1st quarter 2024: Our active stewardship illustrated

In line with our Engagement Policy, we noted that the Company had a high turnover rate of employees. We engaged with the Company to:

• Request that they resume reporting Health & Safety (H&S) data for the managed hotels as well as their legal scope employees.
• Request that they report turnover rates consistently for both legal scope employees and managed hotels.
• Request that they resume disclosing fatalities in managed hotels.

In January 2024, we held a videocall with the Company’s investor relations representative.

We engaged with the Company to understand their disclosure surrounding employee H&S as we had found inconsistencies in the universal registration document (URD). Overall, the high turnover is not an area for concern for the Company as it is in line with the industry average and the Company does not bear majority of the staff costs as most of their staff are hired through their managed and franchise hotels. They did acknowledge that this is a risk area from a reputational point of view given that the managed and franchise hotels use their names, so any labour issues could reflect poorly on the Company.

The Company provided us with information regarding the programmes they have in place to train and retain employees, and they are focusing on providing employees with personal development plans to enrich their future careers.

We did note that the Company’s lost-time injury rate had increased, and they stopped reporting on data for employees in their managed hotels, and they did not disclose the fatality figures for 2022 in their managed hotels, therefore we requested the Company to resume reporting the H&S data for managed hotels again. They explained to us their change in reporting methodology saying that this was done to reflect more accurate data as the managed and franchise hotels use different reporting systems and reconciliation of figures proves difficult at times. They said that they will consider changing the reporting KPIs as per our requests.

We also used this engagement as an opportunity to exchange on the Sustainability Linked Bond (SLB) the Company issued in 2021, which we hold in our portfolios. This conversation provided us with more information about the Company's progress towards achieving the SLB targets, and it also allowed us to give feedback on how the Company discloses data regarding its performance against these targets.

Following the engagement with the Company, we modified our START rating under the social pillar from B to C. This was done to reflect the reduction in the disclosure of social KPIs by the Company. We will continue to monitor whether the Company will implement our requests and engage where necessary.