In this issue:

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An Inside View: Testifying About Tourism on Capitol Hill

Heart of house: A U.S. Congressman Takes A Tour

Data Privacy: Defining the Boundaries

An Inside View: Lori Gaytan Testifies About Tourism on Capitol Hill pg. 6

Immigration Reform: A Search for the Right Balance

Summer 2013

PublicAffairs at IHG®2

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Connecting the Dots

W elcome to the inaugural issue of PublicAffairs @ IHG! We’ve designed this quarterly publication to keep you updated on IHG initiatives and activities in

the realm of Public Affairs—defined as how government issues, both domestic and international, can impact the travel and tourism industry, IHG and our owners and employees.

Think about your drive to work today. The lead news stories on the radio probably included the latest on topics such as immigration reform, global warming and data privacy. You know these are important matters, but specifically how do they—or might they— affect your life and work? And what can you do to have a say in the matter?

PublicAffairs @ IHG will serve as a resource to help untangle the complexities and provide perspective on the implications of current government events for our IHG Global Priorities: Travel & Tourism, Our People, Small Business, Carbon & Sustainability, Intellectual Property, Data Privacy and Tax. The goals are to help connect the headlines to our day-to-day reality and to let you know what IHG is doing, and what you can do, to influence legislative and policy decisions.

Please give us your feedback so that we can make sure the information we provide is useful to you. Email us at globalpublicaffairs@ihg.com and visit the IHG Public Affairs website at politicalactionportal.ihg.com for more in-depth information on the subjects covered here.

Enjoy the issue!

Immigration ReformA Search for the Right Balance

PublicAffairs at IHG®4

S tep into the lobby of the hypothetical Holiday Inn Express Anytown. This 130-room property is located in a

suburban community within a major U.S. metropolitan area. The labor market here is tight—finding employees to fill hourly wage jobs in particular is an ongoing challenge.

General Manager John Smith has decidedly mixed feelings about the current immigration reform debate. On the one hand, he knows that providing a “path to legal status” and an effective guest worker program for individuals who are currently in the U.S. illegally would allow him to tap into a sizable new talent pool. John is also well aware that the growth in naturalized citizens and employees with work visas would increase the cost of government social programs and could potentially lead to future tax increases. He knows that immigration reform legislative initiatives currently making their way through Congress include some provisions for supporting the growth of tourism to the United States and that these could, directly or indirectly, mean more business for his hotel.

John’s assessment is fairly accurate in boiling down this highly complicated issue to its essence, from a hotel operations standpoint. IHG and its owners have two primary areas of interest with regard to immigration reform:

1) Provisions that would affect our employee pipeline

2) The role the U.S. government plays in increasing inbound travel

The following provides an overview of where things stand currently, as well as

more detail on some of the key travel-and-tourism-related elements of the immigration reform discussion.

Issues & Impact• Current status of legislation: The Senate passed its version of immigration reform in late June, with bi-partisan support. The debate now moves to the House, where Republicans have virtually rejected the Senate’s comprehensive approach and are focusing on a package of more specifically targeted bills. Congressional opinions are divided on whether and when a compromise bill might pass both houses.

• Path to legal status: The Senate bill includes a means by which 11 million individuals who are now in the U.S. illegally could become citizens—creating a locally available employment talent pool that IHG hotel operators currently cannot access. The bill’s robust guest worker program aims at serving as a first step toward legal status. IHG has identified a need to hire 30,000 employees in the Americas over the next three years to replace staff and accommodate system growth.

• JOLT (Jobs Originating Through Launching Tourism) Act: This bi-partisan, bicameral legislation would create jobs by increasing travel and reforming outdated visa laws, while maintaing national security. Now incorporated into the Senate bill, the JOLT Act would help expand access to visa services for potential visitors to the U.S. without reducing or eliminating the necessary security protocols.

Provisions include faster visa processing, expedited entry for priority visitors and a pilot program replacing currently required in-person applicant interviews with virtual ones.

• General position of the U.S. travel and tourism industry, which IHG and the other major hotel companies support, behind the leadership of the U.S. Travel Association:

- Access to labor - Safe yet permeable borders

Next Steps & ActionsNow that the Senate has passed a comprehensive bill, focus shifts to the House of Representatives where the Judiciary Committee is already working on individual, targeted legislative initiatives. Pressure from the White House and the Senate will bolster our industry’s efforts to pass a good bill (or several bills), while we try to ensure that the key provisions addressing both inbound tourism and our employment pipeline are included on the House side. Public Affairs will issue legislative alerts to spur hotel-level outreach to Congress on specific provisions and eventually encouraging overall support for the bill(s). Look for an update in the Fall issue of PublicAffairs @ IHG. You can also stay up to speed on the issue by checking the Public Affairs website at politicalactionportal.ihg.com.

As the legislative process continues, the bottom-line IHG message regarding immigration reform remains consistent: the travel and tourism industry creates employment opportunities, and as industry leaders, we support efforts to help people climb the economic ladder. We believe a system of earned legalization is called for, though for the time being we’re reserving judgement about the current legislation’s ability to accomplish this.

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An Inside View Testifying About Tourism on Capitol Hill

PublicAffairs at IHG®6

“Being there with representatives of other leaders

in our industry gave me a more tangible sense of

the importance of tourism to our economy.”

Lori GaytanSenior Vice President, Americas Human Resources and Global Reward

T he camera lights go on, flooding the large, ceremonial room and causing the buzzing audience to

fall silent. Representative Lee Terry (R-NE), Chairman of the House Subcommittee on Commerce, Manufacturing and Trade, calls the session to order and introduces the members of the first panel of the day to present testimony.

“That’s when it really hits you—this is so important. What we say will become part of the Congressional Record,” recalls Lori Gaytan, who represented IHG in May as one of the panelists testifying about the economic impact of tourism. As Senior Vice President of Human Resources, Lori frequently serves as a spokesperson for issues pertaining to IHG’s commitment to Our People. But her invitation to appear on Capitol Hill was a first.

The opportunity arose from IHG’s participation in the 2013 AH&LA Legislative Action Summit in Washington in April. During that week, the Public Affairs team met with several members of Congress, including Rep. Terry. Soon after, the Congressman’s staff asked IHG to designate a representative for the panel speaking before the Subcommittee, which is a part of the powerful House Committee on Energy and Commerce.

Lori’s fellow panelists included: Roger Dow, President and CEO of the U.S. Travel Association; Kathleen Matthews, Executive Vice President and Chief Communications and Public Affairs Officer, Marriott International, Inc.; Brian Rothery, Assistant Vice President, Government Affairs, Enterprise Rent-A-Car, and Hudson Riehle, Senior Vice President, Research & Knowledge Group, National Restaurant Association. IHG and Marriott were the only hotel companies asked to participate.

“Being there with representatives of other leaders in our industry gave me a more tangible sense of the importance of tourism to our economy,” Lori says. “In hearing their testimony, and preparing for my own, I learned even more about the business of tourism and its interconnections to other key issues, such as healthcare.”

Each of the panelists read a prepared statement, and then the Subcommittee members asked a few questions of some of the participants. Lori’s testimony centered on the top benefits that tourism affords, including how the travel industry has emerged as an important driver of job creation, helping lead the recovery (see the sidebar on this page). She provided background on IHG and its specific impact, and used several IHG employees as case

studies for the fact that we offer our people the opportunity for a career, not just a job. Lori concluded by urging Congress to support important legislation and give consideration to issues that help ensure the ongoing health of travel and tourism, including:

• The Federal Match Funding Source for Brand USA—a national travel promotion and communications program designed to attract more international travelers to the United States

• The JOLT Act for visa reform (see the story on Page 1)

• Recognizing the value of responsible Federal travel

“My experience testifying also gave me a better understanding of the Congressional process. It was great to see it in action and play a role in it,” Lori notes. “We got a real sense that ordinary citizens like us have the opportunity to influence legislation. We were planting seeds that might help extend or change existing laws, or bring about the creation of new ones.”

Read Lori’s complete testimony on the Public Affairs portal at politicalactionportal.ihg.com.

• Travel injects $1.9 trillion into the U.S. economy, supports 14.4 million workers in America (one in eight jobs in the private sector) and ranks as a top 10 employer in 47 states and the District of Columbia (U.S. Travel Association).

• Inbound tourism has grown faster than domestic travel over the past four years and is projected to grow 7.3% in 2014, compared with 3.9% for travel within the United States (U.S. Travel Association).

• International inbound travel ranks ahead of agricultural goods and motor vehicles as the single-largest services sector export, accounting for 25% of the total in 2011 (Brand USA).

• The travel industry is one of the top 10 largest employers of middle-class wage-earners in the United States; 53 percent of all travel industry employees earn a middle-class wage or higher (U.S. Travel Association).

• IHG hotel operations and the spending associated with our hotels support close to 2 million jobs and generate $100 billion in sales—45% from the hotels themselves and 55% from the spending of guests (Oxford Economics, 2010).

An Inside View Testifying About Tourism on Capitol Hill

Travel & Tourism’s Economic Impact

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PublicAffairs at IHG®8

Congressman Rob Woodall (above, left)

recently toured the Holiday Inn Gwinnett

Center and met with the hotel team.

W hat’s one of the best ways for a hotel operator to ensure her or his

voice gets heard in Congress? Invite the local Congressman over for an on-site visit and tour of the Heart of house!

General Manager Tracy Johnson and her team at the Holiday Inn Gwinnett Center in Duluth, Georgia, teamed with IHG Public Affairs to pilot the concept in May, hosting U.S. Rep. Rob Woodall (R-GA), seventh district. The Congressman toured the entire hotel, but the highlight was when Tracy showed him the property’s Heart of house, in what was previously known as the “back of the house.”

IHG’s innovative and award-winning Heart of house program transforms those areas of the hotel not seen by guests into bright, engaging spaces, using walls, floors, ceilings and even stairs to create a two-way communication platform with employees. These revamped areas are used to inform staff members about IHG business priorities and provide an effective way to find out about other teams, training, job opportunities or simply to connect with the other employees at the hotel.

“When we showed Congressman Woodall our Heart of house, the Steering Wheel in particular stimulated a lot of conversation,” Tracy says. “We explained the four areas: Financial Returns, Customer Experience, Responsible Business and Our People, and we discussed the engagement survey and how it’s used.

“We were impressed because he had done his homework—he had researched IHG and was familiar with the company and our brands, including the IHG® Rewards Club, so that he could ask PublicAffairs at IHG® questions about how we deliver the brand promise and support our employees.”

The visit ended with an interactive Q&A session involving many of the hotel’s employees, with both the Congressman and team members asking and answering questions. For his part, Rep. Woodall noted, “It was a privilege to spend time touring the Holiday Inn Gwinnett Center and meeting the staff. The hotel as a business is an important contributor to the Duluth area economy and a valued member of its business community, and many of the people who work there are my constituents.

I enjoyed the opportunity to hear from them and to learn more about IHG and this hotel in particular.”

The IHG Public Affairs team is developing a guidebook that any hotel operator can use as a template for arranging and conducting a tour by their Congressional Representative or any other community leader, whether or not the property has undergone the Heart of house transformation. The guidebook will be available in the fourth quarter.

“It was clear that our business is important to Congressman Woodall,” Tracy says.

“His visit provided an opportunity to bring together his passion for serving the interests of the people in his district and our passion for serving our guests and bringing the brand to life. We feel we created the foundation for a great working relationship.”

Holiday Inn Gwinnett CenterBringing A U.S. Congressman into the Heart of house

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PublicAffairs at IHG®10

Data Privacy Defining the Boundaries

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W ith $2.6 billion in revenues coming from online bookings, IHG is understandably

invested in the ongoing debate around the collection and use of personal data.

The global discussion about data privacy centers on finding a workable push/pull in the areas of privacy of the individual—the parameters of what personal information companies should and should not have access to—and data security, or how companies collect, safeguard and use consumer information.

Privacy legislation and regulation under consideration on both sides of the Atlantic could have a tremendous impact on e-commerce in the rest of the world. As an increasing percentage of IHG’s advertising and bookings takes place online, restrictive laws passed in certain countries or regions could significantly affect our business in general and the IHG® Rewards Club in particular.

Here’s a brief overview of specific issues and actions in the realm of data privacy that the Public Affairs teams in the U.S. and Europe are monitoring closely for potential IHG involvement:

European Union • Online advertising: The EU introduced data privacy legislation a year ago that, as written, would have a negative impact on interactive advertising. However, recent changes in leadership within the EU may shift this complex bill’s direction and provide an opening for self-regulation constituting a “safe harbor” for businesses. The EU legislative process is complicated and the scope of the bill itself enormous, extending far beyond advertising. The IHG Europe Public Affairs team estimates one to three years for the legislation to pass, if it passes at all.

• Digital marketing: Separate from the online advertising legislation in process in the EU Parliament, the EU

Council (comprising the heads of state or government of the EU member states) has begun to explore developing a regulation governing interactive advertising.

While the initial direction appeared to be headed toward requiring an opt-in for any online marketing, indications are the Council now may be open to reaching a compromise arrangement that would be more favorable to industry. Ongoing debate among pro-business and pro-consumer interests in the EU has stalled progress toward any kind of digital marketing regulation for the time being. However, if ever enacted, an EU Council Regulation could become the overarching law covering digital marketing in Europe.

• Do Not Track: Since 2011, IHG has been in compliance with the U.K.‘s “cookie directive,” mandating what user data can and cannot be stored by websites visited. More restrictive still is “Do Not Track” legislation under consideration by the EU. This would enable users to opt-out of website tracking entirely, making it more difficult for IHG to market our hotels effectively to guests online. To make the business case against Do Not Track, IHG works with the Confederation of British Industry (CBI), the business organization lobbying the U.K. government on the data privacy issue.

United States• Senate: Senator Jay Rockefeller (D-WV), Chairman of the Senate Commerce, Science & Transportation Committee, has introduced rigorous privacy legislation

calling for opt-in requirements and other provisions that would make compliance by businesses difficult. Senator Mark Pryor (D-AR), Chairman of the Communications, Technology and the Internet Subcommittee, wants to take a different tack. Senator Pryor has indicated to IHG’s representatives that he prefers the approach advocated by the Interactive Advertising Bureau (IAB), a global collection of companies (including IHG) active in digital advertising— specifically, to provide industry with some sort of self-regulatory safe harbor in data privacy matters.

• House of Representatives: The new Chair of the Energy & Commerce Subcommittee on Commerce, Manufacturing and Trade, Rep. Lee Terry (R-NE), understands the data privacy issue from the business perspective and supports industry’s position. He is establishing a bipartisan working group within his subcommittee to look into the issues and attempt to come to consensus on a series of principles that would form the basis for draft legislation. IHG’s Public Affairs experts on Capitol Hill don’t believe a bill could be enacted until 2014 at the earliest. That said, they are keeping an eye on separate efforts by the House Judiciary Committee to limit the ability of law enforcement to access and collect data. If such legislation goes forward, it could become a vehicle for commercial data privacy provisions such as those described above.

Bottom line: As the global data privacy debate continues and the issue builds momentum in the public consciousness, the IHG Public Affairs team and our colleagues in Distribution & Relationship Marketing will keep a close watch to ensure appropriate action is taken to secure IHG’s commercial interests.

Since 2011, IHG has been in compliance with the U.K.’s “cookie directive,” mandating what user data can and cannot be stored by websites visited.

Public Affairs Go-To-Guide

IHG Public Affairs MissionIHG Public Affairs advocates for public policies that help our hotels, rather than 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: