NH HOTELES

A. The main facts about the activities of the company.

Founded in 1978 in Spain, NH Hotels ranks as one of the most important hotel firms. Nowadays, employing 20.000 workers and running 400 hotels in 26 different countries, NH is one of the top 25 hotel chains in the world and one of the main ones in Europe.
Moreover, the company is listed on the stock exchange market of Madrid since 1997 and it is the only Spanish firm in the FTSE4GOOD for CSR, and its business model is aimed at finding potential opportunities that contribute to the sustainable development of the firm, in order to be constantly growing in a responsible manner.

NH operates in the tourism industry, more concretely in the urban hotel sector, and provides high quality and personalized services, trying to create a special experience for each client’s visit to one of the firm’s hotels. The company intends to make the guests feel comfortable by delivering services and equipping all establishments with the latest technology to improve communication and efficiency, as well as to grant entertainment for all customers.

The company is aimed at satisfying all its stakeholders (such as employees, clients, shareholders, suppliers, etc.), by meeting or exceeding their current and future needs.
In addition, the chain takes care of the communities in which it operates and tries to have the less possible impact, in order to grant a good environment for future generations, by implementing sustainable and efficient solutions.

B. The Ethical challenges this company is addressing.

As one of the leaders in the urban hotel industry both nationally and internationally, NH Hotels has often needed to choose between profits and social responsibility. Some ethical challenges in which the company is involved are:

1.Contribute to protect the environment.

NH contributes to the efficient environmental resource management as a key challenge for the company, who works towards the rational use for the existing resources in order to respect future generations. With this commitment, NH Hotels seeks to offer a sustainable and efficient experience when receiving guests, in order to provide a value added hotel service to all stakeholders, from employees to society.
For these reasons, NH Hoteles’s implication has been recognized with several awards and certifications that guarantee that their environment protection commitment is real and assures guests the quality of the services delivered. Some examples of awards received are the Europan Green Building Award for some hotels, the Greenlight recognition for the whole company and the ISO 50001 certificate, being the first Hotel Chain to achieve it.
With its environmental protection measures, NH Hotels has anticipated eight years the adoption of the European Union’s Environmental Plan for 2020 aimed at reducing pollution and consumption of natural resources.

2. Build positive relationships with the communities in which NH operates

Social Action is defined as one of the strategic lines of the new Corporate Responsibility Director Plan 20101-2013 which is adapted to local needs but at a global level, by integrating the communication of the social projects and with aim of protecting and collaborating by adding value in the development of the communities in which it operates
In 2012 the company consolidated the global social action lines with the local implementation. Under the slogan UP! For The People, their goal is to contribute to society through the following lines:

• Up! For Opportunities: Training and Internship programs for youths at risk of social exclusion and disabled people in some establishments of the hotel chain, such as the Sprint Project. This initiative provides employment and professional training to youth at risk of social exclusion Employees are also involved in this project without any extra compensation. This program formed in 2012 almost 400 youths in a vulnerability situation and also offered to some of them labour contracts.

• Up! For Hospitality: NH collaborates with NGOs and other institutions via offering discounts up to 30% for any products and services that they may require, such as rooms, halls or food services. The number of hotels involved in this amounted to 92, who has donate 3.200 rooms in 2011 to 83 NGOs and institutions, such as Josep Carreras Foundation against leukaemia or “Menudos Corazones”, as well as the initiative “Huesped de Corazón” together with Unicef. NH Hotels has been awarded by the “Make-a-Wish International Corporate Partner Award” of Make a Wish Spain for its long history in supporting this Foundation though this line.
It is important to highlight its project – together with SAMUR Social- since 2009 regarding to the current situation in Spain of massive evictions. The goal of this project is to cover the basic needs of support and lodging to all those people in Madrid that lose temporally or definitively their houses due to social emergency situations.

• Up! For Volunteering: This is a corporate volunteering proposal made by its own employees which promotes solidarity and responsibility values. Some examples of this is its participation in the European Corporate Volunteering project “Engage”; a trip of two of its employees to open a School-Hotel in Ethiopia and train local employees a joint project with “Manos Unidas” NGO; and the engagement in a corporate volunteer week called “Give&Gain”, the solidarity campaign “A Christmas for Everyone” to collect toys and food for Spanish Red Cross which involved 193 volunteers in 2011 including its employees, their neighbours and also its customers.

3.Invest in employees’ training and education

NH Hotels considers its employees as the most valuable asset, since they reflect the commitments of the company to provide excellent quality services and a positive working environment. Therefore NH is committed to deliver its workforce opportunities for professional growth and to address cultural diversity and equality among them. Among many actions and programs, we want to highlight the “We All Are Sales” program as part of its business culture which mobilizes positively all its staff with the aim of increasing their sense of belonging in the organization and to foster the maximum implication possible of its employees which results in an increase in revenues – program awarded with the Best HR Management Program in 2010; and NH University, which provides continuing training to the entire workforce.

4. Engage other parties of the supply chain with their commitment.

We would like to highlight in this field the adhesion of its suppliers to their new Conduct Code which guarantees high quality standards and commercial ethics and respecting social and environmental compromises.

C. What makes you believe this company is really ethical and why you trust it?

We were looking for a company with a solid and important Corporate Social Responsibility, as it is very valuable for us that a company engage in projects contributing with their own resources – money, time, employees…- to specific social causes that have nothing to do with its business sector. This fact reveals in our opinion the real interests of an organization in helping the society, in contrast with some companies which only engage in causes that are involved in their business or sector - e.g. Technological/Energy companies which are "compromised" with the environment but they are actually just doing their job properly.

We were looking for a company showing its interest to contribute to improve the current social, economic and environmental difficult situation that the world is currently facing. This is very important for us, as we think that companies with such a big influence and power might lead a charity and helping movement in order to help the society that have some needs that are not covered by the government, specially nowadays as there is very little money to invest in social causes.
We wanted to focus specifically in a company which contributes with its resources to improve the situation of disfavoured people and weak groups, an important and necessary task nowadays taking into account the economic situation that the world, and specially Spain, is facing.

For us, it has a lot of impact that a huge organization with lots of resources, power and influence decides to invest in some social causes. This is why we chose NH Hoteles. This company is willing to make its contribution in order to start changing some bad, unethical or unfair things of our world that an individual would not be able to do.

The fact that a company engages in projects where all employees and stakeholders have to be involved is very powerful, as motivation plays a central role in their acts and in their jobs, and the feeling that your interests are aligned with the company you are working for is very important for motivation and hopes. That is why we also looked for companies in this issue was relevant, and this is also the case of NH Hoteles.

NH Hoteles has been recognized by its tasks in social investments and its Corporate Social Responsibility. It is also present in FTSE4GOOD stock index – which measures Socially Responsible Investments of its components, which is a good indicator of its values and social actions.

What is also very relevant is its Code of Conduct, not only for its employees, but also for all stakeholders, including suppliers. This Code of Conduct shows clearly what are the values an ethic of this company, which includes, among others, equity, good practices, integrity and professional work. Some clauses that has helped convince us about NH Hoteles are the prohibition to from customers, shareholders or suppliers that can influence or compensate their business decision; the reservation of their right to reject any customer if there is an evidence that he violates moral and ethical values generally accepted or the necessary condition of its suppliers to operate legally and ethically, and respecting human dignity at any moment.

D.The possible challenges facing the company in the future and how you think this company may improve.

Year 2012 has been a bad one for NH Hoteles and its finance, who has registered huge losses of 292 million Euros, due to the current economic recession, and this situation does not seem to improve in the first trimester of 2013.

The main aim for NH Hoteles referring to their current situation was the disinvestment of some of their non-strategic assets to help paying its high outstanding debt.
The Group has been negotiating with several financial institutions the restructuring of its outstanding debt but it ended with no agreement, generating uncertainty on its plan of disinvestment. NH Hoteles has finally found the capital needed in China what allows them to take a breath for a moment regarding to its debt terms.
With this acquisition of a part of NH Hoteles, HNA wants to continue NH Hoteles activity around the world including the Chinese market but defining a new five-year Strategic Plan, taking advantage of the hotel chain strengths. This will also include a redefinition and movements in its Management.

Therefore, the main challenge for NH Hoteles in the future is not only to find effective ways to rebalance its financial situation, but also to get new resources enough to allow them continuing with their CSR activities, which is with no doubt a huge part of the identity of the company and what motivates and inspires all the stakeholders of this organization.

The most difficult challenge that NH Hoteles has to face is the inevitable cost reduction in order to restructure its finance, which will not have desirable consequences for all parties.
Although the company started cutting operating costs through a reduction on its renting costs, staff costs also needs to be reduced.
As a last measure to save its finance, NH Hoteles has started a restructuring of its staff which is currently being negotiated with trade unions.

The entire world will be watching this process closely to see whether NH Hoteles will be coherent with the values and ethics that have been declaring during all these years, which has made the company become a reference of conduct in society.