RESPONSIBLE VALUE CHAIN

NH Hotel Group’s relations with its suppliers are based on communication and transparency in order to promote the development of innovative and sustainable solutions. These collaborations also build the way to comply with the Sustainable Development Goals set by the Group for the creation of decent work and economic growth (SDG 8) and for responsible consumption and production (SDG 12).

Since 2010, the different procurement departments of NH Hotel Group are part of Coperama (a company wholly owned by NH Hotel Group). Its tasks are the search, qualification and approval of suppliers, as well as the negotiation and tendering of the goods and services required for the proper functioning of hotel management. Each local Coperama provides service to the Regions of the NH Hotel Group Business Units assigned to it. Coperama Holding provides service at a corporate level to the Group in all its locations.

650,5M€

Total purchase volume (Opex+capex)* in 201912% More than in 2018

470M€

Total purchase volume of opex in 2019

* Expenditure and investment, respectively

* The increase is due to the refurbishment of the New York hotel, assigned to the Southern Europe Business Unit

* The increase is due to the refurbishment of the New York hotel, assigned to the Southern Europe Business Unit

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PURCHASING POLICY

NH Hotel Group has a formal and mandatory Purchasing Policy, which sets out the guidelines to be followed by the various departments, whether Corporate or Business Unit, in situations that affect or may affect the Company’s outsourcing.

The Purchasing Policy helps strengthen:

  • The commitment to guarantee transparency, honesty and ethics in the purchasing function.
  • The need to carry out professional contracting processes to optimize results.
  • The need for alignment with internal control guidelines, as well as timely updating and communication to all company employees.

Like the Coperama Supplier Code of Conduct, the NH Hotel Group Code of Conduct has been part of the Purchasing department’s nominated contract since 2012.
The non-acceptance of these ethical codes, in the phase of selection of suppliers eligible to participate in the following phases of the tender, is a criterion for exclusion.

During 2019, a total of 374 new suppliers globally have adhered to the NH Hotel Group and Coperama Code of Conduct. Thus, in 2019 the number of Ethical Codes signed with active suppliers has reached a total of 1,872, compared to 1,646 last year, a 14% increase.

1.872

Suppliers with signed Ethical Codes

374

New suppliers with signed Ethical Codes

SELECTION OF SUPPLIERS

To ensure responsible procurement, the Company has developed a series of procedures that reinforce the commitment to the supply chain. These are the supplier management procedures, the supplier approval questionnaire (RFI), the Coperama Supplier Code of Conduct and the NH Hotel Group Code of Conduct, both of which must be accepted by all approved suppliers.

The Purchasing department includes in the supplier selection process an extensive approval questionnaire that is automatically evaluated according to the commitment of the suppliers and their policies. As a relevant milestone in 2019, and in order to ensure a responsible operation and achieve long-term relationships with suppliers, the Company has extended the ESG criteria in its responsible purchasing process, increasing the weight of the score in the questions referring to Sustainability in the approval questionnaire and prioritizing suppliers with sustainable criteria. This questionnaire is part of the overall assessment for the validation process. Although NH Hotel Group does not currently conduct social and environmental audits of its suppliers, NH Hotel Group works continuously to align ESG criteria with sustainable supply chain management.

As stated in the NH Hotel Group’s Purchasing Policy, all services or products included in categories that can be tendered by Coperama are part of the Purchasing Perimeter. Within the total purchase volume of OPEX, the Purchasing Perimeter reaches 86% of the hotels in the consolidated perimeter of the NH Hotel Group.

The Purchasing Perimeter is periodically reviewed by NH Hotel Group and Coperama so that it is adapted to the Company’s needs at all times.

In OPEX area:

420M€

Total volume of purchasing perimeter

329M€

Volume of approved purchases in the purchasing perimiter

78,3%

Purchases of approved suppliers inside the purchasing perimeter

Información de hoteles que consolidan del área OPEX:

262M€

Total consolidated purchase volume

245,8M€

Approved consolidated purchase volume

93,6%

Purchase approved of hotels that consolidate

SUPPLIER APROVAL PROCESS LIFE CYCLE IN NH HOTEL GROUP

Supplier selection, as well as the working relationship with them, is based on transparency, honesty and ethics with the clear objective of being able to guarantee an excellent, efficient and quality service. The management of suppliers begins when a need is detected until the service is finally provided.

1.872

Approved suppliers

Before the procurement process starts, a certification procedure takes place which allows for an approved supplier database to be generated. All of the suppliers included in this database will have been previously assessed and have been found to meet the requisites of NH Hotel Group in both economic and ESG matters.

There are certain criteria which, if not accepted or implemented by suppliers, result in their automatic expulsion from the tender process. One of these criteria is the requirement to sign both the Group’s Code of Conduct and the Coperama Code of Conduct, which set out the environmental and labour commitments that govern NH Hotel Group.

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SUPPLIER MANAGEMENT

NH Hotel Group is focusing its efforts on achieving sustainable management throughout the entire supply chain. The supplier management model aims to have the best suppliers available through business procedures that guarantee transparency and equality of conditions for the different bidders. The Company offers a win-win model for all parties with a commitment to a long-term relationship.

The supplier’s rating is the necessary requirement for participating in procurement processes and is obtained as a result of the certification process.

Accordingly, NH Hotel Group encourages certified procurement in most of its hotels, with the need for the required products being identified by each hotel. Coperama’s task is therefore to approve, certify and authorize potential suppliers. In conjunction with our responsible supply goals, we will continue to identify high-quality products that are environmentally acceptable and socially responsible. These efforts will contribute to the development of responsible products in all geographical areas where we are present and in the future.

* The sum of the number of suppliers differs from the total number of suppliers as the same supplier may serve more than one Business Unit.

* Includes nominations outside the purchasing perimeter.

The hotels that consolidate have different monitoring indicators to control purchases from approved suppliers within the Purchasing Perimeter. During 2019, the objectives have been met in all Business Units:

93,6%

Approved procurement

91%

Approved procurement target

95%

of the purchase volume in 2019 is from local suppliers*

* For NH Hotel Group, a local supplier is defined as a supplier that sells in the same country where its tax headquarters are located while an international supplier is one that sells in a different country to its tax domicile.

15.117

Total suppliers**

14.382

Local suppliers

1.160

International suppliers

** The addition of the number of suppliers differs from the number of total suppliers, as the same supplier can serve more than one Business Unit.

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RISK MANAGEMENT IN THE SUPLY CHAIN: CRITICAL SUPPLIERS

33%

Purchase volume from critical suppliers

114

Critical suppliers
identified

The supply chain management process is based on an evaluation of the intrinsic risk factors of outsourcing a service or the supply of a product.

In 2020, a risk assessment will be carried out in the supply chain to determine the risk level of the main suppliers in relation to environmental, social and governance criteria. The aspects that will be analysed will be those related to human rights, health and safety, emissions and corruption, among others.

For contract bidding management, NH Hotel Group uses its Electronic Negotiation Platform. This tool makes it possible, through the RFI (Request for Information) phase, to assess and analyse the legal, financial, environmental, operational, social and labour situation of suppliers who submit bids for contracts. This reduces the possible risks that suppliers could generate in future operations with the Company.

For this initial assessment, specific documentation has to be submitted, providing evidence of the veracity of the information provided. This preliminary assessment is complemented with a subsequent screening that is intrinsic to the contract award process, based on compliance with the technical requests shown in the RFP (Request for Proposal).

In this part of the process, suppliers have to accept both the Group’s Code of Conduct and the Coperama´s Code of Conduct– NH Hotel Group’s central procurement service for hotels – which includes environmental and labour commitments. Subsequently, as part of the Nomination Contract, the SLA (Service Level Agreement) is applied, determining the service level parameters and penalising any deviation in the service offered by the supplier. Suppliers’ services are controlled by the hotels or departments that are the end users of such services. In the event of a complaint, Coperama is notified and, depending on the severity of the error, it demands immediate correction or directly rescinds the contract with the supplier. In 2019 no such case has arisen in any of the Business Units.

To carry out its management, NH Hotel Group has identified its critical suppliers as those that could affect the Company due to significant volume of billing or having products that have been specifically designed for the Company or a reputational impact level.

Throughout 2020, Self-Assessment Questionnaires will be sent for the most important and critical suppliers.