GPO Procurement Policy

Accor GPO (Global Procurement Organization)

Procurement Policy

CREDITS

Issuing Function The business related to the goods and services consumed at client level

Author/issuing department Group Procurement Department

Target audience All Accor category managers

Related Group Principles / Policies, Standards or Guidelines The GPO Business Principles The Accor Compliance policy principles The Code of Business Conduct The Roles & Responsibilities for all stakeholders involved (both internal and external)

Repository All Accor Principles and Policies, Standards and Guidelines can be found in the Astore Document center online repository at: https://accor.sharepoint.com/sites/Communities-v0/Room-1850/SitePages/Home.aspx All these appendices are also available throughout the document via links net

Approver Caroline Tissot, ACCOR Chief Procurement Officer

Date of publication June 2020

Copyright and confidentiality The content of this document may not be distributed or disclosed to third parties without proper authorization.

SUMMARY

I. POLICY PRINCIPLES AND SCOPE A. Purpose B. Accor Procurement business, strategy and organization 1. Procurement acting as a service provider 2. Procurement Organization 3. Procurement strategy at category level 4. Procurement category referential II. RISK MANAGEMENT A. Duty of vigilance - Prevention of corruption risks – conflict of interest – personal data 1. Legal documents 2. Prevention of corruption risks 3. General Data Protection Regulation – GDPR B. Responsible sourcing 1. Risk CSR Categories definition 2. A progressive & differentiated mitigation strategy 3. Procurement Charter 4. Focus on CSR Assessment (for risk and high risk categories) 5. On-site audits (for high risk categories’ suppliers) C. The financial health of suppliers 1. Solvency 2. Dependency 3. Recovery process 4. Doubt / questionable supplier: 5. Collective procedure D. Quality Management 1. Controls 2. Sanitary security for F&B categories with regard to health risks 3. Sanitary crisis management III. HOTEL PROCUREMENT ACTIVITIES A. Offer range management B. Procurement commodity management 1. Requirements and expression of needs 2. Group Commitment and standards to respect 3. Sourcing Strategy C. Source to contract 1. Supplier sourcing 2. RFP including Supplier analysis 3. Contract negotiation and supplier selection 4. Contracting process D. Communication and deployment E. Supplier performance and relationship management - Monitor Results 1. Coverage, adherence and capture rates 2. Annual spend and budget 3. Quality Management 4. Tools IV. TOOLS AND SYSTEMS A. ASTORE DOCUMENTS CENTER B. ASTORE ESOURCING to source and contract suppliers C. ASTORE SHOP to order goods and services D. ASTORE COMPANY to promote the procurement solutions E. ASTORE SUITE (A2S) to manage remunerations and performance A. ASTORE ANALYTICS to measure suppliers’ performance V. GLOSSARY

Pullman Bangkok Grande Sukhumvit - ThaĂŻland

I Policy principles and scope

A. PURPOSE

This policy presents the operating methods, processes and best practices of the Procurement teams (i.e. the business related to the goods and services consumed at hotel level) toward hotels’ needs and purchases.

As such, the main purpose of this policy is to: • • •

Provide guidance and support to the Category Managers in the daily exercise of their profession; Facilitate the arrival of new employees into their new job by providing them with a comprehensive view of the procurement organization and key processes.

Strengthen the links within the Procurement worldwide network, by sharing good practices and the use of a common approach.

This policy covers processes from the definition of needs and sourcing to legal and operational implementation of supplier contract “source to contract” (including risk management).

As such, this policy also covers the following objectives: • • •

•

• • • •

Define Roles & Responsibilities for all stakeholders involved (both internal and external); Present main available tools and systems to be used; For Accor customers' solutions: Ensure consistency and respect of Accor brand standards from the identification of needs/specifications to the final nomination of a supplier (whether it is a local or global solution); Ensure open and fair competition, optimize sustainable procurement and value for money while minimizing the level of risk Obtain the desired quality of supplies and services at the best possible cost and timing; Define the principles related to Corporate Ethics and Social Responsibility; Ensure selection of suppliers are compliant with, international and local legislations regulations as well as Accor Compliance policy principles; Ensure Hotels contribute, adhere and through their purchasing activity, respect standards related to brand requirement, guest experience, sustainable and cost efficiency.

Procurement activity related to Headquarters (“Indirect” procurement) is covered by a dedicated separate procedure

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

1. Procurement acting as a service provider In 2018, Hotels’ expenses represented 5 billion euros worldwide, of which 50% (in average WW, different from one country to another) were captured by ACCOR nominated solutions.

The purpose of our business model, based on remuneration services, is to: • For our customers2 : optimize and adapt their hotel spend; • For Accor: acting as Procurement service provider, generate revenues through procurement services remunerations.

Our objective is to deliver additional and sustainable value to existing and potential partners, by focusing on service, total cost advantage and innovation.

Figure 1: Extract from the presentation : "Accor GPO (Group Purchasing Organization): overview & opportunities – 30 avril 2019” (Confidential – Internal use only)

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

2. Procurement Organization The Procurement organization gathers approximately 200 FTE in 21 procurement offices (data 2019) including Global Procurement office.

Figure 2 : Extract from the presentation "Accor GPO (Group Purchasing Organization): overview & opportunities – 30 avril 2019” (Confidential – Internal use only)

The official list of Procurement offices is detailed here.

To improve collaboration between local and global procurement teams, the GPO accelerator operating model has been implemented in 20185.

The objective of such organization is to define projects to be centrally managed and benefiting to the whole GPO perimeter. In this context, a shared service department in charge of administrative tasks (supplier invoicing and rebates redistribution) has been created. Its cost is shared between Global and local procurement department and supported by each country of the GPO organization.

With the respect to revenue, countries of the GPO perimeter are encouraged to use Group nominated solutions to get more services remuneration.

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

a) Global Procurement Organization (Corporate) The Global Procurement team reports to the Deputy Chief Executive Officer, and is responsible for: • • • • •

Defining a global Procurement strategy including Risk Management (CSR, Compliance, …); Steering the performance of the Procurement function as a whole; Managing global suppliers and global sourcing projects; Supporting and coordinating Country Procurement departments for their local sourcing projects; Consolidating and reporting aggregated results of the Procurement worldwide organization.

b) Country Procurement Organization The local Chief Procurement Officers (“CPOs”) report hierarchically to the Group Chief Procurement Officer and functionally to their Country or Regional Chief Executive Officer (“CEO”).

The missions of a local procurement department stand as follows: • Implementation of the Group Procurement strategy in the country / Region; • Collaboration with Global Procurement teams for the sourcing of certain categories; • Roll-out of both Group and Country contracts; • Management of local sourcing projects and suppliers to increase business basis; • Development of new nominated solutions and increase the use for these solutions; • Procurement performance measurement at local level • Deployment of offers on the Accor and non-Accor network: identification of needs, new markets, sale of solutions, communication, customer follow-up, Accor representation,

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

c) Main roles and responsibilities The three key activities (Offer range, procurement commodity and source to contract management) are set up in procurement with 2 different roles and responsibilities: Group Category Manager and Category Manager that we detail here below.

Group Category Manager The Group Category Manager is responsible for the development of the global procurement categories.

He is an expert in his/her purchasing categories and works closely with Country Category Managers to identify expectations and deploy the nominated solutions in the regions.

Revenue is collected and shared by two parts.

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

c) Main roles and responsibilities The three key activities (Offer range, procurement commodity and source to contract management) are set up in procurement with 2 different roles and responsibilities: Group Category Manager and Category Manager that we detail here below.

Category Manager The Country Category Manager develops his local procurement categories in his area.

In functional liaison with the Global Category Manager, he participates actively and jointly in the development of the global categories by expressing operational expectations and organizing the distribution network for the hotels in his or her area.

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

d) Others services provider Astore Equipment Projects Astore Equipment Projects (AEP) is an optional paid solution provided to hotel owners on OS&E and FF&E categories for to support hotel opening (or reopening) projects. Usually CAPEX one shot expenses: • Project planning AEP teams accompany owners from kick off, installation and close-out. According to the specifications and requirements details AEP teams review the project’s timeline, design and material choices, global sourcing and competitive bidding • Value engineering AEP teams provide global sourcing and RFP purchasing negotiations using Astore 's extensive network to save time and money at hotel owners.

• Procurement and logistical coordination AEP teams place and expedite orders taking care of all logistics including warehouse and installation coordination • Aftercare and project close out AEP teams provide comprehensive reports, process vendor payments and compile an asset register that covers all project documentation AEP teams have a global coordination, with hierarchical link with the AEP coordinator, however some teams are located in the countries AEP teams benefit from global coordination in order to identify and implement best practices, but also to synergize and professionalize commercial efforts, and manager workload variability in the geographies Along with the global coordination, AEP teams will be present in the countries in order to allow for the proximity needed during projects Sales department The Astore Sales organization comprises over 20 members dedicated to serving the hospitality sector in 7 countries.

The primary objective of the sales function is to ensure that our 5,500 client partners have the best products and services available to meet both their operational needs as well as client expectations.

To achieve this both Global and Local procurement teams work and negotiate with our 3,500 suppliers.

As purchases by Accor-branded hotels, the business model for our non Accor clients is based on the compensation system (detailed in part III).

The Astore GPO works with a diverse client base consisting of, but not limited to: Hotels, Casinos & gaming, MICE & Events specialists, restaurants and golf clubs.

While serving a significant portion of the global Accor portfolio, the Procurement Sales organization also works with several hundred Non-Accor branded hotels and restaurants (e.g. Groupe Lucien Barrière, Moma Group, Generator, …).

For example, Non-Accor customers represent approximately 20% of France annual purchases volumes expressed in euros.

For the protection of the supplier, before signing a contract with a partner, no tariff should be communicated to a non-Accor partner. Unless specifically authorized by the supplier And, unless otherwise specified in the contract, service remunerations remain confidential.

B. ACCOR PROCUREMENT BUSINESS, STRATEGY AND ORGANIZATION

3. Procurement strategy at category level Direct Procurement teams act as a service provider for hotel owners, other external customers and suppliers.

To deliver such service, a process has been defined by Procurement teams to determine a nomination strategy for each procurement category6 combining both: • a global approach led by Group Procurement team • a local approach led by Country Procurement offices.

This approach allows 2 types of strategies7 per category depending if local and global approaches are combined or if they are applied separately.

LOCAL strategy: Country Procurement teams independently launches its own sourcing projects for categories for which the need is local (e.g. fresh products) Global Procurement teams do not intervene as they have no expertise to be applied locally.

GLOBAL strategy: Global Procurement department leads nomination process for categories for which: • the needs of hotels under Accor brands are common across geographies, regardless of their operating mode (managed or franchised)

• supplier market is global (e.g. bedding, televisions).

This strategy enables pooling specifications and negotiating a consolidated global volume with suppliers thus obtaining the best conditions.

For this sourcing strategy, Global Procurement teams carry out the sourcing process, from the definition of specifications to supplier contract signature.

Country Procurement teams cannot separately launch a nomination project for the applicable categories but can be asked to take part to sourcing project. Once the supplier has been selected and contract signed, they are in charge of deploying the contract on their local perimeter.

4. Procurement category referential This policy is applicable to any employee of the Procurement organization (Group and local Category manager) involved in the nomination process for all existing Direct procurement categories.

In our referential, Direct procurement activity covers many items that are regrouped within 98 Procurement categories, split into 7 bundles.

Pullman Bangkok Grande Sukhumvit - ThaĂŻland

II Risk Management

A. DUTY OF VIGILANCE – PREVENTION OF CORRUPTION RISKS – CONFLICT OF INTEREST – PERSONAL DATA

1. Legal documents Subject to local regulations, every document required by the country must be collected, checked and made available to the hotels.

For example, in France, all suppliers (domiciled in France or other) working with at least one establishment based in France must provide the following documents at the time of signing and then every 6 months until the contract expires : • Official registration document, • Certificate of provision of social declarations and payment of social security contributions and dues • Nominative list of foreign employees.

The authenticity and consistency of these documents must be verified by the instructing party.

1. 2. Prevention of corruption risks a) General Principles and Obligations “The universal values of integrity and respect so actively promoted by Accor have always set us apart from others in the industry. Our culture and expectations are strong. This is the bedrock of our heritage and is still the cornerstone of our combined commitment” Sébastien Bazin, President & CEO (excerpt from the President’s Word of the Ethics & CSR Charter) All of Accor's activities fall within the framework of the Ethics and CSR (Corporate Social Responsibility) Charter applicable to the entire Group. All activities related to Procurement must therefore comply with this Charter, and Accor employees involved in these activities are under the obligation to know the content of the Charter - which has not been included in this document - and to refer to it.

With particular regard to the risks of corruption, the Group applies a zero-tolerance policy for the prevention and fight against corruption and has developed the following instruments and programs: • The Anti-Corruption and Bribery Policy designed to enable employees to identify risk situations and to know how to react to such situations • A Gift Policy, whose central principle is the absence of gifts in business relations, with limited and controlled exceptions and a principle of absolute prohibition of any gift in relations with public officials or similar • A "KYC - know your counterparty" process to ensure the quality of our partners and suppliers • A professional alert system enabling any employee to report any situation that could put the Group or its employees at risk • Financial and accounting procedures to prevent and identify possible fraud situations

Figure 3 : Extract from the Ethics & CSR charter - 2018

A. DUTY OF VIGILANCE – PREVENTION OF CORRUPTION RISKS – CONFLICT OF INTEREST – PERSONAL DATA

These policies and instruments are detailed on the Group's Ethics, CSR & Compliance http://worldwide.accor.net/HumanResources/EthiqueRSEandCompliance/Pages/Accueil.aspx

Intranet:

Every Accor employee involved in a Procurement process has the responsibility to become acquainted with it - if he has not already done so in the context of the training actions regularly provided in this area - and to implement them as far as he is concerned.

In addition, with regard to conflicts of interest, the Group has implemented a specific policy to cover this risk. The interests that Group employees may have in suppliers or partners of Accor (either directly in their personal capacity or indirectly because of their family or other links with persons carrying on an activity there) may give rise to situations of conflicts of interest which are detrimental to the proper functioning of the company and which may in any event 'throw doubt' on a business relationship. The Conflicts of Interest Policy can be found on the Group’s Compliance Intranet at the address above.

Any Accor employee who finds himself or believes that he may be in a situation of conflict of interest with a supplier or otherwise, must immediately inform his hierarchy, the Procurement Department or his local Compliance officer, so that the conflict of interest can be appropriately documented and measures taken to deal with the situation. For example, by ensuring that the conflicted employee does not participate in the selection of a supplier or the negotiation of a contract.

Support on these various questions is available either from the Procurement Department, from your local Compliance officer (the list of Compliance officer’s region by region can be found on the Compliance Intranet or from the Compliance team).

Prohibited countries In order to respect the international compliance rules, it is forbidden to list a supplier working with one of these 6 countries: • Syria • Sudan • Iran • North Korea • the Crimea • Cuba

This is due to the sanctions of the OFAC (Office of Foreign Assets Control), the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and 13 July 2020 GPO Procurement Policy national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

b) Ethics and CSR Charter « Designed to encourage compliance with the most demanding ethical principles and to reaffirm our commitments, the Ethics and Corporate Social Responsibility Charter guides our responsibility process, covering the areas of management ethics, integrity and compliance, as well as corporate social responsibility. » Sebastien Bazin, CEO & Chairman Accor.

The Ethics and CSR charter (in appendix) is the reference document for such topic in the Group. This charter summarizes the Group's values, commitments and responsibilities in conducting our business and interacting with stakeholders.

It is fundamental that this document is share among teams for everyone to be aware of its contents and commitments.

A. DUTY OF VIGILANCE – PREVENTION OF CORRUPTION RISKS – CONFLICT OF INTEREST – PERSONAL DATA

c) KYC Process Accor Group needs to be vigilant before engaging into business relationships with new counterparties – whether hotels owners, joint-venture partners, consultants or suppliers.

This is necessary to ensure that we do not enter into business relationships with counterparties who do not abide by the same business conduct standards as ours, which might lead to detrimental consequences for Accor reputation and unexpected liabilities.

PURPOSE : The purpose of this process is to avoid transactions that may entail bribery, corruption or money laundering risk, or that may infringe international economic sanctions, through the completion of a preliminary risk analysis (“due diligence”) of the counterparty.

SCOPE : This KYC process should be followed before entering into (or renewing or materially amending) a relationship/contract with any of the following counterparties: Suppliers and loyalty program partners that are responsible for 750K€ or more of turnover per year as well as: • Intermediaries and consultants representing Accor and dealing with public officials • Hotels owners (whether managed or franchised) • Joint-venture partners • In M&A transactions, the target and the seller(s)/the Category Manager(s) • Commercial Sponsorship partners • Beneficiaries of Accor Solidarity projects and other charities.

The KYC process and its appendix are available in the Astore e-sourcing tool (click here).

In your tenders, it is strongly recommended that you use this feature of the tool to: • Ensure that your supplier is compliant; • Obtain better control traceability; • Save time.

Figure 4 : Extract from the "KYC process" - 2018

A. DUTY OF VIGILANCE – PREVENTION OF CORRUPTION RISKS – CONFLICT OF INTEREST – PERSONAL DATA

3. General Data Protection Regulation – GDPR Management of personal data is a key challenge for Accor Group. Compliance with the General Data Protection Regulation ("GDPR") is an important pillar of the Group's ethical and regulatory obligations.

In this context, the procurement procedures framing the contracting process with suppliers have been updated to include data protection prerequisites to be communicated to the suppliers and satisfied.

In addition, all contracts with suppliers who process personal data on behalf of Accor must include the Subcontract / Personal Data Annex available on the Procurement intranet.

A guide to explain the GDPR Rules has been drawn up by the legal department and is attached as an appendix as long as FAQ guide. a) General Principles and Obligations Objectives • Provide natural persons with a control of their own data.

• Insure a consistent and optimum level of protection of the data inside the EU. Definitions • What is a personal data?

Any information relating to an identified or identifiable natural person. For example, an email address, an IP address, a telephone number, a PMID or an ALL card number, …

• What is a data processing?

Any operation using one or many personal data, whether being treated automatically or manually (ie: a payroll file or an Excel sheet).

GDPR applies when: • The company that processes the data is in the EU, even if it uses external providers located outside the UE to process the data. (e.g.: a company located in Europe uses a company based in the USA to store its customers’ data).

• The company that processes the data is outside the EU but offers services to natural persons located in the EU or follows their behaviour inside the EU. (e.g.: an e-commerce company in the USA sells products on a website in German where customers can pay in Euros) Responsibility between local and central • Compliance of central tools is handled by Global teams (i.e. TARS, ALL …) while the compliance of local tools is users’ responsibility (i.e. HR data, PMS data) Risks at stake • Financial penalties up to 20 million euros or 4% of global turnover and a loss of image and reputation which may cause a loss of customers. b) Process GDPR Accor procurement categories do not process personal data with the exception of IT categories.

Nominating contracts do not require a GDPR appendix in the contract. The only mention of personal data in the nominating contract concerns the nominative list of foreign employees (art. 8.2 of the nominating contract).

However, it is not necessary to obtain the consent of the employees insofar as the legal basis for the processing of this personal data is the respect of a legal obligation (RGPD, article 6, 1. c.).

Exception: in the event that, on a case-by-case basis, contracts would involve personal data, it will be necessary to regularise the annex RGPD to be added to the contract.

In appendix: the GDPR contractual annex for subcontracting of personal data in FR and EN version (to be attached to the contracts in case of use of personal data)

B. RESPONSIBLE SOURCING

It’s essential to manage the social & environmental risks in our supply chain, to: • Ensure our sustainable commitments and be a responsible company: As per Planet 21 program commitment, Accor Group makes sure to work with suppliers that respect international standards on social (no children labour…) and environmental conditions.

Most of the time, a supplier offering correct social and environmental conditions also has a good quality level.

• Respond to regulatory constraints: In France, a law on duty of vigilance will soon order companies to set up a plan to identify and prevent human rights violations, environmental damages and health risks among other things.

In others countries: UK – Modern Slavery Act came into force in 2016 ; US : California Supply Chain Transparency Act is already implemented.

• Limit the reputation risk: Some brands were seriously denigrated after the dramatic collapse of the Rana Plaza factory in Bangladesh.

The financial consequences of such event are important and higher than the cost of suppliers monitoring.

• Meet NON FINANCIAL REPORTING requirements Open and do the e-learning including the detailed presentation of the Procurement CSR plan (link on going)

1.

Risk CSR Categories definition

In 2016, procurement department updated a detailed risk mapping with the Sustainable development department, in order to adapt procurement actions and suppliers monitoring to the categories’ level of risk.

The 98 procurement categories have been ranked regarding four criteria: • Spend • Environmental rish • Social risk • Client exposure/images • Accor’leverage The 98 procurement categories were split into three criticalty levels: • Standard categories • Risk categories • High risk categories

Figure 5 : Extract from the presentation "Procrement CSR Plan" – 2019

B. RESPONSIBLE SOURCING

2. A progressive & differentiated mitigation strategy The Procurement department has designed a program to ensure that every supplier meets our expectations and set up different levels of control in line with the level of risk

Figure 6 :Extract from the presentation "Procrement CSR Plan" – 2019

3. Procurement Charter Procurement plays an essential role in the implementation of the Ethical & CSR Charter and the Planet 21 programme by favouring products and services that support the wellbeing of persons and contribute to the reduction of environmental impact, and to achieve this Accor shares with its suppliers, contractors, subcontractors and service providers its sustainable development commitments.

With the aim of complying with ethical principles, Accor has an “Ethical and CSR Charter”. This Charter provides the framework for Accor’ responsible approach, in terms of management ethics, integrity and legal compliance as well as social, societal and environmental responsibility. Concerning Sustainable Development, the commitments made

by Accor are formalised through the Planet 21 programme.

The Procurement Charter is available here

4. Focus on CSR Assessment (for risk and high risk categories) As per procurement procedure, suppliers belonging to “risk” and “high risk” procurement categories, must be subject to an assessment of their compliance to CSR by EcoVadis external company.

EcoVadis Methodology The EcoVadis assessment are held on an online platform, scoring suppliers’ CSR practices through: - 21 criteria - across four themes : Environment, Fair labor & human rights, Ethics, and Sustainable procurement - cross-referenced to 3 axes of analysis per theme : Politics, actions, results.

The methodology is built on international CSR standard including the Global Reporting Initiative, the United Nations Global Compact, and the ISO 26000 standard, covering 198 spend categories and 155 countries.

All assessments are verified by Ecovadis based on supporting documentation provided by suppliers

B. RESPONSIBLE SOURCING

4. Focus on CSR Assessment (for risk and high risk categories)

Figure 7: Extract from the website Ecovadis.com

Deliverables A scorecard with an analysis of performance for each CSR pillar with an action plan adapted to the supplier Accor requirements Assessments are valid for 3 years and the expected minimal score is 31/100 Costs

The cost of assessments is supported by Accor to get an access to the EcoVadis platform including the results of suppliers assessment.

A. RESPONSIBLE SOURCING

5. On-site audits (for high risk categories’ suppliers) a) Objectives • Check suppliers on-site, with third-party verification, if the CSR commitments signed by a supplier (Procurement Charter 21 + CSR assessment) are applied/respected; • Focus on the true social and environmental impact/performance of a company’s operations (vs policies, principles, self-reports) ➢ Compliant with the main international CSR standards: SA8000, BSCI,RBA (electronic), WRAP, ICTI Care (toys)), WCA …

• Performed within the last 18 months; • Not revealing any critical non-conformity issue.

Two options: the supplier provides Accor with a valid external CSR audit report or Accor triggers and pays a SMETA audit mission.

An existing audit is considered as “valid” if it is: SMETA audits include two or four modules depending on the Supplier business lines (see slide 20): • Health and safety - Labour standards (Smeta 2) • Environment - Business ethics - Health and safety - Labour standards (Smeta 4) The SMETA audit can be performed by two external companies pre-selected by Accor (Intertek or Bureau Veritas) Accor chose a standard tool versus a dedicated one, so that suppliers can share their audits with other clients – thus avoiding unnecessary duplication, saving time and money for both parties.

For High Risk categories, all the suppliers must give a valid CSR audit report or must be audited every 3 years.

Exception for product categories “Guest Amenities” and “Branded Products with logo” for which suppliers are be audited to the condition that major changes occur in the supply chain for Accor products : • New production • Factory changes of its subcontractors • New subcontractors • New product Otherwise, they will be audited every 3 years like other high-risk suppliers.

Audit perimeter: main Accor products factories (i.e. factories where finished products are produced). 20 July 2020 GPO Procurement Policy Audits are conducted in the main site(s) of production where risks may exist and not in the supplier headquarter or importer. When possible, the audit has to be launched when production for Accor is running.

Actions plans to be implemented following the audit have to be checked by the Category Manager, to be sure that the supplier has launched corrective actions.

In case of major non-conformity, the supplier has to launch corrective action plan and launch an additional audit he bears the price.

C. THE FINANCIAL HEALTH OF SUPPLIERS

1. Solvencey To guarantee both Accor service remunerations and the quality of Procurement services delivered to its partners, Accor Procurement organization needs to monitor the supplier's financial health and solvency.

To do so, Global controlling team is using the Dun & Bradstreet tool.

This database lists financial information on all companies and gives a level of risk (weak, moderate, strong) as well as a maximum credit limit to reach.

In some cases, Country Procurement teams have their own database (such as Intuiz in France or Kriefburger in Germany).

Please note: • In the event that the supplier's last published financial statements are obsolete/old, more recent statements (or complete tax return) have to be requested by the Category Manager; • If a supplier presents a significant risk level, a comfort letter, a surety bond or even a first demand guarantee letter can be requested.

2. Dependency In addition to the solvency check, the dependency check aims to verify that the supplier will achieve less than 20% of its turnover with Accor (based on an estimate of volumes), therefore guaranteeing that it will not be endangered by the possible termination of our commercial relationship and limiting Accor exposure to risk of responsibility.

In the event that a supplier tends to be dependent, it is essential to find, as far as possible, some alternative business solutions (such as nominating new additional suppliers to broaden and spread the number of supply sources).

Please note: • If it is necessary to carry out a more detailed evaluation for a supplier with important volumes or challenging relationship, Category Manager has to ask the Financial Control Procurement team for a more thorough survey; • If the supplier's turnover volume is unknown, request a declaration of independency from the supplier.

3. Recovery process Each Category Manager must regularly ensure that his suppliers are not in payment default and, if need be, work with them to minimise the delay. To assist the Category Managers: • The Controlling procurement team extracts, monitors the aging balance progress and shares information with category managers; • On the basis, Category Managers remind suppliers for their late debts.

When the supplier debts is due for more than 60 days, the category managers can ask the Controlling team to call in Recocash collection company.

Cases where the suppliers fall under collective procedures, are taken over by Accor.

Click here to see the Accor Global Recovering process (confidential - Internal use only)

C. THE FINANCIAL HEALTH OF SUPPLIERS

4. Doubt / Questionable supplier For information the accounting rule is at Global level is to book a provision for receivables older than 180 days (corresponding to 100% of the corresponding invoice).

This rule may be different for other regions such as Southern Europe for which the following rules are applied:

Below 120 days overdue

No bad debt

Overdue 120 – 150 days

50%

Overdue 150 – 180 days

80%

Above 180 days

100%

Exceptions: 1.

Bankrupt situation: 100% of the invoice have to immediately depreciated

2. Doubtful situation: if you consider that there is a really doubtful situation, you can still apply a harsher policy (reserve of 100% after 120 days as an example) 3. Payment plan set up with a supplier: no bad debt reserve (as long as the payment planned is followed). Payment plan must be agreed at Region CFO level and signed with the supplier.

4. “Special case”: No bad debt reserve, but it must be explained and followed in the monthly Europe AR aging file.

5. Write-off / Credit note: Approved by Region CFO.

C. THE FINANCIAL HEALTH OF SUPPLIERS

5. Collective procedure There are 3 types of collective procedures : Safeguard, Judicial Recovery and Judicial Liquidation.

Click here to see the presentation of International Collective Procedure a) Safeguard The safeguard procedure concerns companies which are not in a state of insolvency but are facing difficulties that they cannot overcome and may lead them to insolvency.

The aim of this procedure is to enable the company to continue its activity, maintain its jobs, and discharge its liabilities by reorganizing the company under the Court’s supervision.

For those companies wishing to be help being reorganised, the president of the court appoints a judicial representative who will supervise the company and assist its managers.

An observation period is opened during which the company continues its activity. Ongoing contracts are continued on the decision of the judicial representative who decides how debts can be paid (settle them in prepayment or on the spot).

The company suspends the payment of claims arising prior to the safeguard opening judgment. It only pays claims that arise afterwards and that are essential to the continuation of its business. Legal proceedings against the company and individual guarantors are suspended. Legal proceedings against guarantors who are legal entities are authorized.

Creditors such as Accor Group, must declare their claims according to local regulations. For example, in France, claims must be declared within 2 months following the publication of the judgment in the BODACC (the deadline is 4 months for foreign creditors).

At the end of the observation period, a safeguard plan is presented to the President of the court, who after examination may: - accept it and make it enforceable. The terms and conditions of the plan (deadlines, postponements, etc.) apply to all creditors and to individual guarantors. Legal guarantors do not benefit from the plan. A commissioner is appointed to supervise the execution of the plan.

- or refuse it, in which case the procedure is transformed into receivership or judicial liquidation.

What does a Category Manager have to do when facing a situation of a supplier under safeguard procedure?

The Category Manager or the Credit Manager receives a letter from the judicial representative informing it of the opening of safeguard proceedings against one of these creditors. If the information came directly from a supplier, the Category Manager must inform the Credit Management Department by e-mail.

Current contracts cannot be questioned, but the terms of payment are to be modified.

According to the local safeguard procedure, the following documents must be sent : • An estimate of total due amounts based on existing invoices and ongoing business (not yet invoiced rebates based on turnover supplier made with Accor amount to date) ; • A declaration of debt sent with an Acknowledgement of Receipt; • A request for information by registered letter with acknowledgement of receipt asking to be kept informed of the progress of the safeguard procedure.

C. THE FINANCIAL HEALTH OF SUPPLIERS

5. Collective procedure b) Judicial Recovery

The supplier in suspension of payments may apply for receivership or have it imposed by the Commercial Court.

The court appoints judicial representatives whose mission is to administer the company in the place of the managing team. The court also appoint the following persons: an official receiver, a representative of the employees, an inventory manager and voluntary creditors.

An observation period is opened during which the company continues its activity and a recovery plan is drawn up.

Ongoing contracts are continued on the decision of the judicial representative who decides to settle them in prepayment or on the spot.

The company suspends the payment of claims arising before the opening judgment, it only pays those arising afterwards. Legal proceedings against the company are suspended.

The creditors such as Accor Group must declare their claims according to the local regulations.

• An estimate of total due amounts based on existing invoices and ongoing business (not yet invoiced rebates based on turnover supplier made with Accor amount to date) ; • A declaration of debt sent with an Acknowledgement of Receipt.

At the end of the observation period, the creditors' committees consult the insolvency plan, if it is accepted by the court, the latter gives it enforceability. In the event of refusal, the company may be sold or put into compulsory liquidation.

c) Judicial Liquidation The company is in suspension of payments and recovery is impossible. The court appoints a judicial liquidator, an official receiver, an employee representative, an inventory manager. The managing team is divested of the management of the company.

The creditors must declare their claims according to the local procedure.

The company after agreement of the court can: - disappear purely and simply - or be sold if the following 3 conditions are met: its activity continues, its jobs are maintained and its debts are cleared.

The following documents must be sent according to the local regulations : • An estimate of total due amounts based on existing invoices and ongoing business (not yet invoiced rebates based on turnover supplier made with Accor amount to date) ; • A declaration of debt sent with an Acknowledgement of Receipt.

D. QUALITY MANAGEMENT

1. Controls Indicators must be put in place to measure and monitor the performance of nominated suppliers. Depending on the level of maturity of the Procurement department, some KPI may already be monitored.

Here are some examples of indicators that can be measured: a) Reporting of non-compliance Hotel feedback is very relevant in order to ensure that suppliers respect their contractual commitments on the negotiated price, supply chain (stocks, delivery time, ...), product conformity.

A periodic summary (quarterly, annual, etc.) of the non-compliance noted is produced by the Country procurement offices in order to identify recurring non-compliance and thus implement a corrective and/or preventive action plan, such as setting qualitative objectives to ensure that an improvement is noted or worse, initiate a process to discontinue the supplier. b) Quality audits Supplier Quality Audits can be carried out as required. To perform an audit of a supplier of a category, the following items are required: • An audit frame adapted to the category: • A list of observations to be carried out, with indication of expected good practices • A list of documents to be recovered (approvals, control plans, etc.)

• A scoring grid based on the observation criteria and the documents mentioned in the reference system.

Examples of the check list are available here.

Audits can also be carried out on construction / renovation sites, using an audit guide including a rating grid on a number of criteria (regulations, safety, etc.).

2. Sanitary security for F&B categories with regard to health risks Specific controls are set up for the F&B categories in order to: • Ensure that the rules relating to health risks for food purchasing categories are fully implemented, and minimizes the risks considered • For the most high-risk categories, handle and guarantee on-site audits, in particular using specific audit guidelines and grids for each category Before nominating a supplier, the supplier must provide legal food quality documentation to be controlled by the Procurement teams.

D. QUALITY MANAGEMENT a) Recommendation / Control With regard more specifically to F&B categories, the control of health risks is fundamental and must be one of the priorities, as the occurrence of a health crisis can have harmful consequences on a hotel's activity.

Supplier whose activity or the products he distributes are likely to present a risk and for which special surveillance must be applied. The sensitivity of a supplier can be measured according to 4 main axes: - The nature of the product (fresh, frozen, dry) - The nature of the supplier (industrial or processing activity, distributor) - The quality structure of the supplier (strong or weak dimension) - Accor representation and volumes (high or low) The highest sanitary and bacteriological risks are identified in the following procurement categories:

Butter, effs, cheese, dairy

3

Bacteriological

Beer, mineral, water, soda, fruit juice

1

Organoleptic / Foreign object

Bakery, viennoiserie

2

Bacteriological

Coffee

1

Organoleptic

Cold meats

3

Bacteriological

Groceries, pastry

1

Bacteriological

Fruits & fresh vegetables

2

Pesticide, GMO

Multi families fresh food

3

Bacteriological

Multi families frozen food

2

Bacteriological

Pastry (fresh & frozen), ice cream & sorbet

2

Bacteriological

Fresh fish & crustacean

3

Bacteriological

Caterer products & ready-cooked dish

3

Bacteriological

Sandwiches

3

Bacteriological

Meat, poultry, game, rabbit

3

Bacteriological

Wine, Alcohol, Champagne

1

Organoleptic

Tableware

Chemical components migration

D. QUALITY MANAGEMENT

- For all Procurement categories, 4 digital appendices to the contract should be signed with the supplier, provided

by Accor to guarantee a basis for health controls: • The Quality Assessment; • The Health Safety Certification; • GMO Attestation; • The Quality Contact Information document.

These documents are available here - For risk level 2 categories, in addition to the application of the basis detailed above, the procedure recommends collecting and checking the following documents from the supplier: • Approval of raw material suppliers; • Presence of a cleaning and disinfection plan; • Control of cleaning and disinfection operations; • Existence of satisfactory traceability of preparations; • Control of finished products; • Presence of a definitive approval number; • Presence of a complete HACCP study; • Presence of a training plan.

- For risk level 3 categories, in addition to the application of the two previous levels, the Procurement procedure recommends that, for significant suppliers, an on-site audit of the production site should be conducted by an external control laboratory. The supplier may be required to pay for the audit as part of an invitation to tender.

Finally, specifically for the "Tableware" or "single-use products" procurement category, it is strongly recommended that the supplier sign the Declaration

3. Sanitary crisis management a) Definition Although the various hygiene rules (manufacture, transport, storage, implementation) are controlled, a food product can be detected as unfit for consumption.

A sanitary alert can provide from different sources: • local official organizations • Nominated Suppliers • Accor establishments (through the customer care) • F&B country department And it may concern: • A batch delivered to several sites: responsibility of the supplier / distributor • An isolated case in a hotel: responsibility of the owner

D. QUALITY MANAGEMENT

b) Sanitary alert information and management The purpose of informing of a sanitary alert is to immediately withdraw a product presenting a health risk or a manufacturing defect. It may concern a food or non-food product.

Before sending the information, the incriminated product details have to be collected from the concerned supplier : the name of the product concerned, the nature of the risk, the origin, the importer or producer, the brand or label, the batch number, the approval number of the establishment, the type of packaging. Thanks to the mandatory traceability system set up in its production and supply chain, the concerned supplier must be able to identify the complete list of concerned establishments.

Once these descriptions are collected, an information must be sent (by the country procurement team or directly by the supplier) to all concerned establishments for the withdrawal of the incriminated product.

The receipt of information and feedback from institutions must be monitored.

In the case of a serious or recurring health alert involving non-compliance at a supplier's production or logistics site, it is recommended to trigger an on-site verification audit to check the supplier's quality management system.

Pullman Bangkok Grande Sukhumvit - ThaĂŻland

III Hotel Procurement Activities

This section discusses in detail the 3 key Procurement activities: Offer range management, Procurement commodity management and Source to contract process (including the operational implementation of a nominated contract).

A. OFFER RANGE MANAGEMENT Since Accor's business model is asset-light, hotel owners are under no obligation to purchase our nominated solutions.

Therefore, the role of the Procurement organization is to be a service provider using 2 levers: procurement activities and commercial activities to ensure that hotels and partners join in and buy nominated, innovative and competitive solutions.

The regulatory and competitive contexts require regular benchmarking activities, keeping abreast of the latest business developments: • Economic stakes of the markets; • Changes in the cost drivers concerned; • Product/service innovations (particularly in terms of sustainable development); • Technical, operational and commercial best practices.

This monitoring may be carried out internally or externally by specialized independent companies.

B. PROCUREMENT COMMODITY MANAGEMENT

1. Requirements and expression of needs To define a procurement strategy at category level, the Category Manager must first assess the customer needs and ensure that its requirements are exhaustively and clearly defined for the project.

It requires to: • Unlike most procurement organisation, Category Managers have a role of prescriber when it comes to defining specifications.

• Identify the exact need (technical need and quality) and avoid over-specifications (cost impact) or underspecifications (unsatisfaction) while understanding the timing of such need and more generally related operational constraints.

• then based on data collected, market and categories knowledge, propose appropriate solutions, assess the volume spent per supplier per product; • this information must be included in the brief of requirements which is the synthesis of the efforts of different experts • In case of existing contacts with suppliers 2 topics have to be anticipated: ➢ Existing stock of items to be cleared and that may have an impact on the starting date of the new contract; ➢ Termination period to respect with the current supplier contract.

The brief is a key phase to focus on, to secure and make more efficient the later stages of the tender process. It is the basis around which a potential contract will be drafted and later implemented.

Ideally, for key solutions, the requirements should be reviewed twice a year by analysing both market offer from suppliers and feedback from users of the nominated solutions.

B. PROCUREMENT COMMODITY MANAGEMENT

2. Group Commitment and standards to respect The requirements phase must be performed while respecting Accor Group existing guidelines (Brand, Design, Technical standards, F&B guide, etc…) being a frame to take into account while satisfying customers’ needs.

For non Accor clients, their requirements/standards must also be taken into account in the expression of needs and sourcing.

Here is an overview of the main Group guidelines (details available in Appendix): a) Sustainable development strategies The “source to contract” process must include the topics and constraints related to sustainable development in order to: • Meet the Group's transparency obligations in terms of CSR policy, existing regulations (such as Sapin II); • Source innovative products and services that are more relevant and differentiate from competitors;

• Monitor this topic by strengthening risk management processes (see details here: Responsible sourcing); • Maintain a balanced and trustful supplier relationship to encourage an innovative approach.

Accor’s ambition in such field is to: • Work with suppliers committed to CSR and who respect the Group's ethical principles (see details: Compliance, ethics and Risk Management) • Support and gradually build up a pool of suppliers capable of bringing a positive contribution to social progress, environmental performance, economic development and ethical practices; • Select responsible products and services in line with the Group objectives.

B. PROCUREMENT COMMODITY MANAGEMENT

Elimination of single-use plastic items Accor will eliminate all guest-related single-use plastic items in all hotels by the end of 2022, as per the following timeframe: At the end of 2019, straws, stirrers and cotton buds will be removed from hotels, By the end of 20208, all individual plastic toiletry bottles and plastic cups will be withdrawn.

And by the end of 2022, all remaining items will be eliminated.

The commitment is progressive over 3 years and only concerns single-use plastic items used at hotel level.

Click here to follow the operational guide

Carbon Footprint project

The Global procurement department has already established a sustainability framework for suppliers via the Planet 21 Charter and risk approach.

This Carbon Footprint project aims to go beyond Planet 21 with a focus on promoting the low carbon transition.

Accor Group expects that the suppliers initiate measures to decarbonise their products, services and operations and define targets in that respect (Science-based Targets initiative or “SBTi’s”).

This project can also be translated in the nomination process by adding new type of criteria for supplier comparison and selection.

In that sense Group Procurement is working on a global methodology9 defining : • low-carbon evaluation criteria to be included in calls for tenders; • key performance indicators (KPIs) for low-carbon public procurement for priority categories, in line with Accor’s commitments; • a framework for collecting carbon intensity data from suppliers to enable hotels to report their emissions; • communication to suppliers on Accor’s carbon objectives, commitments and expectations

B. PROCUREMENT COMMODITY MANAGEMENT

Eco-Friendly Products In connection with Accor commitments, it is also recommended to source and select innovative products and suppliers with limited impact on environment.

The Sustainable development Department has selected 10 key Eco-Friendly products to focus on such as cleaning products with Ecolabel, flooring materials with GĂœT/FSC/PEFC labels (detailed list available here).

Food and beverage charter Criteria defined in the Food and beverage charter must be included in all documents and communication whether it is a call for tender, the definition of requirements, the nomination of a supplier.

Some examples: Preference to suppliers committed to animal welfare and responsible fishing, remove controversial food, additives and reduce fat and sugar, ‌ (the Food and beverage charter is available here)

Inclusive purchases Since 2018, Accor has been part of a collective group of 35 major companies working on the development of inclusive purchasing.

Inclusive purchasing aims, through company orders, to encourage, promote and support the inclusion of groups of people and companies with a lack of access, visibility and means of integration into the economic and social ecosystem, while at the same time favouring territorial anchoring.

B. PROCUREMENT COMMODITY MANAGEMENT

b) Brand standards Accor brand Standards are a set of guidelines and decisions that define the identity of a brand, its consistency and completeness toward both employees and external partners.

To guarantee competitiveness and cover all the needs of our clients, several solutions can be nominated in addition to the one in line with the standard brands.

Marketing guidelines

Marketing standards have been declined per brand and must be considered in the sourcing strategy and process.

Click here to see more details F&B guidelines The Accor F&B standards is a primary source of information when defining/expressing a new requirement. These standards vary from one hotel to another depending on its brand and market segment.

Click here to see more details D&TS Brand Guidelines The Design and Technical Solutions department (D&TS) has established key Design guidelines, aiming to guide & inspire all the different stakeholders in Design and Development.

All of these guidelines are available on Group intranet by following this address: https://accor.sharepoint.com/DesignTechnicalServices/Pages/DTS-Library.aspx This library has been created in order to access all information and guidelines needed to design, build, renovate and maintain hotels.

Guest Technology Standards The technology guide lists all the standards for each brand that must be considered in the sourcing strategy and process.

This guide is available on Group intranet by following this address: https://accor.sharepoint.com/DigitalServices/ConsumerTechnology/Pages/Guide_Technologique.aspx

3. Sourcing Strategy At the beginning of the sourcing process, Category Manager must decide whether he wants to work and develop business with incumbent suppliers or if he wants to launch a call for tender based on the category strategy (global or local) applicable to his need.

For the global categories, the sourcing strategy is co-constructed between Global and Local Procurement teams.

Global procurement team is in charge of collecting the Country operational needs (volumes, scope, quality), summarizing and including them in the call for tender.

C. SOURCE TO CONTRACT

The tender process is the upstream part of the act of purchase in order to find a supplier who provides the best answer in terms of coverage, expressed need, price and risk, and to establish with him the contractual framework of the business relationship.

After the identification of needs, this process is divided into 5 steps : RFI, RFP, offer analysis, negotiation & contracting.

Figure 8 : SOURCE TO CONTRACT- step-by-step overview of appendices, 7 steps methodology

For applicable countries, ASTORE e-sourcing digital tool must be used. This tool is covering 4 out of 5 steps of the process and guarantees: • information and tasks sharing between Global and Local Procurement teams • harmonization and securization on the sourcing approach • more agile and cooperative approach • traceability of information • a reinforced risk management by inserting control steps.

See details here In the case of simple consultations, the process can be simplified but some steps are still mandatory: • a benchmark between at least 3 suppliers, at least one of which is not listed • check the solvency of suppliers • Verify that suppliers are ethically compliant and respect our CSR requirements.

During the source to contract process and in application of the Accor Code of Ethics, the Category Manager shall refrain from communicating or receiving any information that could be prejudicial to a third party and must always ensure that it complies with the provisions of the NDA (Non-Disclosure Agreement) in force with respect to third parties, in appendix here.

If there is any doubt about the approach, the quality of contacts, the possible risks of departing from the company's ethical rules, or if the transaction is too complex, the Category Manager should contact his or her superiors, who will give the Category Manager instructions on how to proceed.

C. SOURCE TO CONTRACT

1. Supplier sourcing A Request for information (“RFI”) process is used to collect information about the capability of several suppliers to deliver goods, services or both based on multiple criteria.

The RFI process can be launched as a first stage prior to a request for proposal (RFP) or a request for tender (RFT) or a request for quotation (RFQ).

An RFI can also be proceeded as a stand-alone with the objective of building a supplier database under a certain angle/perspective (such as sustainable requirements) or get detailed information to help building further procurement strategy.

Interview performed with suppliers at this stage include both mandatory and eliminatory questions applicable to all categories (such as the one related to economic dependency or Procurement Charter) while other questions are adapted to the scope of categories of the RFI. During the RFI stage, a standard supplier contract can be shared with suppliers for them to understand the scope of our expectations towards them and their future obligations/commitments.

It is also recommended to send at this stage, the Ethics and CSR Charter and the Procurement Charter (attached here).

Risk assessment The identification of risks is to be integrated into the larger supplier selection process and the determination of each supplier level of risk must be taken into consideration in the final choice of a supplier.

The risk assessment covers the following types of risks: • Corruption risks; • Financial strength; • Operational capacity; • Business criticality; • Ability to exit the contract (including economic dependence); • CSR impacts; • Quality performance.

For more detail on Risk analysis, please see dedicated part .

2. RFP including Supplier analysis Call for tenders An invitation to tender must be sent to several suppliers in order to ensure genuine competition. The optimal frequency to launch calls for tender varies from one category to another. However, it is recommended as per best to launch a multi-vendor tender every three years on average, to ensure a level of quality and price at least in line with market evolution.

The RFP process is traditionally based on the following key documents/principles: • Preparation of a formal Request document to be sent to a selection of suppliers. This document includes the description and analysis of Accor requirements, • Inclusion of a minimum of 3 suppliers, of which at least one that is non-nominated • Leading the RFP process with a secured, efficient solution to guarantee suppliers bids are anonymous. Accor Groupe uses Astore e-sourcing tool as RFP tool • Analyse suppliers’ propositions through a list of pre-defined and weighted criteria consolidated in a supplier comparison chart to determine final decision

C. SOURCE TO CONTRACT

b) Selection of supplier Once the negotiation phase is finalized and if it’s possible, a final decision meeting is held including all stakeholders to present the comparison grid and the result of the negotiation to select the final supplier to be nominated.

The Category Manager is in charge of communicating the final choice to suppliers in competition.

4. Contracting process Before the new contract is finalized, the following steps need to be followed and checked: • Prepare a transition plan for new suppliers by ensuring that any previous contracts have been properly terminated and that the new supplier has the technical capacity to deliver products and services as soon as the contract is signed. Also ensure that the stocks of products (on which we are committed) are properly cleared before the new solution is implemented.

• Discuss with the selected supplier about operational implementation of their solutions to determine the starting date of the contract

• Include sustainability requirements and performance objectives.

a) Supplier contract Once Accor Procurement has established a formal contract with a supplier, that supplier is considered as "nominated".

A nomination contract defines the list and price of products and/or services sold to Accor Group and its scope of application (country, brand, hotels, partners).

For information, a negotiated contract does not necessarily generate remuneration (this is the case for P1/G1 type of contracts defined later in the document).

The recommended contractual period is 3 years maximum, without automatic renewal.

Every contract must be approved before being active and signed by an authorised person as per the delegation of authority, different from the one who negotiated it; Delegations of authority are set up at country level, they may differ from a country to another. As a general rule, the Country Procurement Director has authority to sign all Procurement contracts; For applicable Country procurement department, signed original contracts are scanned and made available in ASR database tool and are in parallel archived in a safe.

C. SOURCE TO CONTRACT b) Types of contract Different supplier contracts exist depending on the supplier's organisation and the services provided10:

P2/G2 contracts P2/G2 covers nominated suppliers which have a direct relationship with the hotel and are either companies that distribute products or sell a service directly to the client establishments or industrial distributors.

These contracts are subject to a detailed declaration at establishment level (client) and, in most cases, are invoiced quarterly. The remuneration calculated must be linear (without tiers) in relation to the calculation base (% of turnover).

P3/G3 contracts P3/G3 contracts are signed with an “industrial” supplier for one brand or a selection of the Group’s brand(s). The supplier doesn’t have any direct relation with the hotels and are more likely to go through distributors . The contract is signed between the Brand Management and the supplier. It is a visibility contract or is for showcasing products or concepts. The product will generally be subject to a P3/G3 remuneration with the industrial supplier and a P2/G2 remuneration at the level of its distributor.

The supplier was most often invoiced annually on the basis of a declaration that it has previously made. But more and more P3/G3 contracts are being declared and charged quarterly and this model is recommended, especially for large amounts and/or fragile suppliers, and must be included in the contract. The declaration must be filled in at least at country and brand level.

P4/G4 contracts P4/G4 contracts are signed with an “industrial” supplier for all the Group's brands. The supplier doesn’t have any direct relation with the hotels and are more likely to go through distributors. In some cases, this type of contract concerns industrial suppliers whose remuneration depends on crossing volume purchasing thresholds.

The supplier was most often invoiced annually on the basis of a declaration that it has previously made. But more and more P4/G4 contracts are being declared and charged quarterly and this model is recommended, especially for large amounts and/or fragile suppliers, and must be included in the contract. The declaration must be filled in at least at country and brand level.

10 Contract P: Country Contract – Contract G: Group Contract

C. SOURCE TO CONTRACT

c) Nomination (listing) contract Regarding its procurement activity, ACCOR acts as a central listing agency under the business name “Astore”, as the Group negotiates with suppliers the prices and preferential conditions that the hotels may benefit.

The purchases of products and/or services are then concluded directly between the Nominated Suppliers and the Hotels.

ACCOR, as a central listing agency, has: • an intermediation role (business provider): connecting suppliers with the hotels, and associated services, • a negotiating role: ACCOR negotiates favourable commercial terms for the hotels.

The nomination contract aims to describe: • the applicable conditions between the supplier and ACCOR: • provisions relating to nominated supplier; • definition of the services provided by ACCOR: services improving the relationship between ACCOR and the supplier as well as services improving the relationship between the supplier and the Hotels, • The conditions applicable between the supplier and the hotels: • Definition of the conditions for establishing contact between the Hotels and the supplier; • organisation of business relations between the Hotels and suppliers (see Appendix 1 "Commercial Conditions").

These are the commercial terms negotiated on the basis of the supplier's General Terms and Conditions. Nonnegotiated points will be subject to the supplier's T&Cs. For information, a template of “light” listing contract has been drafted for specific local suppliers in order to simplify the negotiation/contractualization. Click here to see the “light” contract template.

Legal requirements regarding services attached to a listing contract In order to avoid any litigation/controls, make sure: • the existence and consistency of the services offered • vigilance on redundancy of services between the G and P contracts as well as with existing contracts. There must be no duplication of services rendered (generating remuneration).

• the proportionality between the services offered and the associated remuneration • the proper execution of services A guide to draft supplier contracts has been set up by the Legal department as well as FAQ guide (here)

C. SOURCE TO CONTRACT

d) Digital tools used for contracting process For the collection of regulatory documents Depending on the country, the regulations now require, during any commercial transaction, that the customer obtain from his subcontractor, supplier, service provider, at the latest when signing the contract, mandatory administrative documents updated every 3 or 6 months, such as: • Official registration document, • Certificate of provision of social declarations and payment of social security contributions and dues • Nominative list of foreign employees.

Failure to comply with these provisions is punishable by particularly heavy sentences To ensure strict compliance with these legal provisions and to ensure that subcontractors, suppliers and service providers comply with their reporting obligations, digital platforms exist to collect and verify regulatory and administrative documents. For example, Global Procurement department work with the company My Procurement, a specialist in this field, which has designed an Internet platform for this purpose: www.myprocurement.fr. The relationship with this service provider and the tracking of imported documents are monitored by the back office. A similar module will be developed in the A2S tool.

The Category Manager must make sure that his suppliers transmit his documents correctly.

For the signature of contract DocuSign is a tool for signing contracts online. It facilitates and accelerates the conclusion of a contractual agreement and secures the relationship with the supplier more quickly. The value of electronic signature is the same as handwritten signature: it enables to guarantee the integrity of the content of the contract and to authenticate the signing parties at a certain date.

No specific training is required. The online tutorial is accessible using this link: https://support.docusign.com/en/videos/New-DocuSign-Experience-Sending-Documents For an account creation, the form must be completed and returned to the designated contact person. It can be directly used by the Requester when he / she is in charge of the contract conclusion stage.

Whatever the procurement category, it is strongly recommended to use the electronic signature functionality of the DocuSign tool.

On boarding on Astore Suite

Astore Suite tool (“A2S” replacing ASR former tool) was designed to support the GPO back office processes and promote procurement offers.

The main objectives are: • Secure a unique master database for suppliers, customers, users and contracts at worldwide level.

• Secure, efficient, reliable and more frequent revenues cash in from our suppliers.

• Create capabilities for implementing new pricing model to customers.

• Significantly improve supplier risk & CSR management.

• Provide visibility on international and cross-regional procurement contracts and conditions.

After the contracting step, data of new nominated supplier must be integrated in the Astore Suite tool and updated during the life of contract.

To on board your nominated supplier on the Astore Suite tool, please click in the following link : On boarding Process (on going)

D. COMMUNICATION AND DEPLOYMENT

a) Communication From Group Procurement to Country Procurement teams (for Global solutions) Global procurement department is responsible for the communication of nominated solutions to Local Procurement teams.

From Procurement teams to other departments (Group and Country teams) The Procurement Category Manager should keep the internal prescribers informed and involve them in the progress of the call for tenders and later to the final choice of the supplier.

From Country Procurement To hotels Country Procurement department is responsible for communicating procurement solutions to hotels/partners including: • Communication to the users of the solutions negotiated at Country level including the contractual commercial terms and conditions (order, delivery, ...)

• Communication to users of the solutions negotiated at Group level Astore Company for external clients Astore Company.com is the ASTORE institutional website.

It was developed to: • Introduce prospects to the value proposition of GPOs • Easily search for supplier information by category • Access the monthly news on new offers Any modifications made on a supplier profile in Astore Suite are automatically integrated in Astore Company. Please click on this link to access Astore Company website

b) Deployment and onboarding phase Once the "source to contract" process has been finalized, hotels and partners have access to the suppliers’ productions/services/prices through the local dedicated tool and can therefore place an order.

This process covers 3 phases: the phase prior to the purchase made by a hotel, the purchase itself and the payment of the supplier by the hotel/partner.

There are several ways to order from a supplier. The hotel/partner can order by on one of the Group internal webshops. For countries without an internal webshops, hotels and partners can order by telephone, email or on the supplier's online platform.

Accor Procurement has been developing a range of dedicated digital tools and services. Click here to see the explanatory video Once the supplier is listed, it must be created and integrated into tools.

On boarding on Astore Shop Astore Shop is an E-commerce platform that is transforming the way the hospitality sector purchases all necessary products & services.

Astore Shop is the centre of our supplier and client ecosystem.

Figure 9 : Extract from the presentation "ZOOM ASTORE SHOP CLIENT VERSION" 2019

D. COMMUNICATION AND DEPLOYMENT

The main benefits of this platform are: • One stop shop A single multi device platform covering all operational needs.

• Operational efficiencies Streamlined purchasing with hospitality specific features through a user-friendly environment.

• Competitive prices Ensure the best deals by comparing offers from multi-suppliers.

• Control Manage your complete purchasing environment with dedicated workflows, budget controls & order management.

Figure 10 : Extract from the presentation "ZOOM ASTORE SHOP CLIENT VERSION" - 2019

To on board your nominated supplier on the Astore Shop tool, please click in the following link : On boarding Process (confidential - Internal use only)

E. SUPPLIER PERFORMANCE AND RELATIONSHIP MANAGEMENT – MONITOR RESULTS Indicators must be put in place to measure and monitor the performance of nominated suppliers.

Indicators may of course, be adapted in time depending of the type of suppliers and products.

Below, some examples of indicators that can be measured.

1.

Coverage, adherence and capture rates

The coverage rate represents, in a given category, the percentage in value of the category's purchasing volume that is covered by procurement solutions.

The coverage rate is determined by an estimate of the Category Manager in charge of the category, validated with Management Control and/or by its Purchasing Director.

The adherence rate represents the percentage of used nominated solutions by the units (hotels, headquarters, partners).

The adherence rate is generally calculated by dividing the capture rate by the coverage rate.

The capture rate represents the ratio, for a given entity, between the amount of nominated spend and the amount of total purchases.

These three rates are mathematically linked together by the following formula : Coverage rate x Adhesion rate = Capture rate

2. Annual spend and budget Every year, during the budget process, Category Managers are defining annual targets (in terms of total spend and rebates) for their suppliers and community.

This budget is then tracked and compared to the turnover actually declared by the suppliers on the basis of which Accor Group is calculating and invoicing procurement remuneration on a quarterly basis.

Any significant discrepancy between actual figures and budgets figures should be reviewed to understand its origin and if it is related : - to the quality of the initial budget definition. This budget can updated in the course of the year through the Last Estimate “LE” process; - to the low performance of nominated solutions to be further investigated (which supplier implied, for which hotels, etc…).

The increase of annual spend by hotel on a category and/or a supplier confirms that the nominated solution corresponds to operational expectations.

E. SUPPLIER PERFORMANCE AND RELATIONSHIP MANAGEMENT – MONITOR RESULTS

3. Quality Management Hotel feedback is very relevant in order to ensure that suppliers respect their contractual commitments on the negotiated price, supply chain (stocks, delivery time, ...), product conformity.

A periodic summary (quarterly, annual, etc.) of the non-compliance noted is produced by the Country procurement offices in order to identify recurring non-compliance and thus implement a corrective and/or preventive action plan, such as setting qualitative objectives to ensure that an improvement is noted or worse, initiate a process to discontinue the supplier.

For applicable countries, hotels can report to the Category Managers potential cases where nominated suppliers are not compliant with the contracts. This can be done either via internal contacts (VPOM or VPOF*), internal customer service or external customer service (e.g. ZenDesk in Southern Europe).

A project to collect KPI automatically is in progress through the tool Astore Shop.

The purpose is that in the event of non-compliance, the hotel can directly contact the supplier and report noncompliance cases to be solved by the supplier.

This tool may also be efficient to provide periodic automatic reports to measure the supplier performance through several KPI (on delivery, price, product quality, …).

4. Tools Accor is developing a project mainly for cost controllers (“Astore Procurement Analytics”) to be able to manage supplier performance (capture rates, performance on spend and remunerations) through PowerBI solutions.

Pullman Bangkok Grande Sukhumvit - ThaĂŻland

IV Tools and systems

Here is a presentation of the tools and solutions used by Procurement teams for their daily work (Procurement operations, sales, marketing and controlling).

A. ASTORE DOCUMENTS CENTER

Astore Documents center is a SharePoint Room created in order to centralize and easily share all documents and information in one single location, including all appendix of this present document.

Astore Documents Center aims at becoming the reference storage platform for all the documents Procurement teams needs in their daily tasks, in order to increase the exchanges of information and best practices.

To visit Astore Documents Center, please click on the link below: https://accor.sharepoint.com/sites/Communities-v0/Room-1850/SitePages/Home.aspx This platform is available to the whole Procurement teams ONLY, some documents are confidential and not to share to external parties.

How does Astore Documents Center work?

The platform will be opened to the whole Accor GPO Worldwide (over 200 people) and available in our GPO Teams group.

This platform tends to be user-friendly: all the files are classified by category, so that you can find the documents you need from all geos and teams, such as presentations about global strategy, communities/shared centers roadmaps, useful templates and many more!

For now, all the documents (PPT, Word, PDF‌) are available on a read-only format and you can easily download them.

If the platform works well among the teams, we will progressively enable online modifications and uploads.

Contact: Jean-Baptiste Portier Process: if you would like to add any documents or give access to a new collaborator, contact Jean-Baptiste Portier to upload the files

B. ASTORE ESOURCING TO SOURCE AND CONTRACT SUPPLIERs

Contact: Zoe Blackford Process: click here

C. ASTORE SHOP TO ORDER GOODS AND SERVICES

Contact: Emmanuel Barbosa Process for BUILD: click here Process for RUN: on going

D. ASTORE COMPANY TO PROMOTE THE PROCUREMENT SOLUTIONS

Contact: Pauline Dubuc Process for BUILD: the modifications made on a supplier in Astore Suite are automatically integrated in Astore Company.

E. ASTORE SUITE (A2S) TO MANAGE REMUNERATIONS AND PERFORMANCE

Contact: Pauline Dubuc Process for BUILD: here

F. ASTORE ANALYTICS TO MEASURE SUPPLIERS’ PERFORMANCE

Contact: Stephane Brylinski Process for BUILD: here

Pullman Bangkok Grande Sukhumvit - ThaĂŻland

V Glossary

ASR Accor Supplier Reporting, developed by procurement in order to manage suppliers, contract and declarative exercises P2/G2, as well as P3/G3 and P4/G4 invoicing process.

Benchmark Process enabling the identification and comparison of best practice, prices and suppliers in a given market / product category Black Listed Supplier Supplier identified must not be used for conflicts risks, CSR and ethics purpose.

Brand Standard Brand Standard are set of guidelines that comprise a brand for all forms of organizational image and identity, both tangible and intangible including the supply of goods and services. They are the glue that holds a brand together and support the creation and protection of a brand identity. Keys to effective standards are consistency and completeness.

Capex Capital Expenditure (investment spend), amount spent to acquire / refurbish a existing asset such as a building or an equipment Capture Rate Percentage of use of Procurement Solutions by Hotels and Ratio between the amount of nominated spend and the amount of total spend for an entity. It is also the result of the multiplication of the coverage and the adherence rates.

Categories referential Accor procurement scope is made of 95 spend categories (lines of business). This referential of the suppliers activities must be set in the countries management systems and reporting issued by and for RPO

Coverage Rate At Accor, for a given category, the % of the category spend covered by nominated solutions.

CRM Customer Relationship Management.

Establishments Hotels of all detention modes, headquarters or partners under contract with Accor (e.g.: Lucien Barrière) which are using Accor procurement solutions.

F&B Food and Beverages product categories.

FF&E Fixed Furniture and Equipment product categories GPO Global Procurement Organization is responsible to nominate strategic solutions / suppliers with an international coverage. Headquarter is based in Paris.

GPO Accelerator Project is a reorganization to optimise Procurement resources.

LOI Letter of Intent used in order to confirm a firm intention to commit to an action, such as signing a contract in specified circumstances. Commitment level varies function of the LOI content.

Nominated products, services and Supplier, Products / services chosen and negotiated by Accor within the nominated supplier’s range of products and services in line with preset brand standards and requirements. Supplier who has a nominated contract with Accor, Accor brands or any supply contract or partnership involving Accor Procurement, whatever the form. These suppliers are listed as (Group and country nomination) in Procurement management systems.

Due Diligence, sourcing, selection, risk, CSR, Planet 21, validated by Brand, Marketing, Operation at Group, Regional or Country Level Nominated Spend or Nominated Turnover Correspond to the total spend made by hotels, hq or partner with nominated suppliers.

OPEX Operational Expenditure i.e. the on-going costs. For an hotel, it corresponds to spend such as food, laundry, staff, etc.

OS&E Operating Supply & Equipment are products that are used on regular basis excluding food. At Accor, it corresponds to spends such as amenities, disposables, uniforms, etc.

Procurement savings Difference between the price proposed by a supplier before Category Manager negotiation, and the price agrred on the nomination contract.

The recommended allocation is as follows: • 60% allocated into P1 (price paid by users) • 40% allocated into Service Remunerations • Provided P1 remains competitive on the market Procurement Solutions A Procurement Solutions may include tool, system, supplier, products, and services market REACH Registration, Evaludation and Authorisation of Chemicals (EU No. 1907/2006 of the EU Parliament, active since June 1st 2007. Objective to reinforce the health and environment protection through the identification of chemical products properties.

Remunerations At Accor, this corresponds to the payment by a Supplier to Accor of an which calculation rule and frequency are defined in the nomination contract., as a counterpart to the service provided by Accor to the supplier.

RFI Request for Information, i.e. a document sent by a Category Manager to suppliers to collect information usually on their organisation (turnover, top customers, product offer, manufacturing and commercial footprint, etc.)

RFP or RFQ Request for Proposal / Quote i.e. a document sent by the Category Manager to suppliers to collect prices of product or services and associated commercial conditions (such as manufacturing lead-times, etc.)

RPO Regional Procurement Organization is responsible to implement Global nominated supplier and develop partnership at regional and local level in line with brand requirements and market specificity.

SD Sustainable Development.

Accor Procurement has created a Sustainable Procurement Charter called “Procurement Charter 21” to extend its social, societal and environmental commitments to suppliers and create value.

Service Contract / SLA Service Level Agreement – supplier contractual commitment over a level of service provided. SLA belongs to the contracts, and defines KPI level expected for a given service supply. In general, it describes the corrective actions and the penalties in case SLA are not met. It is an essential part of a contract.

SRM Supplier Relationship Management, i.e. a programme aiming at structuring the relationships with the suppliers in order to track and monitor improvements.

TCO Total Cost of Ownership: estimate of the total cost of a product or service, including direct and indirect costs (supplies/energy required for use, recycling costs…).

Total Spend All external purchases (ER, IER and NR), excluding XP and I. XP Supplier “Excluded from perimeter”, suppliers that are not in the scope of the procurement department action (taxes, some specific bank or finance fees…etc…)

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