Corporate Responsibility Report

Last updated September 2010

Innovation Collaboration Environment Community

www.ihg.com/cr Contents

About IHG 02

Innovation 14

Collaboration 18

Environment 26

Community 46

Our performance 64

What’s new 73

Corporate Responsibility Report

Corporate responsibility

About IHG

Innovation

Collaboration

Environment

Community

Our performance

What's new

Hotel of the future Our performance Book a greener hotel

Page 1

Corporate responsibility / About IHG / CEO message

Corporate Responsibility Report

Corporate responsibility CEO message About IHG CEO message “What will our hotels look and feel like in the future?” Approach As CEO of the world's largest hotel group I am frequently asked this question. When I Innovation look out into the future I see our hotels as more intelligent and sustainable. This thinking Collaboration is in keeping with changing consumer expectations. With over 4,000 hotels globally, we have a big responsibility and a big opportunity to make a positive difference. A small Environment incremental change across all our hotels can have a large impact. Given the economic Community downturn this is even more important. Our performance Though at times there seems to be a tension between tourism and the environment, this What's new tension creates a space for innovation. We are focused on developing better ways to design, build and run our hotels. Our approach isn't about offsetting carbon: it is about green hotel innovation that lessens our negative impacts, whilst enhancing the guests' hotel experience. This is why we introduced our online tool Green Engage in 2009 to help hotels operate in a more responsible and cost effective way. We have also introduced a CR Committee at board level to drive Green Engage and other CR initiatives from the top of the organisation.

Corporate Responsibility is an important value which is shaping how we better manage our costs and revenue. Being responsible reduces our costs, especially energy. It also makes our hotels more in keeping with our guests' values on the environment and the community. This way of thinking is especially important as we seek to proactively meet the challenges of climate change and other complex environmental and social issues.

This report will show you how we are translating our Corporate Responsibility thinking into actions. These actions are central to how we intend to deliver on our core purpose of creating Great Hotels Guests Love. I hope you enjoy our third CR Report and please do let us know what you think.

Andrew Cosslett Chief Executive

Page 2

Corporate responsibility / About IHG / Approach / CR approach

Corporate Responsibility Report

Corporate responsibility CR approach About IHG CEO message Key achievements Fast facts Approach Established a Corporate Responsibility Committee to drive our CR strategy Jennifer Laing, a Non- CR approach Executive Director, is the Stepped up hotel engagement with Green Engage, our online sustainability Governance approach Chairman of IHG's management tool, with 1,400 employees now signed up to use it. Responsible tourism Corporate Responsibility Policies Committee.

Innovation Read Jennifer's biography Key innovation objectives Collaboration Environment Refine our vision of what the green hotel of the future looks like

Community Enhance our CR communications, in particular giving regular updates to key Our performance stakeholders and seeking their feedback What's new Keep track of Government legislation to inform CR strategy. 900 hotels Between May 2009 and December 2009 more than 900 of our hotels signed up Corporate responsibility (CR) is an integral part of the way we do business and is at the to our Green Engage core of our business strategy. Being a responsible business gives us a competitive edge system, that’s roughly 20% and helps us to create value for the company and for society. of our estate.

As with other areas of our business our approach to CR is based on innovation and collaboration. We look for creative solutions to the environmental and social challenges we face, and we work closely with our partners to develop ideas and implement them.

It's this approach that will help us achieve the core purpose of our business: to create Great Hotels Guests Love. To measure our progress against this goal we focus on four We have placed corporate areas, which we call our 'How we win' priorities. Responsible business is one of those responsibility at the heart of priorities. our strategic thinking, Guest Experience: To operate a portfolio of brands attractive to both owners and embedded it in our strategic guests that have clear market positions and differentiation in the eyes of the guest. priorities across the business and set up internal Financial returns: To generate higher returns for owners and IHG through revenue measurement and delivery and improved operating efficiency. performance objectives. Responsible Business: To take an active stance on environment, safety and security, and community issues in order to drive increased value for IHG, owners and Gavin Flynn, guests. Senior Vice President People: To create a more efficient organisation with strong core capabilities. Strategy and Corporate Development Creating value through CR

Our CR strategy focuses on the two main areas where we believe we can make a difference, and which help us achieve our business objectives: Related content the environment, including reducing our carbon footprint. We are aiming to make a Innovation in action night’s stay with IHG more carbon efficient our communities, in particular the creation of local economic opportunities and Winning ways charitable work. Key issues Within these areas we look for opportunities that will create value for the business and society. We believe there is real competitive advantage in acting responsibly, which is playing a key role in our efforts to manage costs and drive revenue more effectively.

The way we have chosen to tackle carbon emissions is a good example. Rather than purchase carbon offsetting permits, we are working with partners such as hotel owners and suppliers to deliver emission cuts that are sustainable, responsible and help us to reduce costs.

Page 3 Strategic Corporate Responsibility

Build the foundation

Do no harm

Policies & governance

Measure & manage

Innovation & Collaboration

Do positive good

New products

New services

Strategic Corporate Responsibility

Effective risk and cost management

Creation of new value

Sustainable performance

For more on IHG’s overall strategy, see our corporate website

Building a strong foundation

We are a relatively new business entity within IHG. For that reason our main focus over the past two years has been to build a solid foundation that will support our CR strategy and activities.

In 2009 the IHG Board established a Corporate Responsibility Committee to set out our CR strategy and make sure we have the right policies, measurement and management systems in place.

Much of our work so far has involved applying the systems we develop to monitor and measure progress across the Group – in our franchised hotels as well as those we own or manage directly. One of our key initiatives is Green Engage, an online sustainability tool which gives our hotels the means to measure, manage and monitor energy, water and waste.

We have taken many steps forward but with 86% of our hotel estate operating under brand franchises the pace of progress is inevitably constrained. For instance, as we are still in the process of rolling out systems to our franchised hotels, some of our data does not extend across the entire Group. Consequently, our objectives in some areas are to continue rolling out systems until we are in a position to deliver specific results for our business as a whole.

We appreciate that we will only achieve our CR goals by getting all of our hotels on board. We are working towards that by building a strong base with our partners, through compliance with our CR policies through contracts and statements of intent, and by getting all of our hotels to work to the behavioural values set out in the Group’s Winning Ways.

With the groundwork in place we are keen to get to work on our CR priorities: defining the green hotel of the future, bringing new products to the marketplace, finding cost efficiencies for ourselves and our partners, and enhancing the value of our brands. We are already seeing how this will work with key initiatives such as Green Engage and our Innovation Hotel. Crucially, these initiatives have inbuilt feedback mechanisms that are helping us build a franchise community that is genuinely committed to our approach of growth through innovation.

We are also making good progress in other key initiatives including IHG Academies, Responsible Business Partnerships, our conservation partnership with Oxford University and our new HQ building. For more on these initiatives see our Innovation in Action section.

Page 4

CR and new value creation

Charity Create new value

Compliance Control

Priorities for action

We focus on activities that give us the opportunity to do the right thing and better manage our impacts while positively influencing our guests’ hotel stay. To help us identify and tackle these priorities we engage with our stakeholders. Our current priorities are:

climate change energy efficiency carbon costs/opportunities local economic impacts availability of skilled staff community support.

More details can be found in our Key issues section.

Find out how we have been tackling these challenges in the Innovation in action section.

In 2010 we will focus on:

developing a corporate responsibility communications strategy, focusing on more interaction with key stakeholders refining our stakeholder engagement process by holding a series of stakeholder round- table events rolling out Green Engage to 100% owned and managed hotels developing a carbon strategy revising our community strategy developing the commercial potential of our CR innovations.

About this report

We aim to make our CR communications cost-effective, sustainable and interactive. To that end we have combined the CR section of the IGH website and our online CR report into this one site, which allows you to select and download the sections of the site that interest you most. We do not publish a printed CR report.

Because we also want to make our reporting more dynamic we will also be updating certain elements of this site on a quarterly basis. Read more about our Reporting cycle.

PDF versions of our CR site from previous years can be found in the download section, at the top right-hand corner of each webpage.

Page 5

Corporate responsibility / About IHG / Approach / Governance approach

Corporate Responsibility Report

Corporate responsibility Governance approach About IHG CEO message Our approach to CR governance Related content Approach In 2009 we set up a CR Committee to deliver the strategic priorities of the responsible More about the Board CR approach business section of our Great Hotels Guests Love wheel and to determine the overall Governance shape of our Corporate Responsibility strategy. This formalises our aim to make CR a fully More on risk management approach integrated part of our business, putting the needs of society and the environment at the Code of Ethics and Business heart of our business objectives and broader risk management programme. Business model Conduct Our brands The CR Committee reviews and advises the Board on matters relating to the Responsible tourism environment, community and social investment, and policies relating to corporate Policies responsibility. It has met twice since its inception, focusing on developing our carbon strategy, defining the role of hotels in society and improving our CR communications. Innovation Collaboration The Committee reports to the Board and is chaired by Jennifer Laing, a Non-Executive Environment Director. Non-Executive Director, Ralph Kugler is also a member. To reflect the high priority we place on CR, CEO Andrew Cosslett and Non-Executive Chairman David Community Webster regularly attend meetings. Our performance The CR Committee also responds to regulatory changes, which have made CR a critical What's new component of effective corporate governance. Under new rules directors are responsible for environmental, employee, social and community matters, with public companies also required to include these issues in their annual business reviews.

A key requirement in 2010 will be the need to comply with a new carbon trading scheme in the UK, the Carbon Reduction Commitment (CRC). We are working with all our UK franchisees to implement the scheme and have created a Carbon Strategy team to manage the reputational and monetary risks. For more information on this and our other environmental regulatory risks see Environmental Legislation.

Operationally, Tom Seddon, Chief Marketing Officer, is the Executive Committee member responsible for Corporate Responsibility. David Jerome, Senior Vice President Corporate Responsibility, reports directly to him and chairs the cross-functional CR Steering Group.

The Board of InterContinental Hotels Group is responsible to the shareholders for the strategic direction, development, performance and control of the Group. Find out more about the Board.

The CR Committee was evaluated at the same time as all other committees during 2009.

Code of Conduct

We believe that strong ethics and good business go hand in hand. We are committed to operating our company with integrity and according to the highest ethical standards. In 2006 we revised our Code of Ethics and Business Conduct and made it publicly available on our website.

The new Code consolidates and clarifies expected standards of behaviour and sets out the ethical values of the Group. It states clearly that IHG's reputation is built on the trust and confidence of our stakeholders and is fundamental to our operations world-wide. We have a whistleblower line and communicate this through internal communications and a dedicated website www.ihgethics.com.

The Code applies to all directors, officers and employees of IHG, and should be read together with the company’s core values. We also provide conflict of interest training to key employees to ensure our ethical standards and the Group’s overall best interests are maintained.

Find out more on Corporate Governance at IHG in our Annual Report and Summary Financial Statements 2009.

Page 6

Corporate responsibility / About IHG / Approach / Governance approach / Business model

Corporate Responsibility Report

Corporate responsibility Business model About IHG CEO message Business Overview Approach 4,438 IHG is the world's largest international hotel company with more guest rooms than any Hotels in 2009 CR approach other hotel operator. Our core purpose is to create "Great Hotels Guests Love" and Governance between our seven hotel brands we have 4,438 hotels (at 31 December 2009), comprising approach 646,679 rooms across nearly 100 countries. Business model We directly employed an average of 7,556 people world-wide during 2009. When the Our brands whole IHG estate is taken into account (including staff working in both managed and 646,679 Responsible tourism franchised hotels) approximately 335,000 people are employed globally across our Hotel rooms in 2009 Policies brands.

Innovation Ownership Model Collaboration Related content Environment Our hotel ownership model is based on managing and franchising hotels rather than directly owning them. 640,828 rooms operating under IHG brands are managed or Definition of different types Community franchised and 5,851 rooms are owned and leased. See definitions of our different types of hotel ownership Our performance of hotel ownership. IHG Annual Report and What's new At the end of June 2009 we have 3,799 hotels operating under franchise agreements – Financial Statements 2009 86% of our total estate. Franchising enables owners to trade under one of our brands, taking advantage of our reservations systems, sales and marketing teams, training and development expertise, as well as benefiting from our brand reputation, which is increasingly important to our overall CR performance. Green Engage is currently voluntary for our franchise hotels but our CR policy is reflected in our contracts with owners.

We have 622 hotels operating under management contracts – 14% of the estate. Under a managed contract we run the hotels on a day-to-day basis with direct control over quality and service standards, but ownership of the buildings remains with a third party.

We own just 17 hotels ourselves – less than 1% of the estate. These are mostly in major cities such as London, Hong Kong, New York and Paris. Of our three operating regions the Americas is the biggest with a total of 3,479 hotel rooms (78%).

Total number of Hotels in 2009 by Region

78% Americas 3,479

16% EMEA 695

6% Asia Pacific 264

Total 4,438

Total number of Hotel rooms in 2009 by Region

69% Americas 445,354

19% EMEA 120,296

12% Asia Pacific 81,029

Total 646,679

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Corporate responsibility / About IHG / Approach / Governance approach / Our brands

Corporate Responsibility Report

Corporate responsibility Our brands About IHG Our brands include some of the best-known and most popular in the world. They range Related content CEO message from luxurious hotels in the world’s major cities and resorts to reliable family-oriented Approach hotels offering great service and value. Our brand strengths are built on our corporate Winning Ways values of Winning Ways and Room to be Yourself. CR approach Room to be Yourself Governance Read how CR supports our core business purpose. approach Our CR approach Business model Our brands

Responsible tourism Policies

Innovation

Collaboration

Environment

Community

Our performance What's new

Page 8

Corporate responsibility / About IHG / Approach / Responsible tourism

Corporate Responsibility Report

Corporate responsibility Responsible tourism About IHG CEO message Fast facts Approach 9% Travel and tourism is one of the world's largest industries, employing more than 220 Travel and tourism CR approach million people world-wide (Source: World Travel and Tourism Council) generates more than 9% of Governance approach Despite the global economic downturn, international tourist arrivals are predicted to global GDP (Source: World Responsible tourism increase from 903 million in 2007 to 1.6 billion by 2020 (Source: International Travel and Tourism Council) Policies Tourism Partnership). Innovation

Collaboration Environment IHG and responsible tourism Community Tourism plays a large role in the world economy and is an important source of wealth for Travel, in the younger sort, is Our performance many countries, particularly developing countries where tourism may be the primary force part of education; in the older, a part of experience. What's new driving economic prosperity. At the same time the industry faces increasing pressure to balance its economic performance with its social and environmental impacts. Francis Bacon, 1562 - 1626 As the largest hotel group in the world we acknowledge that this is the context in which we conduct our business. We believe that travel and tourism should be operated responsibly and that the long-term benefits of taking this approach far outweigh the costs. Hotels, as part of the global tourism industry, have a responsibility to ensure that owners and hotel general managers understand and adopt responsible tourism practices and that Related content they educate their guests and suppliers in these principles. Green Engage Responsible tourism is, therefore, a central focus for our CR programme. It will play a major role in the long-term viability of our business and of the travel and tourism sector. Climate change and what The responsible tourism industry is expected to increase from 903 million in 2007 to 1.6 we are doing to reduce our billion by 2020. We want to make sure we are in the best possible position to capitalise impacts on this. Community section We have made good progress on initiatives that address two of our industry’s biggest challenges – global climate change and the recent economic downturn, particularly its impact on local communities. These initiatives are helping us to measure and manage our environmental impacts, and provide jobs and training opportunities in the communities where we operate.

Climate change

By using resources such as energy and water wisely, minimising waste, conserving ecosystems and biodiversity, and sourcing locally wherever possible our hotels can reduce the negative impacts that contribute to climate change.

Find out more about climate change and what we are doing to reduce our impacts.

Local economic development

Responsible tourism is also about involving local people in tourism to generate greater wellbeing for their communities. Our hotels support economic development by creating stable sources of income and providing opportunities for both local employment and local businesses, notably as employees of and suppliers to the hotel.

Find out more in the Community section.

Partnerships

To ensure we remain at the forefront of developments in responsible tourism we have put a lot of effort into strengthening existing partnerships and developing new ones.

We are an active member of the International Tourism Partnership, established by the International Business Leaders Forum (IBLF), to promote responsible tourism through responsible leadership. The programme provides members with a non-competitive platform to share knowledge and resources, develop policy, and actively implement programmes that have a positive impact on economic, social and environmental issues.

Over the coming year we will be working with our peers on the programme to develop sector-relevant reporting criteria for the GRI.

Page 9 IHG’s InterContinental Brand has created a pioneering partnership with the National Geographic’s Center for Sustainable Destinations (CSD) to help embed responsible tourism principles throughout our key brands. You can read more about our work with National Geographic here, or view the 'What is Geotourism?' video.

InterContinental Brand & National Geographic – Bringing Responsible Tourism to life for IHG – Case study

Five Principles of Geotourism

InterContinental Hotels & Resorts has been working with National Geographic, widely acknowledged as leaders on geotourism, to develop a CR strategy that sets out to educate guests on responsible tourism and let them know how we go about supporting these principles.

The result is InterContinental’s Five Principles of Geotourism, which are based on the code of good practice devised by the National Geographic Center for Sustainable Destinations.

The new CR strategy was launched in July 2009 and cascaded globally during InterContinental’s ‘You Bring it to Life’ training programme. The aim of the launch was to inspire colleagues to share the brand’s mission for destination enhancement and sustainability at a local level.

Our Five Principles of Geotourism: We recognise that many of our InterContinental Hotels & Resorts already have their own activities promoting local business responsibility through environmental initiatives and community involvement. We are currently working with the hotels to develop these activities and share them with stakeholders and guests. Examples of the work undertaken by our hotels include:

Integrity of Place – InterContinental Bora Bora Resort & Thalasso Spa Working to enhance the character of Bora Bora by building a sea water air conditioning unit and Osmoser water filtration system to ensure local resources are not depleted by tourism and that coral and fish populations are protected and are able to regenerate.

Destination Appeal – InterContinental Al Bustan Palace, Muscat Helping to develop local infrastructure by constructing and maintaining sewage treatment plants to halt pollution and protect water supplies for the local farming community.

Community Appeal – InterContinental London Park Lane Supporting Well Child, a charity for sick children, through hotel and employee volunteering aimed at improving the quality of life for local children and their families.

Sharing our Stories – InterContinental Amstel, Amsterdam Helping guests and residents to gain a deeper understanding of sustainability issues in the communities they are visiting or working in, through supporting and promoting local food sourcing and sustainable fishing choices at the hotel.

Minimising Impact – InterContinental, The Willard, Washington Minimising the human and environmental impacts from tourism by considerably lowering energy and water usage, while leading employee ‘clean-up’ activities in the local community, and providing much needed water wells in Africa through funds saved from lower energy consumption.

In 2010 we plan to help hotels and resorts embed the Five Principles of Geotourism in their operations and develop more initiatives within the framework. To support them we are developing a Responsible Business toolkit and creating a series of short films that show best practice in bringing the Five Principles to life. These will be available for colleagues and guests on our online portals and in-room television. The films will Page 10 also be shown at National Geographic’s International Geotourism Summit in Washington in 2010.

Ann Nygard, Associate Director Operations, National Geographic Center for Sustainable Destinations, said they had chosen to screen the films because, “InterContinental Hotels (and Resorts) has made a major step forward in understanding and practising geotourism and has set a high benchmark for the hotel industry into the future.”

During the year, InterContinental will also work on a targeted communications strategy to encourage our employees, consumers and brand advocates to share their geotourism stories and enhance guests’ enjoyment of responsible tourism.

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Corporate responsibility / About IHG / Approach / Policies

Corporate Responsibility Report

Corporate responsibility Policies About IHG We have comprehensive Group-wide policies on key CR issues, including: CEO message Related content Approach Code of ethics and business conduct Environment CR approach Environment Governance approach Human rights Community Responsible tourism Community Human rights Policies The CR Committee is responsible for these policies. We regularly review our policies and Code of ethics Innovation implementation procedures to ensure we continue to meet best practice in these areas. Collaboration Our focus in the coming year will be on refining policies and rolling them out across the Environment entire Group. Find out more about the CR Committee.

Community

Our performance Environment What's new We acknowledge our responsibility to respect the environment and manage our impacts for the benefit of the communities in which we operate, and we are committed to measuring and managing those impacts and finding innovative ways to reduce them. We will:

implement sound environmental practices in the design, development and operation of our hotels encourage the development and integration of sustainable technologies endeavour to reduce our use of energy and water, and re-use and recycle the resources consumed by our business wherever practical engage our customers, colleagues, hotel owners, suppliers and contractors in our efforts to protect the environment provide the training and resources required to meet our objectives monitor, record and benchmark our environmental performance on a regular basis make business decisions that take these commitments into account communicate our policies, practices and programmes to all our stakeholders.

Find out more about our approach to the environment.

Human rights

We support and protect human rights wherever we can. As a responsible company with operations in nearly 100 countries, we believe that strong ethics and good business go hand in hand and we are committed to complying with the laws and regulations of the countries and jurisdictions in which we operate.

To demonstrate our commitment in this area we:

support the protection of human rights, particularly those of our employees, the parties we do business with and the communities where we operate respect our employees’ rights to voluntary freedom of association, under the law provide a safe and healthy working environment do not support forced and compulsory labour or the exploitation of children support the elimination of employment discrimination and promote diversity in the workplace provide our employees with remuneration and tools for growing their careers, and take their wellbeing into consideration promote fair competition and do not support corruption conduct our business with honesty and integrity in compliance with applicable laws develop and implement company procedures and processes to ensure we comply with this policy.

Find out more about our approach to Human rights.

Page 12 Supporting our communities policy

We are committed to active involvement in local community issues. Ultimately that means being a valued, responsible community partner by ensuring that our business objectives enhance the quality of life in our communities.

The aim of our charitable endeavours is to support global efforts that represent the business goals of IHG and which give back and say thank you to the communities in which we operate. The activities we support must be aligned with our corporate values, ‘Winning Ways’, and our Code of Ethics and Business Conduct.

Find out how we choose which charities to support and our approach to charitable giving.

Review structure and process Corporate donations are governed by the Steering Group of the Corporate Responsibility Team (CRT) the CRT draws on staff input to guide our ‘Supporting our Communities’ policy the CRT recommends an annual budget for approval by the Executive Committee, sets policies, guidelines, criteria and strategic direction, and approves all contributions with Executive Committee oversight all approved contributions are reviewed by our Corporate Affairs department.

Proposals concerning local communities are referred to the relevant corporate office or hotel for their consideration.

Page 13

Corporate responsibility / Innovation

Corporate Responsibility Report

Corporate responsibility Innovation

About IHG The tension between tourism Innovation and sustainability creates a Innovation in action space for innovation.

Innovation Hotel Corporate Responsibility (CR) is at the core of our Collaboration business strategy. It is about how we do business and create value for the company as well as for Environment society. Community find out more Our performance

What's new

help us create a green hotel

Read more about our biggest Read our CEO statement innovation achievements of the year, including:

Our Green Engage tool Our sustainable global offices Our Innovation Hotel Our IHG Academies Our Oxford University partnership

innovation in action

Page 14

Corporate responsibility / Innovation / Innovation in action

Corporate Responsibility Report

Corporate responsibility Innovation in action About IHG Innovation Key achievements Fast facts Innovation in action Rolled out Green Engage, our online management tool to help hotels on their Green Engage awards: Innovation Hotel journey to be green, to 900 of our hotels Collaboration 2009 Hotel Visionary Received a number of awards for Green Engage and our Innovation Hotel Award from Hospitality Environment Invested in making our US office in Atlanta more energy efficient Technology Magazine Community Worldwide Hospitality Our performance Awards for best initiative What's new We acknowledge there is a tension between tourism and the environment but we believe in sustainable this can be a creative one, providing an opportunity to find innovative solutions to the development 2009 environmental, social and economic effects of our business. With over 4,503 hotels globally and a new hotel opening every day, we have a big responsibility and a real opportunity to make a positive difference.

Generating innovative improvements to the way we work is a key element of our Related content response to the social and environment challenges we face. We believe in the power of leading by example such as at our new global headquarters in England but we also Green Engage recognise that head office does not have all the answers. For that reason we work closely with our partners to arrive at sensible and sustainable business-led solutions. Book a greener hotel

We are making good progress with a number of innovative initiatives that show how this Energy section approach is shaping our response to some of the major CR issues of the day. Innovation Hotel

Green Engage

We are committed to finding new and innovative approaches to building and running our hotels to mitigate our impact on climate change and future proof our business against rising carbon and resource costs. Central to our environmental strategy is defining what a green hotel is and how we will achieve energy and carbon reductions.

Green Engage is an online management system that enables hotels to measure, manage and report their key environmental impacts. It also helps them to identify the most appropriate solutions to their local environmental risks by providing best practice advice that is specific to their type of hotel and the climate they operate in.

See Green Engage in the Environment section

Book a greener hotel

Global offices

Our global headquarters in the UK and the USA are innovative examples of sustainable building design.

Denham HQ We relocated our global IHG Headquarters (HQ) to a new site at Denham, just outside London, in September 2008. The new HQ provided us with a blank canvas that enabled us to design our offices in consultation with our employees and with sustainability in mind.

We wanted our new HQ to be a workplace that reflects the modern, open and professional company we are, as well as the values we work to. We also wanted the building to be sustainable in all ways, from the materials and suppliers we used for the refurbishment, to the ongoing reduction of our carbon footprint and the creation of an environment that supports the wellbeing of our employees and demonstrates environmental best practice.

Some of the key features are:

by the end of the project over 90% of waste was successfully reused or recycled, preventing almost 400 tonnes of waste from ending up in landfill we helped reduce the project’s carbon footprint by supporting local suppliers based within 25 miles of Denham

Page 15 energy- and water-saving measures include energy efficient lighting, solar panels in the car park, low flow plumbing, reducing water consumption by 20%, and zone metering all of our furniture contains recycled material and up to 95% of it can be recycled in turn.

Read more about our new Denham HQ

Atlanta office In 2009 our US Office in Atlanta invested in making the office more energy efficient. Find out about some of the building’s key features in our Energy section.

Innovation Hotel

Our award-winning Innovation Hotel, launched in 2008, is an online showcase for what hotels of the future might look like if they use green technologies.

Go to Innovation Hotel

IHG Academies

We know that the global economic downturn is having an impact on the communities in which we operate. We also know that if we want to grow as a business we need to develop our own talent pool. Our IHG Academy is an innovative approach to supporting local communities while also supplying our hotels with a sustainable talent base.

Oxford University Conservation Project

IHG has joined forces with the University of Oxford to accelerate vital and innovative research into conservation. We have pledged up to US$1million over a five-year period to help Oxford increase its research capability into how climate change is impacting on biodiversity. This will inform our future hotel design and operations.

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Corporate responsibility / Innovation / Innovation Hotel

Corporate Responsibility Report

Corporate responsibility Innovation Hotel About IHG Innovation Key achievements Innovation in action 2,400 Made our Innovation Hotel more interactive Roughly 2,400 people a Innovation Hotel month visit the Innovation Collaboration Hotel and the average virtual Environment Consumer research confirms that the majority of our customers want to make choices that guest stays for nearly 7 minutes, some of the longest Community are better for the environment and for communities. This strengthens our determination to find innovative ways to act responsibly throughout our brands and services. session times on our overall Our performance PLC site What's new Our Innovation Hotel was created so that our guests could tell us what they like and share their ideas with us, and to provide us with a place to set out our latest thinking. The site allows us to explore possibilities and consider how we might incorporate new ideas in our Green Engage programme. Geared to online guests and members of the public, this interactive site has brought a step-change in our relationship with these important stakeholders. Love the ideas in the This year we have made the Innovation Hotel more interactive and will be regularly innovation hotel, everybody publishing our visitors’ top ideas and latest comments. We will look to test more ideas talks about climate change, I through Green Engage and will use feedback from visitors to inform current and new know I would feel good product and service development. staying at a place where there is a conscious decision made Innovation Hotel won a number of awards over the past year including: to support the environment.

2009 CSR Innovation Award from Hotel Magazine Innovation hotel online Worldwide Hospitality Awards for best initiative in sustainable development 2009 guest, 2009 Hotel Report Awards ‘Innovator Award in CSR’ – 2008

Take a journey through the Innovation Hotel

Page 17

Corporate responsibility / Collaboration

Corporate Responsibility Report

Corporate responsibility Collaboration

About IHG We are more than the sum of Innovation our parts.

Collaboration The IHG model is based on partnership, so Approach collaboration with key stakeholders is a natural corporate behaviour within the Group Our partners and stakeholders

Key issues find out more

Environment

Community Our performance What do our employees think? What's new

The creation of new models of partnership to tackle complex socio-economic and environmental problems represents one of the most important, and at the same Green Engage owners perspective case time challenging, trends in study corporate responsibility. Jane Nelson, Senior Fellow and Director, Corporate Social Responsibility Initiative, Kennedy School of Government, Harvard University

our partners

Page 18

Corporate responsibility / Collaboration / Approach

Corporate Responsibility Report

Corporate responsibility Approach About IHG Innovation Key achievements Collaboration 6,700 Established a new partnership with Oxford University's Department of Plant The United Nations Global Approach Sciences Compact is the world's Our partners and stakeholders Signed up to the United Nations Global Compact – a strategic policy initiative for largest corporate citizenship Key issues businesses that are committed to operating responsibly and sustainability initiative. Since its official launch on Environment Continued to co-create the future of responsible hotels with our stakeholders 26 July 2000 the initiative Community through our Innovation Hotel website. has grown to more than Our performance 6,700 participants, including over 5,200 businesses in What's new 130 countries. Key collaboration objectives (Source: UN Global Compact website) Refine and integrate CR strategies for brands as appropriate

Refine our stakeholder engagement process and hold a series of round-table events Related content Enhance our CR communications with stakeholders Key priorities in our Key issues section

Our business model is based on partnership, so working closely with key stakeholders Our stakeholders comes naturally to us.

Our stakeholders are groups or individuals who are interested in or are affected by our operations. They provide us with opportunities to learn about emerging issues, challenges and opportunities and work with us to develop new solutions to some of our biggest challenges. Their input helps us shape our strategy and decide which CR activities and investments to prioritise.

We have conducted a mapping exercise to identify our key internal and external stakeholders, the CR issues that are most important to them, and the potential impact of these on our business and on local communities.

Key stakeholder groups

Guests & corporate clients

Owners & franchise holders

Local communities

Employees

Shareholders Suppliers

Academic institutions

NGOs

Governments

Institutional stakeholders

Stakeholder engagement process

We have a formal and iterative process for engaging with our key stakeholders through meetings, one-to-one interviews and surveys. Their feedback influences the development of our CR strategy.

Our stakeholders tell us they are concerned about a range of issues from climate change and biodiversity to green cost savings and carbon regulation. Using their feedback we assessed the issues that have most impact on our stakeholders and IHG, identifying the following areas as critical to our business:

climate change energy efficiency

Page 19 carbon costs/opportunities local economic impacts availability of skilled staff community support.

For more information on our key priorities, please see our Key issues section.

Our stakeholders also provide us with invaluable feedback on our current CR programme and communications. As a direct result of what they told us, we are improving our CR communications and targeting them to address our different stakeholder groups in a way that suits them; we are also revisiting our community strategy.

We will continue to refine the way we engage with our stakeholders. This year we have made a commitment to look at ways of further formalising our stakeholder engagement process and seeking more opportunities to share learning on CR through, for example, round-table events.

Page 20

Corporate responsibility / Collaboration / Our partners and stakeholders

Corporate Responsibility Report

Corporate responsibility Our Partners and Stakeholders About IHG Long-term business partnerships and stakeholder engagement allow us to better Innovation understand our business context and to consult widely on sustainability issues. This Collaboration section highlights some of the programmes and partnerships we have been developing Green Engage reduces our Approach this year. carbon footprint, gets people in the company involved in Our partners and green issues and helps them stakeholders Guests & Corporate Clients to understand the benefits of Key issues green management. We would Environment Our core purpose is delivering Great Hotels Guests Love. As such, feedback from the like to introduce Green Engage to more of our hotels Community guests who stay in our hotels is central to our CR strategy. Our investment in consumer insight research over the past two years confirms that CR is important to the majority of in the near future. Our performance our customers and that they want to know what we are doing. This report will keep them CEO Glenn Squires, Pacrim What's new updated on our progress throughout the year. Hospitality Our Innovation Hotel also provides our stakeholders with the means to create the hotel they want by sharing ideas on how to make a hotel greener across a broad spectrum of design and operations elements. Find out what people are saying about our Innovation Hotel.

We know that many of our corporate clients have set themselves sustainability targets and look for our assistance in helping them achieve these targets. We provide corporate The CSR Initiative at clients with details of our own carbon footprint when they choose to do business with us. Harvard's Kennedy School is At the same time we have set ourselves a strategic objective of making every guest’s stay working with IHG and other at one of our hotels more carbon efficient. companies to evaluate new multi-stakeholder models in The National Business Travel Association, representing more than 4,000 corporate travel the areas of expanding managers, recognised our commitment to supporting societal needs and reducing our economic opportunity, building environmental impact in its first annual CSR awards this year. This is significant as the human capital and improving NBTA is the authoritative voice of the business travel community and collectively manages governance and accountability and directs more than $200 billion of expenditure within the business travel industry. in developing countries. NBTA is dedicated to putting CSR policies into everyday practices to promote sustainable social, environmental and economic benefits and to encourage and educate membership Jane Nelson, Senior Fellow on CSR. and Director, Corporate Social Responsibility Initiative, Kennedy School of Owners & Franchise Holders (The IAHI) Government, Harvard University We own, lease and manage 639 hotels worldwide and have direct control over their CR activities. Although we do not own our franchise hotels we now work closely with hotel owners through our owners association, the IAHI, to shape and implement our CR strategy.

The IAHI has been very supportive in the development of our environmental management tool, Green Engage. During 2009, nearly 250 franchised hotels adopted Green Engage. Our target for 2010 is to continue to sign up new owned and managed hotels so that we have 100% taking part. We would also like to make significant progress on the number of franchised hotels taking part.

Our monthly community involvement survey enables general managers to report on community and environmental activities at an individual hotel level. Read more about how we support our communities.

Page 21

Green Engage – An owner's perspective – Case Study

Canadian hotel group Pacrim Hospitality signed up seven of its hotels to the Green Engage pilot phase in June 2009. Despite some initial concerns that monthly measuring and reporting might be an unwelcome burden, the hotel was soon noticing the benefits.

Roger Rowsell, Green Engage co-ordinator at Pacrim, said: “Implementing Green Engage has been a huge advantage in this economic downturn. Our revenues are down and Green Engage provides real opportunities to reduce energy consumption and therefore our costs. At a conservative estimate we believe we could save CND $130-150 per hotel room per year.”

Now that all seven hotels have got to grips with measuring their water, waste, electricity and gas consumption they are beginning to explore Green Manage, the area of the system that offers best practice ‘green’ improvements throughout the entire hotel lifecycle. Although the seven hotels are starting to see some minor paybacks now, the real gains are expected to come in 18-20 months when changes suggested by Green Engage have been put into action.

Pacrim’s CEO Glenn Squires sums up the benefits for his hotels: “Environmental issues really resonate with our customers and they are expecting us to be advocates and only engage in projects that are good for the environment. They want to see commitment beyond towels on the rack. Green Engage does exactly that. It reduces our carbon footprint, gets people in the company involved in green issues and helps them to understand the benefits of green management. We would like to introduce Green Engage to more of our hotels in the near future.”

Local communities

In many cases the lack of a skilled workforce is a barrier for developing nations to tap into the economic benefits that travel and tourism have to offer. In China we launched the IHG Academy, a public/private partnership that provides hospitality job training in our local communities. Read more about this and review our student interview case study in the Community section of this report.

Employees

We place great importance on communicating information about our business and its performance to employees. Because CR issues are central to our company values they feature prominently in global management conferences, informal briefings, in-house publications and our intranets.

In September 2009 we held a Green Day at our UK HQ to raise awareness of IHG's approach to CR. During the coming year we will work with HR to ensure that we are following sound principles for Green Meetings and Green Training materials. We will also set up a dedicated section on CR in our Leaders Lounge, a virtual community of IHG leaders that provides time-effective tools, tips and articles that reinforce our strategy and help managers improve their leadership. This online tool allows users to connect with and share best practices with peers and senior IHG leaders around the globe.

In 2010 we plan to set up a green forum to provide staff with a more formal platform through which to share CR learning. This group will be responsible for managing our building’s Green Engage journey and to ensure that we continue to live by our green values and lead by example. We will provide updates on this forum as the year progresses.

Shareholders

We report formally to shareholders twice a year and release quarterly results. In addition, regular meetings are held with major institutional shareholders to discuss the progress of our business, performance, plans and objectives.

IHG is included in the FTSE4Good Index. As well as assessing whether we continue to meet globally recognised standards on CR, such indexes facilitate our engagement with the wider investment community on CR issues.

Our Annual General Meeting also provides an opportunity to meet private shareholders. Our shareholders can read about our approach to CR in the dedicated CR sections of our Annual Review and Annual Report.

Suppliers

Feedback from suppliers helps us to better understand how we perform against our peers and gain a clearer picture of our risks.

Wherever possible we encourage our hotels to source goods and services locally. In

Page 22 addition to IHG supporting local suppliers, we also need to promote responsible business practices by those same suppliers. One area we are working on with suppliers is procurement – find out more in our Supply Chain section.

Academic Institutions

We want to be leaders in CR within the hotel and tourism industry. That is why we aim to work with the best, most forward-looking academic thinkers on the subject.

Cornell University School of Hotel Administration

We took part in a hospitality industry sustainability round-table event hosted by Cornell University School of Hotel Administration, which focused on “The Role of the Sustainability Department in Hotel Companies”, “The Impact of Emerging Codes, Laws and Regulations”, “Guest Engagement and CSR (corporate social responsibility)”, and “Carbon”. Cornell is a leading hospitality management school dedicated to educating the next generation of leaders in our industry.

Harvard University John F Kennedy School of Government

We joined Harvard’s CSR Initiative at the JFK School of Government in 2008. The Initiative works with IHG and other companies to assess new ways of opening up economic opportunities in developing economies. Its Visiting Practitioners’ programme brings IHG managers and non-profit partners together with students from different disciplines to share lessons on building cross-sector partnerships for the public good.

We have also worked closely with the student-led CR Council on campus, which is continuing to provide us with invaluable feedback on our CR communications.

In 2008, Harvard University studied our IHG Academy with other hospitality-related partnerships in its report: “The Role of the Tourism Sector in Expanding Economic Opportunity”.

University of Oxford

We are working with the University of Oxford in a project to recognise and conserve plant biodiversity.

Find out more about our work with Oxford University

National Geographic

Our InterContinental brand has been working with the National Geographic Center for Sustainable Destinations to develop a responsible tourism strategy for ourselves and our guests. The result is InterContinental’s Five Principles of Geotourism, which are based on the code of good practice devised by the National Geographic Center for Sustainable Destinations.

Find out more about our work with National Geographic

NGOs

Global Compact

This year we became a member of the United Nations Global Compact and are committed to aligning our operations, culture and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. We will report on our progress against the ten principles within the next year.

BITC

We joined the Business in the Community forum in 2009. We have committed to improve the way we manage our resources, human and environmental, in collaboration with other members. Our membership of BiTC will help to inform our revised community strategy.

Page 23 United States Green Building Council and LEED

David Jerome, Senior Vice President of Corporate Responsibility at IHG, is a member of the United States Green Building Council's Hospitality Advisory Working Group.

Industry Specific Stakeholders

We work with a number of stakeholders on specific industry issues.

World Travel & Tourism Council (WTTC)

We are members of the World Travel & Tourism Council (WTTC), which promotes the tourism sector, highlighting its large economic impact as well as promoting the protection of the natural, social and cultural environment.

International Tourism Partnership

We are an active member of the International Tourism Partnership (ITP), established by the International Business Leaders Forum (IBLF) to promote responsible tourism through responsible leadership. The programme provides members with a non-competitive platform to share knowledge and resources, develop policy and actively implement programmes and initiatives that have a positive impact on economic, social and environmental issues.

We will also be working with our peers in the programme to develop reporting criteria that are relevant to our industry for the GRI over the coming year.

Review the IHG Academy featured in the latest ITP report

Meetings Professionals International Partnership

IHG is working with the Meetings Professionals International MPI Foundation on a Green Meetings project to further the advancement of thought leadership studies, research, and the development of standards and business content in the area of corporate social responsibility (CSR)

Page 24

Corporate responsibility / Collaboration / Key issues

Corporate Responsibility Report

Corporate responsibility Key issues About IHG Innovation Assessing stakeholder issues Collaboration We analysed the issues our stakeholders said mattered to them and used them to Approach prioritise the areas identified as having the highest impact for our stakeholders and the Our partners and stakeholders business. We continue to use stakeholder feedback to inform the development of our CR strategy and stakeholder engagement programmes. Key issues

Environment

Community Customer relations Ethical consumerism Climate change Our performance Employee wellbeing and CR governance Energy efficiency What's new employee relations Guest health & safety Carbon costs/opportunities Regulatory compliance Hotel security Local economic impacts Hotels open – even to controversial guests/events – Innovation/value creation Availability of skilled staff absent public safety concerns Disaster response Community support

Stakeholder relations Conservation Water use

Business ethics (bribery & Equal opportunities & diversity Suppliers’ impacts corruption) Sex tourism/Prostitution/Adult Waste management Customer privacy entertainment Biodiversity Business partner environmental and human rights impacts Employee health & safety

Air emissions (non-GHG) Business partner economic impacts Natural resource use

Page 25

Corporate responsibility / Environment

Corporate Responsibility Report

Corporate responsibility Environment

About IHG Innovating to reduce our Innovation impact where it matters – in Collaboration our hotels.

Environment In our owned and managed estate, we seek to Approach achieve an energy savings of 6% to 10% over the next three years (2010-2012) on a per available Green Engage room night basis Climate and carbon find out more Energy

Water

Waste IHG Denham HQ Biodiversity case study Community Explore how we live our Our performance values at our Global Learn about our new online sustainability tool What's new Headquarters in the UK book a green hotel read more

Find out more about 59KG IHG's carbon footprint

IHG’s carbon footprint is 59KG per room night sold

our performance our carbon footprint

Page 26

Corporate responsibility / Environment / Approach

Corporate Responsibility Report

Corporate responsibility Approach About IHG Innovation Key achievements Collaboration $500,000 Owned/managed hotels met their target of reducing energy use by up to 10% in The average IHG hotel Environment 2009 spends over US$500,000 on Approach 900 hotels set up in Green Engage in year one energy usage each year. Environmental legislation Established a carbon strategy team Green Engage Nearly 1,000 people took part in sustainability training Climate and carbon Winner of Worldwide Hospitality Award 2009 for best initiative in sustainable Energy development for Green Engage and the Innovation Hotel. Water 4,438 With over 4,438 hotels and a Waste new hotel opening every day Biodiversity we are in a strong position Key environment objectives Community to advance the use of green building technologies and Our performance Continue to roll out Green Engage to 100% of our owned and managed hotels, processes getting new hotels on board and expanding the system into franchised hotels in all What's new three regions Achieve energy savings of 6% to 10% in our owned and managed hotels over the next three years (2010-2012) on a per available room night basis.

Read IHG's Environmental Policy Climate change is already having a major impact on the travel and hospitality industry. As the largest hotel chain in the world we know that the potential climate change costs to our business are huge. We want to continue to grow responsibly and that means rising to the challenge of reducing our energy, carbon and resource impacts. We are committed to doing this by seeking new ways to reduce and manage emissions across our hotel estate rather than through purchasing carbon offsets. This provides an opportunity to work Related content closely with our partners to develop innovative technology and identify and implement practical, cost-efficient measures that are both sustainable and responsible. Green Engage Book a greener hotel Our overall approach is based on our environmental policy. Building on this, in March 2009 we launched Green Engage, our ground-breaking online sustainability tool which Environmental legislation defines our vision of a sustainable hotel. As thinking evolves in this area, so too does our vision of what a green hotel looks like and we constantly seek the input of internal and external stakeholders in order to find new and better ways to design, build and run hotels.

Green Engage

Green Engage enables us to measure, manage and report on the environmental and other CR impacts of our hotels across the entire Group. It provides recommendations for both new and existing hotels in four different climatic regions. Its recommendations cover design, operations, and technologies aimed at reducing energy, water and waste, cutting carbon emissions, improving guest health and comfort, reducing operating and maintenance costs, and raising guest and staff awareness of sustainability issues.

Feedback from guests and the public on our Innovation Hotel site is taken into account as we regularly update Green Engage.

We have more than 4,438 hotels in our buildings portfolio and we are opening a new hotel a day. We are therefore in a strong position to advance the development of new ‘green building’ technologies and processes and to use our critical mass to bring them to market. We have recommended that our Green Engage hotels look to create these opportunities for local suppliers.

Competitive advantage

We also believe there is a real competitive advantage in reducing our impacts and providing 'green' choices for our guests and corporate clients. We are dedicated to enhancing the quality of our guests’ stay, while having a positive impact on local communities and the global environment. We are now offering guests the opportunity to book a 'greener hotel'.

We have incentives in place for our staff to achieve our green targets. Key Performance Objectives (KPOs) are in place throughout the business for the roll out of Green Engage.

Page 27 Employee education

Effective staff training is essential to achieving our sustainability objectives. We can only achieve the sustainability measures put in place by our design and construction teams if we educate our staff to use them properly. We encourage all of our hotels to put training in place to help their employees use the hotel’s sustainability initiatives and understand the purpose and goals of ‘green’ hotel management strategies.

In 2009 we developed a new training package for our staff and owners called Green Engage – The Fundamentals. This builds on and replaces the previous Green Aware training course and integrates more fully with Green Engage and our new corporate management wheel, of which Corporate Responsibility is one of the segments. In 2009, 300 people took the refreshed Green Engage – The Fundamentals course and we plan to roll it out further in the coming year. If you are an IHG employee interested in attending this course please contact the CR Team.

In September 2009 we held a Green Day at our UK headquarters to raise awareness of IHG’s approach to CR. Activities included:

surveying staff to find out what they think about IHG’s approach to CR screening an educational CR documentary educating employees on the environmental credentials of our HQ building promoting the work our staff kitchen is doing to ensure food is sourced ethically and locally providing information on running greener meetings in our conference area fundraising for Oxford University’s conservation project.

Employees told us they would like us to focus on reducing waste and we introduced a new efficiency campaign ‘War on waste’. They also indicated they would be in favour of a cycle-to-work scheme and discussions are now underway to begin implementing this. We also display information about our carbon footprint and the Innovation Hotel more prominently on our website as a result of feedback during the event. Proceeds from the day were donated to our conservation project with Oxford University.

Feedback from our staff questionnaire tells us that there is good awareness of CR at IHG with nearly 90% of staff aware of our online report. Building on this we have extended the way we use our corporate intranet site ‘Merlin’ to ensure all staff have access to our CR policies. We have also included educational material in our meetings area to help colleagues run their meetings in a more sustainable way.

Guest education

Encouraging our guests to behave responsibly is crucial to the effective implementation of our sustainability measures. We are doing this by making recommendations to our hotels through Green Engage, such as:

using signage, literature and helpful front-of-house staff to draw attention to the green efforts of the hotel and encourage guests to participate promoting local sustainability shops, activities and alternative means of transport so that guests’ environmentally conscious choices permeate into the surrounding economy providing guests with feedback on their energy and resource usage in a friendly, informative manner.

Also through Green Engage we are capturing how our different hotels around the world engage with guests on environmental issues in order to share learning across the Group. One of the initiatives helping to bring responsible tourism principles to life for our guests is our partnership with National Geographic.

In turn, guests can provide us with feedback through our Innovation Hotel site and help to inform the future design and operation of our hotels.

Page 28

Corporate responsibility / Environment / Approach / Environmental legislation

Corporate Responsibility Report

Corporate responsibility Environmental Legislation About IHG Our response to environmental legislation is clear and simple – to comply with legal Innovation requirements wherever we operate. But we also aim to go beyond that, developing Collaboration sustainability programmes that make sure our business is ahead of regulatory demands. 22 22 US states now have Environment As a global brand operating in more than 100 countries those demands are significant environmental regulations Approach and IHG is exposed to the ever-increasing raft of legal environmental measures, that affect hotels. Environmental particularly on carbon emissions. The European Union currently operates the largest legislation emissions trading scheme in the world and the US and several other countries are also in the process of developing schemes that will place greenhouse gas emission caps on Green Engage companies. Climate and carbon These will increasingly have a direct impact, not just on major carbon emitters, but on Energy other sectors such as the hotel industry. As an example, from 2010 our operations in the Water UK will have to comply with a new carbon trading scheme, the Carbon Reduction Commitment (CRC). This will compel companies to monitor energy use and purchase Waste carbon allowances corresponding to CO2 emissions. There are significant implications for Biodiversity franchise-based businesses such as ours. We are actively working to support all our Community franchisees within the scope of the CRC. If we do not proactively engage all employees Our performance to reduce emissions – in both our owned and franchised hotels – we risk public censure as well as financial penalty. What's new To address these complex regulatory requirements, we have set up a Carbon Strategy Team. We review our carbon strategy regularly with the IHG CR Committee and have discussed this issue with our independent owners’ group the IAHI to ensure our franchise business partners are fully engaged.

It is clear to us that as new legislation emerges, we will continue to need to take steps to make our hotels more energy and cost efficient and to ensure we are meeting legislative requirements. One example is the inclusion of national regulatory demands into our Group-wide sustainability tool Green Engage to ensure hotels are fully prepared for incoming regulation.

We are not aware of any significant fines for non-compliance with environmental laws and regulations.

Page 29

Corporate responsibility / Environment / Green Engage

Corporate Responsibility Report

Corporate responsibility Green Engage About IHG

Innovation Key achievements Download Green Engage sign Collaboration up form (37Kb) Set up 900 hotels to use Green Engage in year one Environment Established growing and active community of green champions in Green Engage Approach Green Engage Owned/managed hotels met their target of reducing energy use by up to 10% in 2009 Book a greener hotel

Climate and carbon Adopting a system like Green Energy Engage, which offers the Key objectives opportunity to share Water information, establish systems Waste Continue to roll out Green Engage to 100% of our owned and managed hotels and for benchmarking and sharing extend this into the franchised estate in all three regions best practices with other IHG Biodiversity hotels is a valuable tool to Seek energy savings of 6% to 10% in our owned and managed estate over the next Community advance our objectives in this three years (2010 -2012) on a per available room night basis Our performance area quickly and consistently. Ensure that Green Engage is used accurately and regularly by participating hotels What's new Gabriela Gonzaga, of the InterContinental Hotel São Paulo Green Engage Fast Facts

Green Engage can help our hotels make 15-25% in energy savings. That equates to $200 million in IHG portfolio savings

Green Engage is our new Group-wide online sustainability management system

David Jerome, our Senior Vice President for CR, explains how the system works and how it is playing a key role in helping IHG achieve its CR goals.

What is Green Engage?

Green Engage is our comprehensive online sustainability system. It tells our hotels what they can do to be a ‘green’ hotel and gives them the means to conserve resources and save money – by measuring, managing and reporting on their hotel energy, water and waste consumption, as well as their community impacts. We believe this offers a huge advantage to owners in the current economic climate and in relation to future carbon taxes they may face.

Green Engage builds on and replaces our former educational material, CR in a Box, and our previous reporting system, Escap Enviro. Crucially, it proves the value of our commitment to innovation, for example, seeking better ways to manage our carbon footprint than merely offsetting emissions; and to collaboration, engaging with our partners to create a ‘green’ culture where owners actively explore solutions that enhance their business.

How does Green Engage work?

Hotels input their site data into Green Engage. The system automatically generates reports and benchmarks against similar hotels across the world. Green Engage then advises both new-build and existing hotels on the specific actions they need to take to reduce their impacts, depending on their climatic location. Finally, reports are produced which allow IHG, as well as guests and corporate clients, to review an individual hotel’s progress.

Green Engage provides owners with advice on every aspect of the hotel lifecycle from picking a suitable site, to selecting the correct lighting for the hotel through to choosing Page 30 responsible cleaning materials and providing staff training on sustainability. The return on investment, carbon reduction and potential impact on our customers is calculated for each action item suggested.

Green Engage Key Action Group Areas

SITE A hotel’s location affects commuting options, local ecosystems, building energy efficiency and much more. Proper site selection should be taken into consideration at the start of a project as it will affect many subsequent decisions.

WATER Responsibilities and opportunities exist with all water that passes through a building and site. From an economic and environmental perspective it is best to make as few man-made changes to the natural hydrological cycle as possible.

PRODUCTS & MATERIALS Materials selected for sustainable buildings need to combine the appropriate performance, durability and environmental properties. Material selection can affect issues ranging from natural resources to the comfort and health of our guests and/or employees.

WASTE Both construction and demolition contribute significantly to landfill sites and incinerators. Proper management can avoid unnecessary waste, reducing disposal fees and transportation costs.

BUILDING ENVELOPE The ‘building envelope’ is the interface between a hotel’s indoor and outdoor environments. Careful design helps to efficiently maintain desirable indoor conditions – for example, making the most of daylight, natural ventilation and passive heating.

MECHANICAL Guest comfort, operating costs and many environmental impacts are dependent on a hotel’s mechanical systems. Optimum results can be achieved when these are designed to work in harmony with other building systems and components.

ELECTRICAL Efficient electrical systems in a hotel reduce both operating costs and environmental impact. Improved lighting design not only makes savings, it also contributes to guests’ enjoyment and comfort.

OPERATIONS & MANAGEMENT Hotel and hospitality operations can be very resource intensive. Improving a hotel’s operational systems and practices can be an immediate and public way of showing its commitment to the environment and sustainability.

What kind of benefits is Green Engage bringing?

Green Engage is already driving change across our business. Early trials of the system have shown potential energy savings of up to 25%. If all the hotels in our 4,438-strong portfolio adopted the system the estimated total savings for hotel owners could be as much as $200 million. So far 900 hotels have entered into the system. Of those, our 600 owned and managed hotels reduced energy use by up to 10% in 2009.

We believe Green Engage gives us a significant competitive edge. It makes our hotels the most cost-effective in the sector and ultimately allows us to improve the value of service we offer our guests, who tell us they would prefer to stay in a green hotel. Some of our Green Engage hotels are now beginning to drive new business through their sustainability commitments. In one hotel, The Willard in Washington, this is estimated to be worth up to USD $800,000.

How does Green Engage integrate with existing green building certifications?

Green Engage was developed to integrate with existing global sustainability metrics, such as LEED, BREEAM and Green Globe. Like these other systems, it is a point-based metric which establishes both a minimum level of sustainability and outlines opportunities to exceed this minimum. It will be applied to both new-build and existing hotels.

What sorts of challenges have been encountered with Green Engage?

The economic climate this year meant we had to fast track the pilot phase of the project. We know our content is strong but we also recognise we can make the system easier to use and this is our priority for the year ahead. Not all hotels signed up to Green Engage are using the system to its full capability. As well as making it easier to use we will expand our training efforts this year. Page 31 What next for Green Engage?

The original pilot went live in March 2009 and was quickly extended to our entire owned and managed estate and then opened up to any other hotels who wanted to participate by May 2009. We had a good uptake with nearly 900 hotels on board in a matter of months. We hope to maintain this momentum and will continue to roll out Green Engage to 100% of our owned and managed hotels and expand this further into the franchised estate in all three regions.

We appreciate that some of our hotels have limited resources for this sort of activity. To help them we will be making the system more intuitive by prioritising green hotel recommendations by climatic region, providing legislative tracking, and identifying Government funding opportunities.

It is early days and we recognise that we are still learning how we can make the most of the technologies and techniques we have introduced to achieve our CR goals. Throughout this site there are examples of how Green Engage is already bringing ‘early wins’ for IHG and for individual hotels. We plan to report further during the course of the year on how more and more hotels are using Green Engage to achieve real benefits. We aim to start quantifying these benefits on a Group-wide basis within the next two years.

Interview with Scott Larsen, General Manager at Holiday Inn Select San Antonio Airport (SATAP)

A herb garden on the roof of the Holiday Inn at San Antonio Airport is watered by wastewater from the air conditioning system.

1. Why did SATAP sign up to Green Engage?

The hotel had already set out on its ‘green journey’ and partnering with IHG on Green Engage just made sense. Prior to the development of Green Engage, our environmental programme covered water consumption reduction, recycling and energy saving; by signing up for Green Engage we have expanded our programme significantly.

2. How have you been using the system?

We first started using the system mainly for reporting purposes, but as the site continued to develop, it has become a learning tool and action planning system.

3. What are some of the big initiatives you've undertaken as a result of using Green Engage?

Our water-saving programme started with low flow toilets: with Green Engage it expanded into finding additional ways to water our landscape without using City water. We capture air conditioning (AC) condensate, pool backwash and chilling tower blow-down water to water our landscape. We also researched roof-top gardens and implemented a roof-top herb garden watered by AC condensate.

4. How are you encouraging guests to behave in a more sustainable way?

We have a recycling bin in each guest room, and a letter on the desk detailing our programmes and success in each category: water, recycling and energy. We also encourage guests with information such as “did you know, on average, 3 USA Today newspapers = 1 lb... please help us recycle”. We also have associated material about our towel re-use programme, and a nifty little sign on the dual-flush toilet – to push the right button.

Page 32 5. What are some of the benefits you've found from using Green Engage?

We've not yet had a full reporting year on Green Engage but our statistics from 2008 clearly indicate the business impact of effective resource management. Our water-saving programme reduced consumption from 202 gallons per occupied room to 120, saving over 7 million gallons of water. Our recycling programme is a full single stream programme starting from every guestroom. We recycled 83.5 tonnes of material. The hotel retrofitted all lighting ballasts to accommodate CFL light bulbs instead of incandescent light bulbs – saving 553,000 kWh in a year.

From a staff standpoint, I have had many employees tell me that they never recycled at home until the hotel started doing it, and they feel good about doing it.

6. What are some of the challenges you've experienced in terms of creating a more sustainable hotel?

We started our journey through the ‘school of hard knocks’. We picked one thing – recycling newspapers – and started a programme. The biggest challenge has been finding vendors willing to support the programmes – we were in the vanguard of some of these ideas in our market.

7. How could Green Engage be improved?

Developing the central training programme/work so hotels can benchmark themselves against similar properties and share best practice.

8. How could IHG and the CR team help support you more in your general sustainability efforts?

I think IHG has done a great job of telling hotels about Green Engage, but there needs to be more done to expand the initiatives at the property level.

9. What are your plans for Green Engage in 2010?

We continue to expand our programmes as we learn more. We are currently piloting a food composting programme with other hotels and restaurants in the area. We have started planting some of our landscape with food-bearing plots that can be utilised in the hotel kitchen or by the staff. Spring will include the expansion of our roof-top garden. We are planning on handing out seed packets at the front desk with seeds from the herb garden as a parting gift to departing guests. Another spring programme – ‘What's the buzz at the Holiday Inn?’ is a beehive to help our garden. If we’re lucky, our gift shop will sell Holiday Inn Honey.

Page 33

Corporate responsibility / Environment / Green Engage / Book a greener hotel

Corporate Responsibility Report

Corporate responsibility Book a greener hotel About IHG Consumer research confirms that people are more interested in sustainability issues than Innovation ever before – and this applies to hotels too. So we’ve made it easier for guests to make Collaboration the right choices. Environment In 2009 we launched Green Engage to help our hotels to measure, manage and report Approach their environmental impacts. Please see our interactive map on our web site to discover Green Engage the hotels that have started their Green Engage journey.

Book a greener hotel

Climate and carbon

Energy

Water

Waste

Biodiversity

Community

Our performance What's new

Page 34

Corporate responsibility / Environment / Climate and carbon

Corporate Responsibility Report

Corporate responsibility Climate and Carbon

About IHG Key achievements Innovation 59kg Collaboration Joined the Carbon Disclosure Project (CDP) The average IHG hotel's carbon footprint is 59kg, Environment roughly equivalent to the Approach average US home on a per Along with the recent economic downturn climate change is one of our biggest business room night basis. Green Engage challenges, as we work to balance business growth with the expectations of a responsible Climate and carbon business:

Our carbon footprint customers, governments and regulators are increasingly demanding the highest Carbon FAQs environmental standards, specifically in relation to water efficiency and greenhouse gas emissions Energy regulation of greenhouse gas emissions and other resources is increasing, including Water new carbon taxes such as the Carbon Reduction Commitment in the UK, and stricter Waste building codes to encourage sustainable construction Biodiversity increasing electricity, water and energy prices are driving up operational costs Community the environmental impact of the supply chain is coming under closer scrutiny Our performance changing sea levels and climate patterns are impacting on the availability of raw materials for construction, on how and where hotels are built, and on how guests travel What's new to various locations guests are under increasing pressure to reduce air travel.

Innovation not offsetting

Many businesses choose to mitigate their greenhouse gas emissions through the purchase of voluntary carbon offsets but we disagree with the principle that a company can pay others to cut carbon on its behalf. We believe that as a global organisation with operations in many markets, our biggest contribution towards cutting greenhouse gas emissions will come from changing our own behaviour. Consequently, we’re working to deliver real emission cuts through our Green Engage programme – by innovating new and better ways to design, build and run our hotels – not through offsetting.

Green Engage enables us to track and report on carbon and other emissions across the business. We joined the Carbon Disclosure Project (CDP) this year and expect the system to provide more accurate Group-wide data on our carbon footprint to interested parties both internally and externally. Read our CDP response.

We recognise that we can reduce our contribution towards climate change by using resources such as energy and water wisely, minimising waste and conserving ecosystems and biodiversity, and sourcing locally whenever possible. We have also set up a carbon strategy team. The team’s principal steps so far have been to:

ensure we have legal clarity on the status of regulation start developing a financial model for business planning on carbon create internal and external awareness and knowledge of regulatory requirements develop a shared calendar outlining key CRC milestones from 2009 through to 2013 work with the Confederation of British Industry (CBI) to better understand its approach to the Carbon Reduction Commitment and where we might act jointly forge governmental relationships to ensure our business modelling reflects a changing legislative framework.

In order to make real progress with these issues, we are setting targets against all our major activities. In short, we aim to make a night with IHG more carbon efficient.

Page 35

Corporate responsibility / Environment / Climate and carbon / Our carbon footprint

Corporate Responsibility Report

Corporate responsibility Our Carbon Footprint About IHG A key business objective for IHG over the coming years is to minimise our impact on the Innovation climate and to future proof ourselves against rising energy and carbon costs. We see this Collaboration as an opportunity to innovate and focus on the practical measures we can take to reduce 9 million IHG's carbon footprint is Environment emissions. Our approach takes in responsible design, construction and operational activities. approximately 9 million Approach metric tonnes or Green Engage The essential first step is measurement. We commissioned carbon footprint specialists approximately 63,000 return Best Foot Forward to undertake an emissions measurement exercise that we believe is flights from London to Miami. Climate and carbon more comprehensive than any other study undertaken in the hotel industry to date. Our carbon footprint Extrapolating data from a representative sample of 26 of our hotels during 2006-2007 Carbon FAQs gave us an idea of the carbon footprint throughout our complete hotel portfolio:

Energy our total estimated carbon footprint is approximately 9 million metric tonnes Water roughly 4.6 million tonnes comes from energy usage while 4.4 million tonnes are indirect emissions from consumption of other resources, including materials and waste Waste at 59kg per night, our average hotel room footprint is roughly equal to the average US Biodiversity home Community in our best performing hotels our carbon footprint is significantly lower than staying at Our performance home and a range of our mid-scale hotels have lower carbon emissions than staying at What's new home.

The study also demonstrated that the environmental aspects of hotel activities such as heating, ventilating and air conditioning systems can be managed to lower our carbon footprint. In addition, we discovered that there are opportunities to reduce carbon emissions in all our hotels.

Average IHG hotel carbon footprint by percentage (direct and indirect emissions)

To address our carbon challenges, we will continue to use Green Engage to implement and share best practice in areas that really make a difference, particularly in hotel design, operations and purchasing. We will also use Green Engage to track and report on our carbon use across the Group in order to provide a more accurate picture of the progress we are making in reducing our carbon footprint.

Page 36

Corporate responsibility / Environment / Climate and carbon / Carbon FAQs

Corporate Responsibility Report

Corporate responsibility Carbon FAQs About IHG Innovation Green Engage Key Action Group Areas Collaboration Is IHG exposed to regulatory risks associated with climate change? Environment Yes. Regulation includes carbon taxes such as the Carbon Reduction Commitment in Approach the UK. Green Engage Is IHG exposed to the physical risks associated with climate Climate and carbon change? Our carbon footprint Yes. As yet there is no real clarity on how they will impact on the sector but we Carbon FAQs believe that rising sea levels and a changing global climate will affect, amongst other things, the availability of raw materials, the locations where hotels can be sited, and Energy customers' travelling patterns. Water Does IHG consider climate change as a commercial opportunity? Waste Yes, we have a clear objective of making a night with IHG as energy efficient as Biodiversity possible. By addressing the physical and regulatory risks associated with climate Community change – through technology, partnerships and operational improvements – we can Our performance operate more responsibly and efficiently. What's new What is IHG’s carbon footprint? In 2006-2007 we calculated our carbon dioxide emissions to be approximately 9 million metric tonnes. Approximately 4.6 million tonnes are emissions from energy usage whilst 4.4 million tonnes are indirect emissions from consumption of other resources.

How was the carbon footprint calculated? IHG commissioned Best Foot Forward to undertake a robust carbon footprint of a representative sample of 26 of our hotels to give an estimate of carbon emissions throughout our hotel portfolio.

How does IHG hope to engage all hotels, including franchisees to decrease their Greenhouse Gas emissions? To help us achieve a significant reduction in our impacts on climate change, we launched Green Engage in 2009. This system is designed to assist our general managers across the entire hotel portfolio of 4,438 hotels to manage energy, water and waste consumption more effectively.

Does IHG have an ambition/target to minimise the group’s carbon footprint? Energy efficiency is highly correlated to carbon reduction. In our owned and managed estate, we seek to achieve an energy savings of 6% to 10% over the next three years (2010-2012) on a per available room night basis.

How is the company progressing against its carbon reduction target? Early trial models of Green Engage show that we could achieve energy savings of as much as 15-25% per hotel. We expect to be able to report more fully on hotel progress in the coming year.

Page 37

Corporate responsibility / Environment / Energy

Corporate Responsibility Report

Corporate responsibility Energy About IHG Innovation Key achievements Collaboration 15-25% Owned/managed hotels reduced their energy consumption by up to 10% in 2009 Energy is the second largest Environment Introduced energy-efficient lighting systems on our new Holiday Inn signage, saving cost in our hotels, after Approach the brand an estimated $4.4 million annually and an estimated 52 per cent people. Green Engage can Green Engage reduction in kilowatt hours. help run a 15-25% more energy-efficient hotel – that's Climate and carbon an average saving of USD Energy $75,000 per year. Water Key energy objectives Waste In our owned and managed estate, we seek to achieve an energy savings of 6% to Biodiversity 10% over the next three years (2010-2012) on a per available room night basis Related content Community We will continue to roll out Green Engage to 100% of our owned and managed Environmental policy Our performance hotels, including new hotels, and expand into our franchised estate in all three What's new regions. Green Engage

Energy usage in hotels accounts for the largest proportion of our carbon footprint and is the second largest cost to our hotels after people. While the economic downturn inevitably had an impact on our business, at the same time it provided an impetus to help us focus on improving energy efficiency throughout IHG.

Green Engage gives us the means to produce a more accurate picture of energy use across the Group but we still have some way to go. Firstly, we are still learning how the energy saving technologies and techniques we recommend to our hotels can be best used to achieve greater energy efficiency. We also need to take into account the impact of growth on our energy reduction objectives. We will achieve this by starting to use a metric that is closer to the way the hotel business actually measures itself – on a per available room night basis. Over the course of the year we also plan to report on the ways in which more and more hotels are using Green Engage to achieve real benefits. Our aim is to start quantifying these benefits on a Group-wide basis within the next three years.

The figures below are based on a representative sample of hotels across our regions. They show that on a per available room night, our hotels reduced energy use by approximately 9.3% from 2007 to 2009. From this we estimate that in 2009 our hotels’ global use was approximately 18.2 billion Kilowatt hours (kWh) m, equivalent to a total energy bill of approximately US$1.9 billion a year (at 2009 US prices).

Energy use in kWh for 2007–2009

kWh per room night available % change kWh

2007 59.63 2008 55.64 2009 54.08

Our hotels

Green Engage provides our hotels with recommendations on a range of the most appropriate energy-saving techniques and technologies depending on location, climate zone and whether or not the hotel is new. This allows hotels to benchmark against similar hotels in the same climate zone, helping them to identify which strategies could produce most savings.

Electricity consumption is one of the most costly aspects of hotel management from both a financial and environmental standpoint. With careful design, we know it is possible to reduce consumption without diminishing the well-being of guests and staff. This can be achieved through a range of measures such as efficient lighting design, energy-saving products, on-site power generation and effective energy controls and management.

We are also looking at installing more master switches in guest rooms. With potential savings of up to 20% in energy use, the system recognises when a room is occupied or unoccupied, and saves energy during the time guests are not in their rooms.

Page 38 Holiday Inn leads with LEDs

The Holiday Inn brand is currently undergoing a $1 billion global re-launch. More than 9,300 new signs in 3,200 locations have been installed. The signage incorporates energy- efficient, long-life GE Tetra® LED lighting systems saving Holiday Inn an estimated $4.4 million annually over previous neon and fluorescent lighting ($3 million annual maintenance savings and $1.4 million energy savings). In addition the new signs contain no lead, mercury or glass.

Holiday Inn expects to cut energy usage by more than half and achieve an estimated 52 per cent reduction in kilowatt hours. That represents an estimated reduction of 8,700 metric tonnes of carbon dioxide annually or the equivalent of planting more than 2,300 acres of trees per year.

Our offices

We are also putting considerable efforts into making our offices around the world more energy efficient.

Our Global IHG Headquarters relocated to a new site at Denham, United Kingdom, in August 2008. From the outset it was designed with sustainability in mind. Our goal was to enhance the well-being of our employees and set a positive example for our hotels. Some of the features of the building include energy-saving measures such as energy efficient lighting, and solar panels in the car park.

read more our people $1.6M

Charitable giving Find out how IHG supports communities IHG is the biggest hotel group in the industry, providing staff with lots of career opportunities. Already I think that the skills that I have charitable giving gained through working with IHG have given me a better platform from which to launch a successful career. Mike Li, IHG Academy Graduate

Page 46

Corporate responsibility / Community / Approach

Corporate Responsibility Report

Corporate responsibility Approach About IHG Innovation Key achievements Collaboration 2010 Endorsed the United Nations global compact, the world’s largest corporate We will launch our revised Environment citizenship and sustainability initiative. Community Strategy in the Community coming year. Approach Economic opportunities Key community objectives Our people

Human rights Complete a review of how our Great Hotels Guests Love goal translates into actions in the community Supply chain Align partnerships as appropriate Accessibility

Our performance Work with the London Organising Committee for the Olympic Games (LOCOG) to support sustainability goals for the 2012 London Olympics. What's new

With hotels and offices in more than 100 countries across six continents, we take our commitment to operate responsibly in local communities very seriously. For us that means creating opportunities for local people, preserving local customs and traditions and introducing our guests to local cultures.

We are currently reviewing our community activities so that IHG can have an even greater positive impact on the communities in which we operate. Our revised Community Strategy will be launched in 2010.

In 2009 the economic downturn meant we focused on maximising the benefits we bring to local economies via direct and indirect employment, taxes paid, local purchasing and donations to community projects.

Building, developing and protecting our workforce

An important area of activity for us is training potential employees in our communities and working with local and regional Chambers of Commerce and trade and industry associations to support workforce development. In China, for example, we’ve launched an innovative public/private partnership, the IHG Academy, with renowned educational institutes in the region.

We also work with other companies and government bodies to identify and address workforce issues such as working conditions, skills shortages and infrastructure development in the countries where we have a substantial presence, particularly in developing countries. To ensure we act responsibly and to the highest ethics we have put in place policies for Human Rights and Supporting our Communities.

Grassroots activities

In addition to our corporate efforts, IHG hotels are involved with their communities in their own right through in-kind donations, grants and volunteering programmes. Hotels’ grassroots level activity is now surveyed as part of Green Engage. This enables us to share best practice throughout the Group, communicate more effectively with our guests and make better-informed decisions about community support and investment.

Page 47

Corporate responsibility / Community / Economic opportunities

Corporate Responsibility Report

Corporate responsibility Economic opportunities About IHG Innovation Key achievements Collaboration 47% Took our total number of IHG Academies in China to 25, in 11 locations In a survey 47% of IHG Environment hotels asked said they would Community like us to provide more Approach hotels skills training in the Fast facts community. Economic opportunities

Charitable donations Despite the global economic downturn, international tourist arrivals are predicted to increase from 903 million in 2007 to 1.6 billion in 2020 (Source: ITP). Our people

Human rights Supply chain Our size and global market presence mean that we have a significant impact on the Our Academies are essentially economies of the communities where we operate. We believe these to be as important as Accessibility a junior talent training centre our environmental and community impacts. Our performance with the emphasis on What's new Throughout the world IHG hotels provide opportunities for economic development, new communication, collaboration business, much-needed jobs and technology transfer. Travel and tourism as an industry is and upskilling. The particularly important to the economies of developing countries, employing more than 220 partnership is a win-win million people worldwide and generating more than 9% of global GDP. (Source: World situation for IHG, the students Travel and Tourism Council.) and the hotels.

However, the tourism industry faced a number of significant challenges this year. The Anthony Foo, IHG's Hotel economic crisis, rising unemployment and the swine flu pandemic meant fewer people School Project Director travelled, and they spent less while they were away. As a result the revenue generated from international tourism fell by 8% in 2009, a drop that was felt not only by our business but also by our business partners and the local communities in which we operate. While these challenges remain risks to our business, we believe the tourism industry will show signs of recovery in 2010.

Against this background our economic success allows us to support communities that have been affected by economic instability and to continue to invest in long-term environmental and community initiatives, which help develop local infrastructure.

Our business model, based on franchising our brands for use by third-party hotel owners, also has a positive economic impact. We partner with small to medium-sized enterprises, which are often local to the hotel location. With them, we are committed to employing local people and supporting their career development, sourcing products and services locally, and encouraging tourists to use local services and experience local culture.

IHG Academy

In many cases the lack of a skilled workforce prevents developing nations from tapping into the economic benefits that travel and tourism has to offer. For instance, we are the largest international hotel operator in China but have found it difficult to attract and retain talented employees in the region. That’s why we launched the IHG Academy, a public/private partnership that provides hospitality job training in our local communities. First launched in Shanghai in June 2006, we now have 25 partners located in 11 cities throughout China. We are due to open a new academy in Manila in the Philippines in 2010.

Each IHG Academy offers a range of certificates and diplomas that combine theoretical sessions, lectures by IHG executives and internships at IHG’s hotels. Our Academies train more than 5,000 students per year, and since June 2008 more than 800 students have graduated from the programme, with 67 becoming permanent employees after their internship.

The value of our approach was recognised in a Harvard University study conducted in 2008: “The Role of the Tourism Sector in Expanding Economic Opportunity” (PDF 8.8Mb). Looking at the IHG Academy and other hospitality-related partnerships, the study said our strategy to develop human capital was one of four strategic approaches companies should adopt in order to expand economic opportunity. A well-implemented programme in this area will lead to improvements in the health, education, experience and skills of individuals which will ripple out to businesses and the entire community. We hope to be able to monitor some of these wider impacts as the Academy expands and will report on this further in 2010.

This year we will continue to sign more selected partner schools to meet our target of 30

Page 48 Academies. A monitoring system to track students’ placement, progress and career path in our hotels is currently being established.

At the same time we want to build on the success of our 3+2 pilot programme, set up in Chongqing in 2007 specifically to tackle industry retention rates. According to the Chinese Education and Tourism Bureau, issues such as long working hours mean that 50% of hotel management students don’t work in the hotel industry once they have graduated. Under our scheme, 24 students attended lessons two days a week and spent the rest of the week doing hands-on training in a hotel. While many hotel management courses in other parts of the world are run this way, it was an industry first for China.

All 24 students completed the course in 2009 and all are still working in the industry; 14 of them doing full time jobs with IHG. According to the Dean of Chongqing University: “There has never been such a high percentage of students who want to carry on working at the hotel after their internship. IHG has achieved something unique here.” We plan to work with more partner schools to expand this programme throughout 2010.

IHG Academy Graduate Interview

Angel Wu, Management Trainee, Blue Italian Seafood and Grill Restaurant at the Crowne Plaza Shenzhen

Name: Angel Wu

Course name and location: Major in Tourism Management, Provided by Jinan University Shenzhen Tourism College partners with IHG in the IHG Academy in Shenzhen.

Year: 2004-2008

Position at IHG: Management Trainee, Blue Italian Seafood and Grill Restaurant @ Crowne Plaza Shenzhen

What did you like about the course? The course gave me the opportunity to participate in a wide range of activities across eight different hotel departments. It is rare for students in China to be exposed to this level of practical industry experience.

I also enjoyed learning from lecturers who have direct experience of the hospitality industry.

What did you find challenging about the course? Dealing with the range of differing hotel affairs for each individual department from a manager’s point of view was initially difficult, as was building co-operation across departments to ensure the hotel runs more efficiently. Another big challenge I found as a manager was how to balance customer satisfaction against making a profit.

How do you think the course has improved your skills? I think my leadership skills have developed, as has my understanding of what it takes to be a good manager.

As I gained an insight into all departments during my training I can now add value by looking at how to improve collaboration between departments so that the hotel runs more efficiently.

Finally, the course has improved my communication skills with both customers and staff, helping me to identify ways to drive customer satisfaction and to motivate staff.

What did you hope to achieve by taking the course? I hoped to gain practical work experience and the necessary skills to become a good manager. Page 49 What are your hopes for your career? I'd like to become a hotel manager and travel around the world experiencing the different cultures in which IHG operates.

If you hadn’t taken the course what do you think you would be doing now? I would probably have become a waiter or I’d be working in an office.

Why do you like working at IHG? IHG provides fantastic practical training which I can use in both my professional and personal life. IHG also supports staff to develop their own skills and interests and encourages them to have a good work/life balance.

Page 50

Corporate responsibility / Community / Economic opportunities / Charitable donations

Corporate Responsibility Report

Corporate responsibility Charitable donations About IHG Innovation Key achievements Collaboration Over Gave USD $813,908.60 in charitable donations Environment Donated approximately $924,039.85 including benefits-in-kind, such as free hotel $900,000 Community accommodation, products, and volunteer hours. This was down from $1.39M in In 2009 our total expenditure Approach 2008 but the figure increases to $1.675M when taking into account employee on charitable donations was Economic opportunities donations and consumer donations generated by IHG programmes. $924,039.85

Charitable donations

Our people

Human rights Supporting local communities Supply chain Our involvement in local community issues is guided by our mission to support global Accessibility efforts that represent the business goals of IHG and to give back and say “thank you” to the communities in which we operate. The activities we support must also be aligned with Our performance our corporate values ‘Winning Ways’ and our Code of Ethics and Business Conduct. What's new As part of our revised Community Strategy, to be launched in 2010, we are looking for ways to create even greater impact through our donations. To that end we are introducing criteria to ensure that we target our donations effectively and align them with our corporate objectives. Our local managers and employees will be encouraged to use them as a commonsense guide in deciding what is right for their community.

In future, our support will be focused on charities which:

exhibit a clear purpose and defined need in one of IHG’s areas of focus, either the environment or local opportunity; recognise innovative approaches in addressing the defined need; demonstrate an efficient organisation and detail the organisation's ability to follow through on its proposal; explain clearly the benefits to IHG and our hotel communities.

We only support organisations which have verifiable charity status and whose ethical principles are consistent with our Code of Ethics. We do not support political or religious organisations, nor in general do we support individuals or provide operating support for hospitals and healthcare institutions. We will not support organisations that discriminate on the basis of race, religion, creed, gender, age, physical challenge or national origin.

Our full eligibility criteria and grant application form will be available soon.

Page 51

Corporate responsibility / Community / Our people

Corporate Responsibility Report

Corporate responsibility Approach About IHG Innovation Key achievements Collaboration 91% Improved engagement score in our employee survey – up 1% to 69% 91% of our people say they Environment are proud to work for the Community company. Approach As a responsible employer the relationships we have with our employees and the way we Economic opportunities manage and take care of them are extremely important to us.

Our people One of our key challenges as a company is to attract, retain and inspire people to deliver Employee profile our core purpose, Great Hotels Guests Love. We achieve this by clearly articulating our Safety and security values and the behaviours we expect from our employees – our Winning Ways – and by creating an environment where our people can be themselves and are encouraged to Diversity and equality perform at the highest level – we call this Room to be Yourself. Together these form ‘the Human rights deal’ between IHG and everyone who works for us.

Supply chain Unless otherwise stated, information in this section applies to people directly employed by Accessibility IHG and those who work in managed hotels or as part of our joint Venture with All Nippon Airways (ANA) in Japan – in total approximately 110,000 people. While our franchised Our performance operations are not required, by nature of their contract, to engage employees in the deal, What's new we work hard to ensure that our franchised hotels offer good working conditions through contracts and terms and conditions.

What we ask: Winning Ways Winning Ways is a set of behaviours that defines how IHG interacts with guests, colleagues and hotel owners. It was developed in 2006 and integrated into the business in 2007. IHG’s people have embraced these behaviours with enthusiasm and creativity worldwide.

What we offer: Room to be yourself While Winning Ways define what is expected from all employees at IHG, we have also developed standards that characterise what employees can expect from IHG. Research shows that our employees want the opportunity to make a difference, to be themselves and to be recognised as unique and talented individuals. We used this knowledge to develop the employer side of ‘the deal’. Room to be Yourself consists of four promises covering our commitment to our employees and the working environment they can expect from us.

Our promises are:

Room to have a great start You will be treated with respect and we will make sure you have everything you need to have a great start. Room to be involved You will have the opportunity to work with great teams, know what is going on and make a real difference in your workplace. Room to grow You will be supported and given opportunities to develop yourself and pursue a rewarding career. Room for you You will be rewarded and recognised for your contributions and we will value the significance of your life beyond work.

Room to have a great start In spite of the continuing economic recession and its impact on revenues, we continue to open hotels and expect to recruit 160,000 people over the next three years. We are meeting this challenge in a number of ways.

Our online recruitment system attracts and matches candidates to job vacancies. Over 240,000 CVs were posted to the site during the past year and over 6,000 people were appointed as a result of online applications. Page 52 In China we have set up a number of initiatives to recruit talented individuals to support the number of hotels we anticipate opening over the next few years. These include a range of fast-track programmes to bring in professionals from human resources and finance backgrounds. We also developed the IHG Academies to equip students with the skills required by the hotel industry. Click here to find out more about the IHG Academy.

All our corporate and hotel staff take part in an induction programme. Our Denham head office provides a two-day induction programme for new staff; in 2010 we will include our approach to CR in the programme.

Room to be involved We place great importance on communicating with our employees, making sure we keep them informed about what is happening in our business and how we’re performing. Communication channels include global management conferences, team meetings, informal briefings, in-house publications and intranets. Improvements to our corporate intranet site ‘Merlin’ mean employees can now access information about people, policies and news across all hotels, corporate offices and reservations centres at any time.

Employee feedback is vital if we are to meet expectations and deliver our commitments. Our twice-yearly survey measures employee opinion and attitudes and is sent to employees in owned and managed hotels, corporate offices and reservations centres. We have not reported the survey data on our joint venture partners.

Since the first survey in 2007 we have continued to achieve very high response rates with more than 89,000 employees participating in the November 2009 survey.

2009 response 2008 response Division/region rates rates % %

Americas hotels 90 89

EMEA hotels 89 86

Asia Pacific hotels 93 93

Corporate offices 89 88

Reservation centres 91 87

The key indicator for us is the engagement index, which measures employee advocacy, retention and effort. During 2009, IHG’s engagement index was up by 1% to 69%. The survey also highlighted that our people are proud of IHG and that retention and advocacy remained stable during the year.

Room to grow Developing talent at all levels of our business is crucial to meeting the demands of our growth and delivering Great Hotels Guests Love.

In 2009 we conducted our annual review of 1,300 corporate managers and hotel general managers to identify the management skills we’ll need for the future. This process enables us to move talented individuals into positions where they can enhance their skills and help us meet our key objectives.

We continued to promote the growth and development of employees in our owned and managed hotels, and in our corporate and reservations offices, making training programmes available to all of our people. We introduced an online learning management system to help employees find and book the training and development they require. And we launched a number of online programmes to help people learn flexibly and develop their skills in the workplace rather than attend courses in classrooms.

To support the relaunch of our Holiday Inn brand we continued to deliver ‘Stay Real’. This comprehensive training programme ensures that all employees working in a Holiday Inn or Holiday Inn Express hotel have the skills they need to deliver the levels of service our guests expect.

In our employee survey 85% of employees agreed that IHG delivers training to assist with their current roles, 3% more than the previous year.

We want to inspire our managers to be great leaders. To that end we have several management development programmes in place, including an assessment of individual potential and capability, clarity about expectations, and business-related education. During 2009, 49 senior managers attended the latest stage of our senior leadership programme, focusing on the role leaders play in driving performance and results through people.

Our Leaders Lounge is an innovative and cost-effective way of developing and communicating with our senior managers online. Through this virtual community our Chief Executive and the Executive Committee keep managers informed about key issues and challenges for the business. The site also includes input from external business thinkers. The Leaders Lounge was recognised for its pioneering way of training people when we received the Chartered Institute of Personnel Development's 2009 Award for Excellence Page 53 Through Technology.

We continued our succession planning process for senior leadership roles in 2009. We also restructured the senior corporate team to make us more efficient and better positioned for the economic recovery. As a result 18% of senior executive roles were eliminated. In order to ensure that the changes don’t affect the management of our key functions and operations, and that we continue to provide development for high potential leaders, we combined a number of senior roles. In the APAC region we decided to create two independent business units focused on Greater China and Asia Australasia, resulting in one member of the Executive Committee leaving IHG.

Find out more about our senior management team in our Annual Report.

Room for you The benefits we offer employees vary according to region but wherever our people work we aim to offer them compensation and benefits programmes that are competitive in their local market and which recognise and reward their achievements. We also contribute to both mandatory and company-sponsored retirement plans. In our employee survey the majority of people who work for us said they believe they are fairly paid for the work they do.

We manage performance by helping people to align their objectives to our core purpose, and by encouraging managers to acknowledge employee achievements or contributions as part of our Winning Ways culture.

We provide a range of benefits to help employees achieve a better work/life balance. Healthcare is provided to some staff groups and, in our Americas region, we have programmes in place to help employees maintain a healthy lifestyle and reduce the cost of health insurance claims. In some regions employee assistance programmes offer a confidential counselling service to help employees deal with financial and legal matters, relationship problems and stress.

Page 54

Corporate responsibility / Community / Our people / Employee profile

Corporate Responsibility Report

Corporate responsibility Employee profile About IHG We directly employed an average of 7,556 people worldwide during 2009 whose costs are Innovation borne by the Group. In total, approximately 335,000 people work for IHG and its brands Collaboration across the globe. 7,556 IHG directly employed an Environment average of 7,556 people Community Regional breakdown of staff worldwide during 2009. Approach

Economic opportunities Our people 15% Americas

Employee profile 31% EMEA Safety and security 54% Asia Pacific Diversity and equality

Human rights Source: Estimated number of employees working across our owned, managed and Supply chain franchised hotels per region Accessibility

Our performance The World Tourism & Travel Council (WTTC) estimates that for every job created directly What's new in the travel and tourism industry another 2.04 are created indirectly. Using this ratio we created a further 15,000 + jobs worldwide in 2009.

Gender profile

60% Male

40% Female

Source: Respondents from 2009 October IHG Employee Survey (Owned, managed hotels, corporate and reservation staff).

Managerial diversity

Male Female

Manager 46% 33%

Non-manager 54% 67%

Source: Respondents from 2009 October IHG Employee Survey (Owned, managed hotels, corporate and reservation staff).

Length of service

43% Under 3 years

39% 3 to 9 years

18% 10+ years

Source: Respondents from 2009 October IHG Employee Survey (Owned, managed hotels, corporate and reservation staff).

Page 55 Age distribution

18% Under 25

64% 26 to 44

18% Over 45

Source: Respondents from 2009 October IHG Employee Survey (Owned, managed hotels, corporate and reservation staff).

Our employee survey captures demographic information across all our owned and managed hotels and corporate teams but we do not obtain information on ethnic background. As we give all employees ‘Room to be yourself’, we do not use information to adapt initiatives based on ethnicity.

Unfortunately, economic conditions in 2009 meant that we had to make a limited number of redundancies among corporate staff. This will help to ensure the business operates efficiently during the downturn.

As the changes were largely structural we did not seek voluntary redundancies and explored all opportunities to mitigate job losses. We offered outplacement services to everyone affected, providing ongoing support to individuals and access to external job opportunities.

In addition to the redundancy programme, we introduced a pay freeze for all grades during 2009 except in areas of the world where inflation rates would make this difficult to sustain.

Page 56

Corporate responsibility / Community / Our people / Safety and security

Corporate Responsibility Report

Corporate responsibility Safety and security About IHG Innovation Key achievements Collaboration Introduced a travel risk policy for staff travelling on IHG business Environment Community Approach At IHG we are committed to providing a safe environment for all employees, guests and Economic opportunities other visitors to our premises and to complying with relevant health and safety legislation. Our people

Employee profile Managing safety Safety and security IHG has an established risk management process and framework in all regions. Its long- Diversity and equality term strategic goals are aligned with our core purpose – Great Hotels Guests Love – and include these key elements: Human rights

Supply chain safety and security of guests, employees and other third parties

Accessibility supporting brand strength by developing high standards of risk management at all hotels and corporate locations Our performance maintaining and promoting IHG’s reputation What's new Our approach is to enable and support hotel owners, staff and corporate functions to manage risk effectively by giving them a systematic approach and framework to follow and by providing the right tools to do the job.

Our Global Risk Management team evaluates the policies and procedures which underpin our risk management system, operating a range of health and safety and security measures, including threat assessment, crisis management and business continuity planning. They also provide training in all of these areas to hotel and corporate employees. The team is aligned to the operational structure of the business to ensure we understand and respect local circumstances and engage our people.

Safety and security in hotels

We have designed a strategic framework for hotel safety and security in owned and managed hotels. This is illustrated below, showing identified groups of risks and describing what we do to mitigate those risks.

The red wheel shows the groups of risks that our risk managers around the world work on with IHG general managers and their management teams in order to keep our hotels safe.

Over the years we have developed risk management strategies to assess and treat individual types of risk. This involves developing policies, standards and guidelines; raising awareness levels; training staff to use controls and systems; and reviewing and reporting on progress and continued risks. These management activities are represented by the purple wheel.

Hotel safety framework

Page 57 Security risks, particularly the threat of terrorism, have increased, making the security risk environment a highly dynamic one that needs to be managed at a corporate level and locally in our hotels. In recent years, we have developed an increasingly sophisticated response that is intelligence-led and risk-based. In common with all risk strategies, there are three elements to develop and maintain: physical and technical systems, people capabilities and processes and procedures.

A small number of countries in which we currently, or intend to, conduct business have security risks that may pose a threat to ill-prepared travellers. In 2009 we therefore introduced a travel risk policy for staff travelling on IHG business. The policy informs employees of the risks they may face and describes the measures and procedures they should take to travel safely and securely.

We only collect Health & Safety data for our owned and managed hotels.

For more detailed information on our approach to safety and security in our hotels, please visit our Annual Report.

Page 58

Corporate responsibility / Community / Our people / Diversity and equality

Corporate Responsibility Report

Corporate responsibility Diversity and Equality About IHG Our guests come from all geographic and socio-economic sectors and our workforce, Innovation owners and business partners reflect this diversity. We are proud of our rich cultural We won a Springboard Award for Excellence for our Collaboration diversity. It allows us to strengthen our understanding of and respond to the needs of our guests, and is reflected in our Winning Ways. approach to recruiting Environment people with disabilities. Community Our commitment to diversity and inclusion extends to all aspects of our business. This Approach includes ownership, supplier relationships, recruitment, community relations, franchising and marketing. It means creating a working environment and establishing business Economic opportunities relationships in which every group fits, feels accepted, has value and contributes. Our people To oversee diversity in the Americas region we have an Office of Diversity, based in Employee profile Atlanta, USA. The team is led by a senior diversity executive with operating committee Safety and security responsibilities. Diversity and equality We recruit and promote individuals based solely on their suitability for the job without discriminating on grounds of race, colour, ethnic or national origin, gender, sexual Human rights orientation, age, religion, marital status or disability unrelated to the role. In some Supply chain countries these principles may be modified by national legal requirements. Accessibility We support the employment of disabled people. Where existing employees become Our performance disabled, our policy is to provide continuing employment wherever practicable in the same or an alternative position. We are accredited to the UK Government’s ‘Positive What's new about Disabled People’ symbol. We also have a Disability Advisory Committee to promote the 'disability confident' culture which exists in IHG and to try to adjust ways of working in order to attract more disabled job applicants. At the end of 2008 we won a Springboard Award for Excellence in the ‘Diversity in Employment’ category for recruiting people with disabilities. We want to provide a welcoming environment to all our guests. Please go to the Accessibility section to find out what we do to accommodate disabled guests. We ensure that our training programmes, including leadership and management training, are inclusive and non-discriminatory. In the Americas region we have developed a mentoring programme with a specific focus on minorities.

While the employee survey captures demographic information across all our owned and managed hotels and corporate teams, we do not capture information on ethnic background.

Page 59

Corporate responsibility / Community / Human rights

Corporate Responsibility Report

Corporate responsibility Human rights About IHG Innovation Key achievements Fast facts Collaboration Signed up to the United Nations Global Compact We fully support the UN Environment Declaration on Human Community Rights and the International Labour Organisation core Approach At IHG we believe that strong ethics and good business are natural partners. We are labour standards. Economic opportunities committed to operating our company with integrity and in accordance with the highest ethical standards. Our reputation is built upon the trust and confidence of all our Our people stakeholders, and is an integral part of our vision to make IHG one of the very best Human rights companies in the world. Supply chain Our stakeholders are increasingly concerned that, as well as providing decent working Accessibility conditions for all of our employees, we manage our risks with all our business partners Our performance and make sure the rights of the local people where we operate are protected. We are working to cover these areas in our contract terms and conditions but we know we have What's new much more to do.

The travel and hospitality sector faces a number of human rights challenges such as low wages, forced and child labour, exploitation of migrant workers, displacement of indigenous people and local resource depletion. These risks are even more important to monitor in an economic downturn where there is added pressure on human and other resources. We fully support the UN Declaration on Human Rights and the International Labour Organisation core labour standards. In 2009 we also became a signatory of the Global Compact and have committed to aligning our operations and strategies with the ten universal principles that include commitments to human rights and labour standards.

We began focusing on developing comprehensive methods to assess and respond to human rights issues in 2008. All members of the Executive Committee take responsibility for human rights on behalf of the Board.

Working conditions

We respect and support our employees’ rights to decent working conditions. Our employment policies are designed to comply with all local labour laws and also to create safe, healthy and fair conditions throughout the whole of IHG. We know that wages, working hours and job security can be challenges within our industry. To begin to mitigate these risks we put in place a Human Rights policy for IHG-owned and -operated properties and will expand this to include business partners in contract terms and conditions.

How our employees can raise a grievance

We have a whistleblower line and let employees know about it through internal communications and a dedicated website www.ihgethics.com

Labour unions

We recognise the importance of partnerships with labour unions and the members they represent. ‘Room to be yourself’ means that we support our employees’ right to decide if they want to be part of a union or not, free from any outside pressure or intimidation. We believe the process should be fair, personal and democratic and we support employees’ right to a private, secret ballot election.

Approximately 20% of hotel-based employees in the United States and Canada are members of an organised labour union. There are no collective bargaining agreements in other regions. In the Europe, Middle East and Africa region, IHG has established a Works Council for employee representation.

We provide employees and union representatives with advance notice of material operational changes, including but not limited to: work schedules, operational processes, property renovations, products and services. Minimum notice periods may vary by location and we always seek to comply with local laws.

Responsible supply chain

We have incorporated human rights criteria into our terms and conditions for suppliers. Please see the Supply Chain section for further information on how we support our suppliers in this area. Page 60 Protecting local communities

Through Green Engage we are providing hotels with some initial steps they can take to ensure the rights of local communities are respected. These include:

undertaking a social impact assessment before any building works are carried out to assess and manage the impacts of the work on communities engaging regularly with local leaders to identify and resolve any rights issues keeping our use of resources to a minimum and making sure it does not deplete existing community supplies following our Code of Conduct to guard against bribery and corruption following our Human Rights policy to avoid the unlawful exploitation of labour, women or children. Staff are expected to receive training on how to recognise and resolve these sensitive situations supporting cultural preservation projects through corporate donations or staff volunteering.

Page 61

Corporate responsibility / Community / Supply chain

Corporate Responsibility Report

Corporate responsibility Supply Chain About IHG Innovation Promoting responsible business practices in our supply chain Collaboration We recognise that we have a significant part to play in local economic development and Environment wherever possible we encourage our hotels to source goods and services locally. In Community addition to supporting local suppliers, we also need to promote responsible business practices by those same suppliers. For instance, we set procurement criteria for sub- Approach contractors to ensure that our hotels only use companies that follow good practice in Economic opportunities waste reduction. Our people We are currently strengthening our global procurement function, including reviewing our Human rights corporate purchasing policy. Through Green Engage we are able to further align our Supply chain hotels and our business partners with our sustainable procurement objectives. We want to work more closely with our suppliers in this area, which we see as a key strategic focus Accessibility for us in the near future. Our performance We believe the hotel sector is in a unique position to advance the development of green What's new building technologies. As we build a new hotel a day we have a key part to play in helping to bring these technologies to market and in making them cost effective. We have also asked our owners to look at ways to work closely with product and service providers to identify areas for improvement. We hope to report back on progress in this area in future.

Please see the Diversity and equality section for further information on how we promote diversity.

Page 62

Corporate responsibility / Community / Accessibility

Corporate Responsibility Report

Corporate responsibility Accessibility About IHG Innovation Key achievements Fast facts Collaboration Received two awards for our work on accessibility We received the following Environment awards this year in Community recognition of our work on accessibility: Approach We are committed to providing great service and a welcoming environment to all our Economic opportunities guests, recognising that each one will have different requirements. We aim to make our Holiday Inn London – hotel facilities available and accessible to all. In the rare instances where this is not Our people Kensington Forum possible, we will endeavour to offer a suitable alternative. gained the Outstanding Human rights Achievement Award at We have training courses to provide our employees with the ‘confidence to serve all’. All Supply chain the London regional new hotel employees are provided with this training. Our Central Reservations Teams are Local Employment Accessibility given more in-depth guidance on how to handle detailed requests and provide appropriate Partnership Awards in Our performance support. March 2009 What's new Our UK hotels offer a range of facilities for guests with disabilities, including the following: Holiday Inn Maidenhead/Windsor designated Blue Badge parking achieved Silver status for accessible facilities – bars, restaurants and meeting rooms the ‘Access for All accessible washrooms Tourism Award’ at the Tourism South East accessible bedrooms ExSEllence Awards in menus available in large print October 2009. induction loops assistance dogs welcome.

As part of our continuing commitment to enhancing accessibility for disabled guests, we have now installed ceiling track hoists in six of our UK hotels. These facilities are giving many disabled people with high-support needs a new opportunity to stay away from home.

Online, IHG’s Priority Club Rewards Loyalty programme has been made more accessible, and all UK IHG websites have been reviewed and now carry the Access for All message.

Page 63

Corporate responsibility / Our performance

Corporate Responsibility Report

Corporate responsibility Our performance

About IHG Delivering a more responsible Innovation business is a priority and we Collaboration continued to make significant

Environment progress in 2009. Community find out more Our performance

Reporting cycle

2009 performance Priorities Targets GRI scorecard What's new We comply with the Read about our key priorities in 2010. Global Reporting Initiative (GRI) G3 view targets guidelines. We've achieved 60 GRI indicators.

find out more See how we performed in 2009 and the CR awards we've won. 10%

How much energy our owned and managed hotels 2009 reduced in 2009. performance

see energy use

Page 64

Corporate responsibility / Our performance / Reporting cycle

Corporate Responsibility Report

Corporate responsibility Reporting cycle About IHG This is our third annual CR communication. In 2010 we will begin to update elements of Innovation this site on a quarterly basis, with a more comprehensive annual update available at the Collaboration end of the year. We believe this will make our communications more dynamic and 2009 IHG was awarded best CR Environment interactive, and provide an opportunity to gather more stakeholder feedback. In turn this will help us to create a more progressive CR programme. report in sector by Radley Community Yeldar in 2009. Our performance This site contains data from 2009. As a new company, formed in 2003, one of the key elements of our work programme during 2008 and 2009 was to implement systems to Reporting cycle monitor and measure progress across the Group – in our franchised hotels as well as GRI scorecard those we either own or manage directly. With 86% of our hotel estate operating under brand franchises this process is not yet complete and therefore some of the data we are 2009 performance able to report does not extend across the whole Group. It also means that some of our Priorities immediate targets remain those of further rolling out systems rather than delivering specific results that can be measured on an aggregate basis. What's new

Page 65

Corporate responsibility / Our performance / Reporting cycle / GRI scorecard

Corporate Responsibility Report

Corporate responsibility GRI scorecard About IHG This communication is designed to comply with the Global Reporting Initiative (GRI) G3 Innovation guidelines. For further information on the GRI, see www.globalreporting.org. Fast facts Collaboration This is our third CR communication. Our intention throughout the reporting process has We have achieved 60 Environment been to maintain our GRI Application Level C. GRI indicators Community Our performance For further details see the GRI Index below.

Reporting cycle Key GRI scorecard Full coverage Partial coverage No coverage Not applicable to this report 2009 performance 1. Strategy and analysis Priorities

What's new Indicator Description Coverage Location

1.1 Statement from the CEO and Chair CEO statement

1.2 Description of key impacts, risks and opportunities Responsible tourism Our approach Key issues matrix

2. Organisational profile

Indicator Description Coverage Location

2.1 Name of the organisation Governance approach

2.2 Primary brands, products and/or services Governance approach/Our brands

2.3 Operational structure of the organisation and major divisions, Govername approach/Business model operating companies, subsidiaries, and joint ventures

2.4 Location of organisation HQ Innovation in action

2.5 Number of countries where the organisation operates Goverance approach/Business model

2.6 Nature of ownership and legal form Governance approach/Business model

2.7 Markets served (including geographic breakdown, sectors served, Governance approach/Business model types of customers/beneficiaries)

2.8 Scale of the reporting organisation This data will be included after the publication of our Annual report on 17 March 2010

2.9 Significant changes during the reporting period regarding size, Governance approach/Business model structure or ownership.

2.10 Awards received in the reporting period Performance section

3. Report parameters

Indicator Description Coverage Location

3.1 Reporting period for the information provided Reporting cycle

3.2 Date of most recent report Reporting cycle

3.3 Reporting cycle Reporting cycle

3.4 Contact point for questions regarding the report or its contents Feedback page

3.5 Process for defining report content Key issues Our partners and stakeholders

3.6 Boundary of the report Reporting cycle

3.7 State any specific limitations on the scope or boundary of the report Reporting cycle

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, Governance/Business model outsourced operations and other entities that can significantly affect Reporting cycle Page 66 comparability across time from period to period and/or between organisations

3.10 Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement

3.11 Significant changes from previous reporting periods in the scope Reporting cycle boundary or measurement methods applied in the report

3.12 Table identifying the location of the Standard Disclosures in the Scorecard/GRI index report

4. Governance, commitments and engagement

Indicator Description Coverage Location

4.1 Governance structure of the organisation including committees About IHG/CR governance under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight

4.2 Indicate if the Chair of the highest governance body is also an About IHG/CR governance executive officer

4.3 For organisations that have a unitary board structure, state the About IHG/CR governance number of members of the highest governance body that are independent and/or non-executive members

4.4 Mechanisms for shareholders and employees to provide Collaboration/Partners and stakeholders recommendations or direction to the highest governance body

4.6 Processes of the highest governance body to ensure conflicts of About IHG/CR governance interest are avoided

4.8 Internally developed mission and values statements, codes of Policies section conduct and principles relevant to economic, environmental and social performance and the status of their implementation

4.9 Procedures of the highest governance body for overseeing the About IHG/CR governance organisation’s identification and management of economic, environmental and social performance, including relevant risks and opportunities, and adherence or compliance with internationally agreed standards, codes of conduct, and principles

4.12 Externally developed, voluntary economic, environmental, and Collaboration/Partners and stakeholders social charters, sets of principles, or other initiatives to which the UN global compact organisation subscribes or endorses FTSE 4 good

4.13 Memberships in associations (such as industry associations) and/or Collaboration/Partners and stakeholders national/international advocacy organisations

4.14 List of stakeholder groups engaged by the organisation Collaboration/Partners and stakeholders

4.15 Basis for identification and selection of stakeholders with whom to Collaboration/Partners and stakeholders engage…

4.16 Approaches to stakeholder engagement, including frequency of Collaboration/Partners and stakeholders engagement by type and by stakeholder group

Economic

Indicator Description Coverage Location

EC1 Direct economic value generated and distributed Community/Charity donations Group balance sheet

EC2 Financial implications and other risks and opportunities for the Environment/Climate and carbon organisation's activities due to climate change

EC3 Coverage of the organisation’s defined benefit plan obligations Our people

EC9 Understanding and describing significant indirect economic Environment impacts, including the extent of impacts Community

Environmental

Indicator Description Coverage Location

EN3* Direct energy consumption by primary energy source Environment/Energy

EN4* Indirect energy consumption by primary source Environment/Energy

EN7 Initiatives to reduce indirect energy consumption and reductions Environment/Energy achieved Environment/Green engage Innovation in action

EN8 Total water withdrawal by source. Environment/Water Page 67 EN14 Strategies, current actions and future plans for managing impacts Environment/Biodiversity on biodiversity

EN16** Total direct and indirect greenhouse gas emissions by weight Environment/Climate and carbon

EN17** Other relevant indirect greenhouse gas emissions by weight Environment/Climate and carbon

EN18 Initiatives to reduce greenhouse gas emissions and reductions Environment/Green engage achieved Innovation in action

EN26 Initiatives to mitigate the environmental impacts of products and Environment/Green engage services and extent of impact reduction Innovation in action

* EN3 and EN4 are reported together as a total figure

** EN16 and EN17 are reported together as a total figure

Labour practices and decent work performance indicators

Indicator Description Coverage Location

LA1 Total workforce by employment type, employment contract and Community/Our people region

LA3 Benefits provided to full-time employees, that are not provided to Community/Our people temporary or part-time employees, by major operations

LA4 Percentage of employees covered by collective bargaining Community/Human rights agreements

LA5 Minimum notice period(s) regarding significant operational Community/Human rights changes, including whether it is specified in collective agreements

LA7 Rates of injury, occupational diseases, lost days and Safety and security absenteeism, and number of work-related fatalities by region

LA11 Programmes for skills management for lifelong learning that Community/Our people support the continued employability of employees and assist them in managing career endings

LA12 Percentage of employees receiving regular performance and Community/Our people career development reviews

LA13 Composition of governance bodies and breakdown of employees Governace approach per category according to gender, age group, minority group Corporate governance membership, and other indicators of diversity

Society performance indicators

Indicator Description Coverage Location

SO1 Nature and effectiveness of any programmes and practices that Community assess and manage the impacts of operations on communities, including entering, operating and exiting

SO5 Public policy development and participation in public policy Environmental legislation development and lobbying

SO6* Total value of contributions to political parties or related Policies institutions broken down by country

* IHG makes no party political donations.

Product Responsibility Performance Indicators

Indicator Description Coverage Location

PR5 Practices related to customer satisfaction, including results of Collaboration/Partners and stakeholders surveys measuring customer satisfaction

Page 68

Corporate responsibility / Our performance / 2009 performance

Corporate Responsibility Report

Corporate responsibility 2009 performance About IHG Innovation Key data Collaboration 7 brands Environment 4,438 hotels Community Our performance 86% of hotels operate under franchise Reporting cycle 100 countries

2009 performance 355,000 employees Priorities 9 million tonne carbon footprint (cf 2008) What's new 10% in reduction in energy consumption in our managed hotels

11 IHG training academies in 25 locations $1.65M invested in local communities

Key achievements

Innovation We enhanced our Innovation Hotel so that our stakeholders can continue to be part of developing more responsible hotels of the future.

Collaboration We signed the UN Global Compact. Our unique partnership with Oxford University will help inform future hotel design and operation. Environment We launched an innovative new tool, Green Engage, to help our hotels on their journey to be green. We rolled out the online resource to 900 of our hotels to help them measure, manage and report on energy waste and water and set up an even larger community of green champions to support the system. Community We continued to develop and expand the IHG academy in order to offer local economic opportunities in the areas in which we operate. We are helping our brands to have a more positive impact in the community through initiatives such as the National Geographic partnership, which aims to protect the destinations where we operate.

Summary of performance

This year we remained committed to our corporate responsibility goals despite the backdrop of serious economic decline. Our new online sustainability tool reached nearly 900 hotels and continues to support them on their journey to be more environmentally responsible and cost efficient.

Our approach is collaborative and we continue to work actively with the brightest and best. We have formed new partnerships that we believe will challenge our thinking and add value to our approach.

We continued to refine our strategic approach to CR, spearheaded by our newly established CR Committee at Board level. We are currently working on refining our community strategy so that IHG can have an even greater positive impact on the communities within which we operate.

This year hasn’t been without challenges; we see these as opportunities to further improve the way we carry out our strategy. In 2010 we will focus on improving how we communicate our CR priorities to our broad range of stakeholders and on rolling out Green Engage to greater numbers of our franchised hotels.

Page 69

Corporate responsibility / Our performance / Priorities

Corporate Responsibility Report

Corporate responsibility Priorities About IHG

Innovation

Collaboration Objectives Performance against objectives Environment

Community Innovation Our performance

Reporting cycle Seek to commercialise CR innovations where appropriate In progress To be reported on further in our hotels in the year 2009 performance Priorities

What's new Increase interactivity of our innovation hotel In progress To be reported on further in the year

Collaboration

Agree integrated CR strategies for main brands as In progress To be reported on further appropriate in the year

Refine stakeholder engagement process In progress To be reported on further in the year

Enhance employee engagement with CR In progress To be reported on further in the year

Environment

Roll out Green Engage to 100% of our owned and In progress To be reported on further managed hotels and expand this into the franchised in the year estate in all three regions

Ensure that Green Engage is used accurately and In progress To be reported on further regularly by participating hotels in the year

In our owned and managed estate, we seek to achieve In progress To be reported on further an energy savings of 6% to 10% over the next three in the year years (2010 -2012) on a per available room night basis

Community

Horizon scanning of Government regulation and In progress To be reported on further legislation to inform strategy in the year

Refine current community policy based on our review of In progress To be reported on further our existing approach to community support in the year

Conduct regular review of community partnerships In progress To be reported on further in the year

Work with The London Organising Committee for the In progress To be reported on further Olympic Games (LOCOG) to support the sustainability in the year goals of the 2012 Olympic and Paralympic games

Page 70

Performance against targets and priorities set in 2009

Fast facts

A selection of our awards during the year:

National Business Travel Association (NBTA) CSR award

2009 Hotel Visionary Award from Hospitality Technology Magazine for Green Engage 2009 CSR Innovation Award from Hotel Magazine

Eco-lodging Award at the China Hotel Investment Summit (CHIS)

‘Best Corporate Responsibility Report in sector’

Worldwide Hospitality Award for best initiative in sustainable development Most admired leisure and hospitality company for the third year running at Management Today's Britain's Most Admired Companies Awards Condé Nast Traveller 2009 World Savers Award for Willard InterContinental Washington DC IHG has been recognised as the most environmentally and socially responsible hotelier in Australasia, after being awarded the inaugural Responsible Travel Management Award (RTM) by the National Business Travel Association (NBTA) 2010

Targets Performance against targets

Innovation

Improve internal and external CR communication through We achieved our goals for 2009 and will our CR communications plan. Our communications be focusing on strengthening our strategy includes maintaining and extending the CR communications in 2010 100% report and Innovation Hotel websites

Continue to update our CR strategy and ensure that it is This year we integrated fully with integrated with IHG’s corporate objectives corporate strategy through the IHG 'Wheel' 100%

Finalise the Board's CR Committee arrangements We established the Committee in 2009 and this process will continue in 2010 100%

Update key policies as and when necessary We continue to review and update all policies through our new CR committee 100%

Continue to build on our stakeholder partnerships We formed new partnerships with key stakeholders such as Oxford University and the United Nations in 2009 and we 100% will continue to develop our partnership working in 2010

Collaboration

Further integrate CR strategy in the brand planning We formed a partnership between process and take innovations to the market National Geographic and the InterContinental Brand and are actively 50% working with the Crowne Plaza brand. We need to further integrate with other brands

Ensure that owners and general managers are aware of We refreshed our Green Aware Training the best practice systems available to them: specifically, programme to align with Green Engage the Green Engage online sustainability system and the and renamed it 'Green Engage the 100% Green Aware Training programme fundamentals'

Page 71 Update our online sustainable hotel guidelines – Green We will continue to update Green Engage Engage with new learning in 2010 and will focus on making it easier for our hotels to use 100%

Refresh our General Managers' community involvement We added several categories of questions survey and use the findings to refine our approach to to our survey and integrated it with Green community support Engage to make it easier for our hotels to 100% use. We will continue to analyse this data

Environment

Use the globally comparable data from our 2008 We have loaded historic data into Green measurement to enable IHG to set benchmarks for our Engage to enable our hotels to track hotels on their energy waste and water reduction efforts current performance against past 100% performance

Roll out our new online sustainability system, Green Green Engage has been rolled out to all Engage, across the globe to integrate 'green' objectives our owned and managed hotels at corporate and hotel level 100%

Progress our CR objective to make a night's stay with We measure and manage achievement of IHG more carbon efficient this objective through Green Engage 100%

Build on our corporate office sustainability innovations We have found the online Innovation with the development of the on-site ‘Green Room’ to test Hotel sufficiently helpful. We believe that it concepts and better communicate what IHG is doing would be more beneficial to look at the 0% whole hotel rather than one room and will build this into our approach next year

Community

Develop a more globally integrated approach to our local The IHG Academy is at the cornerstone of economic development initiatives across all our operating this approach. Next year we will focus on regions further implementation and expansion 100%

Based on our general managers' survey results, develop We are currently refining our community guidance for our corporate, regional and hotel community strategy, taking into account the General activities Manager survey results 100%

Continue our research on hotel energy efficiency with the This is an ongoing five-year study which US Department of Energy we continue to be engaged with 100%

Page 72

Corporate responsibility / What's new

Corporate Responsibility Report

Corporate responsibility What's new About IHG Innovation Crowne Plaza Copenhagen Towers creates the world's first Fast facts – Guest Collaboration guest-powered electricity savings Environment Crowne Plaza Copenhagen Towers has 1 x guest cycling at 30 Community created a world first by giving guests the kilometres per hour Our performance chance to help power the hotel whilst (average speed) for 60 getting fit at the same time. minutes will produce What's new approximately 100 watt InterContinental Sydney: water The 366-room Crowne Plaza Copenhagen hours of electricity. efficiency Towers, one of the world's greenest hotels, CR at the InterContinental has taken efficient energy production one The complimentary meal Cairo Citystars step further by installing electricity awarded to guests is worth producing bicycles in its gym for guests to approximately 200 Danish use. Anyone producing 10 watt hours of Kroner or £22 and is electricity or more for the hotel will be redeemable during the given a locally produced complimentary guest's stay. meal encouraging guests to not only get fit but also reduce their carbon footprint and save electricity and money.

Guests using the new electric bicycles will be able to monitor how much electricity they're producing via iPhones mounted on the handlebars. Avid fitness fans can also, from June, race against the hotel's solar panel system in a bid to produce the most electricity. Fast fact – Method

Electricity generated by Crowne Plaza Copenhagen Towers is a member of the UN Global Compact. It has EU guests through this initiative Green Building and Green Key certification and is on a journey to becoming carbon is stored in a battery and neutral. Environmentally responsible technology is used throughout the hotel, fed back into the main including: power supply of the hotel. The first groundwater-based cooling and heating system in Denmark, expected to reduce the energy used in the hotel for heating and cooling by almost 90% Low energy lighting and hand dryers The largest solar panel park in Northern Europe to be integrated into a building, Related content covering all the hotel's sunny facades. InterContinental Hotels Group opens its first hotel in Denmark "I believe that green thinking is not just good for the environment but is also good for the bottom The Guardian: The pedal- line. I have no doubt that businesses that take powered hotel an environmentally responsible approach have the edge over their competitors as leisure and The Sun: Bike for your business guests alike are increasingly choosing supper hotels based on their environmental credentials. This makes the Crowne Plaza Copenhagen Towers a welcome addition to our city." said Lene Espersen, Deputy Prime Minister of Denmark, at the launch of the hotel, adding that the opening of Crowne Plaza Copenhagen Towers was a great day for both the environment and the city of Copenhagen.

Allan Agerholm, general manager, Crowne Plaza Copenhagen Towers commented: "The electric bikes offer our guests the chance to get fit and help power the hotel at the same time using environmentally responsible technology. It will be interesting to see how many guests take part and how much electricity we generate.” See savings calculations to the right.

The electric bikes were installed at Crowne Plaza Copenhagen Towers on 19 April 2010 and will run for a year.

Page 73

Corporate responsibility / What's new / InterContinental Sydney: water efficiency

Corporate Responsibility Report

Corporate responsibility Sydney water About IHG Innovation InterContinental Sydney: helping to educate the industry on Collaboration water reduction The Hotel InterContinental Sydney is proud to have Environment The InterContinental Sydney worked together with Sydney water on a set of staff training saved over 30% from its Community DVD’s for the hospitality sector. The DVDs were produced to raise staff awareness about original water consumption, water efficiency and encourage staff to report leaks. On average, 30% of water used in Our performance making the hotel more hotels is wasted through leaks. Keeping leaks under control is the cheapest and easiest efficient, saving money and What's new way to save water and staff are key to reporting and dealing with leaks quickly. most importantly, making a InterContinental Sydney: positive contribution to the water efficiency To view the 'Sydney Water - What you can do at work' video please visit our corporate environment. web site. CR at the InterContinental Cairo Citystars Andy Goonesekera, Chief Engineer, Hotel InterContinental Sydney

Page 74

Corporate responsibility / What's new / CR at the InterContinental Cairo Citystars

Corporate Responsibility Report

Corporate responsibility CR at the InterContinental Cairo Citystars About IHG Innovation Interview with Thierry Perrot- Director of Operations- Egypt and Collaboration Libya and General Manager of InterContinental Cairo Citystars

Environment The following video shows an interview with Thierry Perrot, Director of Operations Egypt Community and Libya and General Manager of InterContinental Cairo Citystars. He explores how the Our performance hotel has minimised its environmental impact in terms of energy, waste and water consumption and discusses how Green Engage has been a valuable tool in managing What's new and reducing energy consumption. InterContinental Sydney: water efficiency To view the 'Interview with Thierry Perrot' video please visit our corporate web site. CR at the InterContinental Cairo Citystars

Page 75 General enquiries

Europe, Middle East Americas Asia Pacific and Africa PO Box 30321 Guest relations Guest relations Salt Lake City South Pacific Central Oak Court Utah 84130-321 Reservation Office Dudley Road US Level 9, 504 Pacific Highway Brierley Hill Telephone: +1 800 621 0555 St. Leonards NSW 2065 West Midlands DY5 1LG Fax: +1 801 975 1846 Australia UK Telephone (Toll free from Telephone: +44 (0)871 942 9292 Australia): 1800 009 200 Fax: +44 (0)871 942 9101 Landline: +61 2 99269889 Fax: 61 2 94376366