans with pre-existing conditions have obtained coverage through the temporary Pre-Existing Condition Insurance Plan.

Requirements for Businesses• Important definitions: An employer’s

obligations under the ACA are determined, in part, by whether you are considered a “large employer” and whether your employees are full-time or part-time (see the related sidebar on Page 4). Here’s how these terms are defined in the law:

Large employer: An employer with 50 or more full-time equivalent employees. In the case of an ownership group with multiple hotels, each owned through a separate wholly owned subsidiary entity, the ACA considers the parent company to be the employer of any and all subsidiary employees. For example: An ownership group has four hotels, each owned through a separate wholly owned subsidiary of the parent ownership group. Each hotel employs 20 full-time employees. The parent ownership group is considered a large employer since, in total, it is responsible for 80 full-time employees.

Full-time employee: An employee who worked 30 or more hours per week on average over the past year, regardless of how this employee might be classified by the employer.

Part-time employee: An employee who works less than 30 hours per week.

Healthcare Reform: Preparing For Rollout Of The Affordable Care Act

continued...

• Employer mandate: As defined above, large employers (those with more than 50 full-time employees) will be required to offer their employees health insurance or face a penalty of $2,000 per employee (sometimes referred to as the “pay or play” decision). Originally, the effective date of the “employer mandate” requirement was 2014, but in July, the Obama administration announced that this provision would be delayed until January 1, 2015. This gives employers additional time to make informed decisions on whether they choose to “pay or play” in 2015. Healthcare industry experts advise that this business decision is critical and should be analyzed carefully.

• Cost implications: Despite the possible penalties, the Congressional Budget Office (CBO) has reported that ACA could

save businesses $2,000 per person in healthcare costs by lowering health insurance premiums by up to 4 percent for small businesses and 3 percent for large businesses. Small businesses may also receive tax credits toward their healthcare costs if they have fewer than 25 full-time employees making an average of $50,000 a year or less. Qualifying small businesses must also pay at least 50 percent of their full-time employees’ premium costs in order to receive the tax credit.

• Administrative responsibilities: Employers must be prepared to track and monitor employees’ working hours to determine whether they are considered full-time employees and therefore should be offered healthcare coverage.

• Immediate and upcoming deadlines: Though the employer mandate has been delayed for one year, employers still have a number of other requirements to meet effective January 1, 2014, and may be penalized for not complying with them. Many of these specifics were covered in the Healthcare Reform workshop at the Conference.

The ACA is a complex law that is creating a continually shifting operating environment. Owners should stay aware of requirements, continue to ask questions about implications and look to trusted sources for guidance to help them make sound decisions as they respond to this critical industry change.

PublicAffairs at IHG®4

• Currently there are more than 48 million Americans without health insurance.

• 54 million Americans with private health insurance now have preventive services—such as blood pressure screenings, HIV/STD screenings and mammograms—covered due to a provision in the ACA.

• More than 105 million Americans will no longer have lifetime dollar limits on health benefits beginning in 2014.

• Beginning in 2014, insurance companies are prohibited from charging women more than men.

• The independent Congressional Budget Office (CBO) reports the ACA could save a family of four as much as $2,300 annually on their premiums.

• In 2012, 8.5 million Americans received a total of half a billion dollars in refunds due to an ACA provision requiring insurance companies to provide individuals with a rebate if the company does not spend at least 80 percent of premium dollars on medical care and quality improvements.

• The CBO has stated that the ACA will reduce the United States’ deficit by $210

billion this decade and by more than $1 trillion over the next 20 years.

• The CBO also says that it will take four more years to fully implement the ACA. In order for the timeline to be on pace, 7 million uninsured Americans would need to sign up in the first year.

Healthcare Reform Facts & Figures

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As business owners, individuals and the federal government have begun to come to terms with the realities

of operating under the requirements of the Affordable Care Act (ACA), one problematic, unintended incentive has surfaced. Some employers are choosing to cut the hours of their part-time employees to under 30 per week to avoid having to provide healthcare insurance. The ACA defines “full-time employment” as working, on average, 30 hours or more a week.

In response to this, U.S. Rep. Dan Lipinski (D-IL) in August introduced the Forty Hours Is Full-Time Act of 2013, changing the healthcare law’s definition of “full-time employment” from 30 hours a week to 40 when applying the employer mandate.

The Congressman’s news release announcing the bill noted that a recent University of California Berkeley Labor Center study showed that as many as 2.3 million Americans, mostly hourly workers in the restaurant, nursing home, retail and service industries, would see their hours cut as their employers adapt to the new rules.

“Even with the Administration’s recent decision to delay the Obamacare employer mandate for one year, we already know some employers are preparing to meet the law’s guidelines by slashing workers’ hours and forcing them to work 29 hours a week or less. This is reducing the take-home pay for millions of Americans at a time when they can least afford it,” Rep. Lipinski said.

The Forty Hours Is Full-Time Act of 2013 mirrors a bipartisan bill crafted in the Senate. Lipinski’s bill has received the support of the AH&LA, International Franchise Association, National Restaurant Association, Food Marketing Institute, Retail Industry Leaders Association and head of the AFL-CIO, Richard Trumka, among others.

IHG Public Affairs will be monitoring the implications of this and other related bills as they move through the legislative process.

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Offsetting An Unintended Consequence Redefining The Full-Time Work Week

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Photo this page (right): Gov. Nathan Deal of Georgia discusses trade and commerce opportunities at a meeting with government and civic leaders in Qingdao, People’s Republic of China. Photos on opposite page: (Left) Guests at a luncheon at the InterContinental® Hotel Shanghai Pudong listen to a presentation by Gov. Deal. (Center) Paul Snyder, IHG Vice President of Corporate Responsibility, Mrs. Nathan Deal and Gov. Deal enjoy a rooftop reception at the InterContinental Hotel Shanghai Pudong. (Right) The team at the InterContinental Hotel Qingdao and at each of the other InterContinental Hotels hosting the Georgia delegation went above and beyond to deliver an exceptional guest experience.

PublicAffairs at IHG®

Hosting Georgia’s Trade Mission To Asia IHG Takes A Turn In The Diplomatic Spotlight

As one of the world’s leading hotel companies, IHG often has the opportunity to shine on the global stage, serving as headquarters for various government and industry conferences, delegations and other diplomatic events. Each represents the chance to reinforce our leadership while showcasing our brands, generating revenue for individual hotels and setting the stage for future business.

A case in point: In August, IHG® hotels in three countries in Asia played host to a high-level business,

trade and tourism mission organized by the state of Georgia. Led by Gov. Nathan Deal, the 70-plus-person delegation included state officials and business leaders who met with government and corporate community representatives in the People’s Republic of China and Japan to explore business, trade and tourism opportunities. The mission itinerary included stays at four IHG hotels —the InterContinental® Hotel Tokyo Bay, Japan; InterContinental Hotel Shanghai Pudong and InterContinental Hotel Qingdao in China, and InterContinental Hotel Grand Seoul Parnas in South Korea.

Securing the hosting duties for IHG was a three-month team effort that began by leveraging the growing relationship between IHG Public Affairs and the Georgia Department of Economic Development. After becoming aware of plans for the trade mission, the Public Affairs staff turned to Carla Cannonito, U.S. Government Team Lead and Key Account Director, Government Sales, for IHG Americas Sales. Carla manages IHG’s relationship with Cabinet-level agencies and the U.S. diplomatic community. She works closely with hotels in designated cities to develop bid packages to serve diplomatic mission travel.

“We approached our InterContinental Hotels in these cities, as that is the brand most directly suited to accommodating

the niche demographic of diplomatic delegations and trade missions,” Carla says.

“InterContinental Hotels have a legacy of catering to international travelers, through such services as 24-hour dining and highly intuitive concierge services. The hotel teams aligned completely with the needs of the mission, meeting all the service requirements and bringing local flair and creativity to plans for meals and receptions. They were adept, knowledgeable and versatile, all the while delivering their offers in flawless English! Our hotel associates made it very easy for the state of Georgia to do business with IHG, and that was pivotal for this new client.”

The IHG hotels won out over both international and local competitors to land the business, and proceeded to wow the stateside visitors with superlative service throughout the trip, ensuring smooth, round-the-clock communication with Atlanta and accommodating every special request. The InterContinental Qingdao even held a surprise birthday party for Gov. Deal.

“Feedback from Gov. Deal’s staff and the other members of the delegation about the hotels’ performance was outstanding,” says Paul Snyder, Vice President of Corporate Responsibility, Americas, and IHG’s representative on the Georgia mission.

“In fact, the Governor’s chief of staff has said that IHG hotels will be first choice for all future diplomatic and trade events.”

Both Paul and Carla pointed to the many longer-term benefits resulting from IHG’s role in the Georgia trade mission.

“Tourism was a major theme, right along with business and trade,” Paul notes. “We had the opportunity to promote IHG’s global footprint and the diversity of our entire brand family, not just to the government and commerce leaders we met in China and Japan, but also to the representatives of some of IHG’s top global accounts—such as Coca-Cola, AT&T, Delta Air Lines and Aflac—who were part of the delegation.”

Contacts and conversations from the mission have also already produced one piece of tangible business, Carla added: Aflac has booked a major event for the InterContinental Buckhead. More opportunities are in the offing, she notes.

“Every U.S. state conducts business and trade missions, and their key contacts for these events are members of a trade association, the Protocol and Diplomacy International—Protocol Officers Association,” Carla says. “We showcased the Georgia trade mission success and IHG’s wide-ranging global brand portfolio at an October meeting of this influential group. The opportunity is there for generating business across multiple brands from both inbound and outbound diplomatic and trade missions.”

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PublicAffairs at IHG®8

“Our new structure allows

the AH&LA to engage more

hoteliers throughout the country,

significantly grow our political

presence and launch focused

public policy campaigns that

will garner significant results

for the industry.”

Katherine LugarPresident and CEO, AH&LA

As Congress and the Obama Administration continue to debate a wide range of issues that affect

hoteliers’ bottom line—from immigration to the massive new healthcare law (see the story on Page 2)—there’s little doubt in the minds of stakeholders: now is the time to strengthen and unify the hospitality industry’s voice on Capitol Hill.

That was the driving factor behind a study commissioned two years ago by the industry’s key trade organization, the American Hotel & Lodging Association (AH&LA) to evaluate the association’s structure and value proposition.

“The primary feedback from the study was that our constituents want to significantly enhance advocacy. That will require us to broaden our industry coalition,” says Mark Carrier, a Past Chairman of the IHG Owners Association who served on the AH&LA Strategic Planning Group that initiated the study.

The effort led to the development of a new membership and funding model for the AH&LA that was announced this summer. The association is in the process of transitioning from a dual membership structure, where partner state associations collected national dues, to a platform that allows branded hotels to become national AH&LA members through their brand’s hotel company and independent properties to join the AH&LA directly.

The financial model is funded through several sources, including an optional

annual $2-per-room assessment on all branded properties, state association membership dues and dues from brand companies (such as IHG), independent hotels and allied partners.

“The new model provides a sustainable revenue stream and a solid operating foundation for the AH&LA,” says Mark, who is President of B.F. Saul Company Hospitality Group and was also a member of the AH&LA Funding Task Force that developed the new financial arrangement.

“This will allow us to more effectively demonstrate leadership on Capitol Hill, reflecting the lodging industry’s tremendous economic footprint as a major driver of jobs, opportunity and growth.”

The Funding Task Force, which comprised a representative group of both small and large owners as well as representatives of the largest brand companies, took another important step by enlisting support from 35 major industry ownership companies. Representatives of these owners signed a letter to leaders of the five major U.S. hotel brand companies (including IHG) endorsing the new model and requesting they also support the new funding system and facilitate collection of the annual dues assessments on the AH&LA’s behalf.

These major brand companies, most of whom like IHG had representatives on the Funding Task Force, immediately stepped up and agreed to the owners’ request. The new funding arrangement becomes effective in 2014. IHG will bill all hotels a $2.00 per-room assessment in

March 2014 as one lump sum covering the entire calendar year and remit the dues payments in full to the AH&LA. Hotels have the option to pay or not to participate by providing notice to IHG. Owners may also pay dues, separately and directly (not through IHG), for membership in a state association, if they choose.

Along with the funding model, other major changes taking place within AH&LA have included hiring a new President and Chief Executive Officer, Katherine Lugar, who took over in April for retiring CEO Joseph McInerney. Plans also are in place to create membership groups within the organization for the first time, including councils for Brands, Owners, Management Companies, Independent Hotels and Partner State Associations.

“Our new structure allows the AH&LA to engage more hoteliers throughout the country, significantly grow our political presence and launch focused public policy campaigns that will garner significant results for the industry,” says Katherine, who will be a featured panelist for the Government Relations Workshop at this year’s Conference (see the story on Page 10).

“The AH&LA fights battles that affect our entire industry every day. That alone is reason enough to belong and to be actively involved,” Mark adds. “I believe once people see how effective this new structure is, they will want to be a part of it. We owe it to each other and our livelihood to help ensure a strong, unified voice for our association.”

Strengthening the Industry’s Voice in WashingtonAH&LA Reinvents Itself

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PublicAffairs at IHG®10

Corporate Responsibility and Public Affairs at Conference Learning More About Issues & Implications

Moderator Paul Snyder, Vice President of Corporate Responsibility, Americas, introduces the panelists for the Government Relations workshop.

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T he 2013 IHG Americas Investors and Leadership Conference in Las Vegas October 28-30

offered attendees several opportunities to heighten their Public Affairs awareness. Owners, GMs, Directors of Sales and corporate staff brought their questions and engaged in lively discussions across a range of current, high-interest topics. Following are some highlights.

Government Relations: If You’re Not At The Table, You’re On The Menu From immigration reform to healthcare, public policies impact the profitability of IHG® owners’ business every day. This session featured a panel of experts on U.S., Canadian and Latin American politics and was designed to help owners learn how they can impact the policies that impact them. Panelists included: Katherine Lugar, new President and CEO of AH&LA; Tony Pollard, President of the Hotel Association of Canada, and Joel Zorrilla, founder and COO of Fibra Inn, which owns 18 hotels across 11 Mexican states.

The panel discussed the key issues at play in each country, noting that greater engagement between hoteliers and policy-makers is essential. The audience was then invited to kick off a grassroots email campaign that is also open to readers of this newsletter. To participate, simply send an email with your name and Holidex code to AmerPublicAffairs@IHG.com with the subject line “USA,” “Mexico” or “Canada,” depending on where your hotel is located.

• “USA” adds your name to a letter to the U.S. Congress calling for defining “full-

time employees” as people who work 40 hours per week on average, not 30 as stated in the Affordable Care Act (see the sidebar story on Page 5).

• “Mexico” includes your name in a letter to the Mexican Congress requesting that the tax reform package they are considering take into account the negative impact it might have on the hotel industry.

• “Canada” adds your name to a letter to the Canadian Parliament calling for greater investment in marketing to promote Canada for inbound tourism.

Diversity Theater In this entertaining session, attendees watched professional actors play out scenes that raised tough questions about diversity in the workplace. Audience members then engaged in animated discussions about this increasingly important aspect of team dynamics and business success.

Are You Prepared? What Hotel Owners Need To Know About Healthcare Reform Now With the majority of the provisions of the healthcare reform act taking effect January 1, 2014, this timely overview—conducted by Towers Watson, IHG’s corporate benefits consultant—covered the key areas in which IHG owners and GMs could be impacted, and the steps required for compliance in this critical decision period. Topics discussed included:

• Healthcare reform fundamentals and the owner/operator’s responsibilities

to ensure they remain in full compliance with the law.

• How each hotel’s workforce will be affected by the changing conditions of healthcare.

• Impact of the new law on attracting and retaining employees.

• How healthcare reform influences owners’ business strategy and impacts the bottom line.

• Towers Watson and IHG HR professionals held a Q&A session at the end of this workshop. Answers to all the questions posed are posted on the Conference Microsite as well as on the IHG Political Action Portal. Just visit politicalactionportal.ihg.com and click on “Deeper Dive” under the Our People section.

CR Cafe In the vibrant space of the Corporate Responsibility Cafe, members of the IHG community had the opportunity to engage more fully with Public Affairs initiatives such as IHG Green Engage, IHG Shelter in a Storm Program and IHG Academy. Participants learned from CR champions from other hotels, received support for their existing or desired CR programs, and were even invited to leave their own video testimonials. If you are interested in sharing your own story, please send a quote or video testimonial to: CRTeam@ihg.com.

Corporate Responsibility and Public Affairs at Conference Learning More About Issues & Implications

To participate in IHG’s grassroots Government Affairs campaign, simply send an email to

AmerPublicAffairs@ihg.com with “USA,” “Mexico” or “Canada” in the subject line.

Public Affairs Go-To-Guide

IHG Public Affairs MissionIHG Public Affairs advocates for public policies that help our hotels and maintains a vigilant watch for those that might hinder them. We track and respond to the issues that most deeply affect our business and continually scan the globe to make sure we are focusing on the most critical issues we can impact.

Public Affairs Portal The IHG Public Affairs portal (politicalactionportal.ihg.com) 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.

Americas Adam Handler Director, Corporate Responsibility, Public Affairs +1-770-604-5092 adam.handler@ihg.com

Europe Lauren Knott Director, Global Public Affairs +44-1895-512598 lauren.knott@ihg.com

Greater China 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 Contacts

• Travel & Tourism – investment in inbound tourism (especially to the U.S. and U.K.); visa issues.

• Our People – labor relations; human rights.

• Small Business – access to credit; taxation; franchise law.

• Carbon & Sustainability – protecting our hotels from disadvantageous environmental laws; positioning IHG as the leader in sustainable travel.

• Intellectual Property – trademark protection in China; assessing the impact of new generic Top Level Domains (gTLDs) such as “.hotel.”

• Data Privacy – focusing on EU privacy law and its implications for the rest of the world.

• Tax – particularly tax reform in the U.S. and those countries that are members of the Organisation for Economic Co-operation and Development (OECD).

IHG Global Public Affairs PrioritiesFollowing are the areas of focus for IHG’s Public Affairs efforts worldwide: