BSC

MEIA BSC Overview

Virtual RBM 10 th March 2020

Agenda

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MEIA BSC 2020

▪

BSC 2019 Dashboard

▪

Q&A Session

MEIA BSC 2020

MEIA BSC 2020 Key Changes

2 Region-Specific Criteria

GOP Flow Through and Brand Compliance

Banquet Profitability, TrustYou Problem Handling Score, BPV & Shared Values

3 New Criteria

E-Direct, Food Waste, Implementation of SLA Academy, Employee Experience

4 Criteria Removed

+18% Bonus/-15% Penalty Points Internal Audit Criteria

Bonus/Penalty Points

MEIA BSC 2020 Overview

Bonus Penalty

GOR

10.0% +2.0% 10.0% +2.0% 5.0% +1.0% 5.0% +1.0% 5.0% +1.0% 5.0% +1.0%

EBITDA

EBITDA Forecast Accuracy

Our Business

RGI Growth

F&B Outlet Dept. Profitability

F&B Banqueting Dept. Profitability NEW

40%

45%

GOP Flow-Through NEW

5.0%

Succession Planning Core Learning Program

5.0% 5.0% 5.0%

Our People

BPV and Shared Values NEW

15%

20%

TrustYou CompIndex (Online Reviews) TrustYou Top-box Performance (P-S Surveys) TrustYou Problem Handling Score (P-S Surveys) NEW

5.0% +1.0% 10.0% +2.0% 5.0% +1.0%

Brand Compliance NEW

5.0% 2.5% 2.5% 2.5% 2.5%

Our Guests

Security

-2.5% -2.5% -2.5% -2.5%

35%

20%

Fire Life Safety

Engineering Food Safety

10%

Community

Volunteerism and Community Eng.

5.0% +1.0%

2018

2019

2020

Internal Audit

NEW

bonus/pen. +5.0% -5.0%

100.0% +18.0% -15.0%

Legend:

Region-Specific Metrics

Our Business

GOR (10% + 2% Bonus)

OUR BUSINESS

Drive Hotel Performance

2019 BSC

2020 BSC

KEY CHANGES:

• Linear distribution of BSC score upon achieving 81% to 109% of Budget

Score

14.0

SLLN Jan-2020 113% = 12% score

12.0

100% Budget Achieved = 10% Score

10.0

SLLN 2019 102% = 10.2% score

8.0

6.0

4.0

2.0

70 75 80 85 90 95 100 105 110 115

GOR Performance against Budget

EBITDA (10% + 2% Bonus)

OUR BUSINESS

Drive Hotel Performance

2019 BSC

2020 BSC

KEY CHANGES:

• Linear distribution of BSC score upon achieving 81% to 109% of Budget

Score

14.0

12.0

100% Budget Achieved = 10% Score

10.0

SLBL Jan-20 104.8% = 10.5% score

SLBL 2019 97% = 9.7% score

8.0

6.0

4.0

2.0

70 75 80 85 90 95 100 105 110 115

EBITDA Performance against Budget

EBITDA Forecast Accuracy (5% + 1% Bonus)

OUR BUSINESS

Drive Hotel Performance

2019 BSC

2020 BSC

KEY CHANGES:

• Other than monthly forecast, we have included a 3-month forecast • Expanded variation range – Hotels get partial BSC score if variation is within 15% • Bonus points are given when monthly and 3-month variations are consistently within 5% in at least half of the forecasts

Score

7.0

6.0

if variation is within 5% = 5% Score

6.0

if variation is between 1% and 5% = 5% Score

5.0

4.0

SLBL Feb-2019 9% = 3% score

3.0

2.0

SLBL Feb-2020 11% = 1% score

1.0

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

EBITDA Monthly Variance vs. Forecast

EBITDA Monthly/3-Month Variance vs. Forecast

F&B Outlet Dept. Profit (5% + 1% Bonus)

OUR BUSINESS

Drive F&B Departmental Profitability

2019 BSC

2020 BSC

KEY CHANGES:

• Linear distribution of BSC score upon achieving 81% to 109% of Budget

Score

7.0

6.0

100% Budget Achieved = 5% Score

6.0

Budget Achieved = 5% Score

100% Budget Achieved = 5% Score

5.0

Budget Achieved = 5% Score

5.0

4.0

SLBL 2019 95% = 4.5% score

4.0

3.0

2.0

SLBL Jan-2020 93% = 3.4% score

2.0

1.0

70 75 80 85 90 95 100 105 110 115

F&B Performance against Budget

RGI Growth (5% + 1% Bonus)

OUR BUSINESS

Measure Hotel’s Performance against Competitors

2019 BSC

2020 BSC

KEY CHANGES:

Linear distribution of BSC score

•

• Hotels get partial BSC score once they achieve a y-o-y growth

Score

7.0

6.0

100% Growth Target Achieved = 5% Score

Budget Achieved = 5% Score

6.0

5.0

Budget Achieved = 5% Score 100% Growth Targ t Achieved = 5% Score

5.0

4.0

3.0

2.0

1.0

70 75 80 85 90 95 100 105 110 115

Growth Target Performance

GOP Flow-Through (5%) MEIA-Specific Metric

OUR BUSINESS

Optimization of Cost Management

Objectives • In line with our OPERATIONAL EXCELLENCE Strategic Business Pillar • Analyses the hotel’s ability to (i) flow any additional revenue to the bottom line and (ii) flex the expenses if the revenue falls short

Definition •

Scoring Mechanism

Actual FY GOP 2 – Budgeted FY GOP 2 Actual FY Revenue – Budgeted FY Revenue

GOP flow-through vs Budget 1 =

GOP Flow-Through

BSC Score

Scoring based on Full Year Actual and Budget

•

• Monthly tracking based on variance between monthly actuals vs monthly budget

≥ 60%

50% – 59%

Illustrative Example

40% – 49%

SLLN

Jan-20

Below 40%

Actual

Budget

Variance

GOR

2,891,549

2,569,086

322,463 182,101

• Given that flow-through cannot be calculated, if the hotel hits its budgeted revenue and budgeted profit at Year-End, in this specific case the hotel will score the full 5%

GOP Before Management Fee

365,504

183,403

GOP Margin

12.6%

7.1%

56% Flow-Through

Feb-20

Actual

Budget

Variance

GOR

2,952,739

3,143,696

(190,957) (42,277)

GOP Before Management Fee

556,227

598,504

GOP Margin

18.8%

19.0%

78% Flow-Through

1. If negative variance, Flow-Through formula is: 1 – ( Actual FY GOP – Budgeted FY GOP/Actual FY Revenue – Budgeted FY Revenue) 2. GOP before Management Fees

Our People

Our People Criteria

OUR PEOPLE

Purpose

Comments

Other than identifying potential candidates, Hotels are required to develop IDP for candidates

To plan for and build a strong team for growth

Succession Planning

EXISTING

Our People

Other than passing the programs, the score on all employees’ first try will also be recorded for BSC score

To train all employees on basic safety and security

Core Learning Program

EXISTING

• Launch BPV and shared values programs • Test score on first try will be recorded for BSC score

Launch and align our BPV and Shared Values

BPV and Shared Values

NEW

Our Guests

Our Guests Criteria

OUR GUESTS

Purpose

Comments

Score

• TrustYou CompIndex • TrustYou Top-box (P/S Surveys) • TrustYou Problem Handling Score (P/S Surveys) NEW

• Online reviews and post-stay surveys are separated into different metrics • More focus given to post-stay surveys (15% vs. 5% LY) • An individual target is given to each Hotel based on 2019 performance • Bonus points are given if Hotels outperform Target

5% + 1% Bonus 10% + 2% Bonus

Focus on guests’ satisfaction

5% + 1% Bonus

Our Guests

Hotels get full score if they pass their first audit, and zero score if they fail • If Hotels who failed first audit, still fail after rectification period, penalty points will be given

Ensure basic Safety and Security •

• Security • Fire Life Safety • Engineering • Food Safety

2.5% and -2.5% penalty 2.5% and -2.5% penalty 2.5% and -2.5% penalty 2.5% and -2.5% penalty

Brand Compliance (5%) MEIA-Specific Metric

OUR GUESTS

Measured by LQA Luxury Standards 1

Objective • In line with our OPERATIONAL EXCELLENCE Strategic Business Pillar • As MEIA is largely a managed portfolio, assuring Brand compliance and excellent customer experience is paramount

Based on LQA Audit (1 st and 2 nd inspections if required)

•

Front Office

√ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

Reservations

Check-in Check-out

Using LQA Luxury Standards 1

•

Doorman - Arrival

LQA scoring based on the average of the sections to the right only The “Product: Room” subsection is excluded from the total score due to a large number of exceptions

•

Doorman - Departure

Concierge / Guest Services

Scoring Mechanism:

Housekeeping

•

Criteria

Score

Arrival

Turndown Servicing

Each property to achieve 80% pass score on first audit

Laundry

If a property fails the first audit: • Each property to fail 80% pass score on first audit • Then on second audit:

F&B

Breakfast Restaurant

• Each property to achieve 80% pass score on second audit • Each property to fail 80% pass score on second audit

1% -2%

Buffet

Light Meals

Bar

In Room Dining

Each property to improve 2019 score on first audit

Extra 2%

Product

Room

Exception for SLIB: due to excellent 2019 score (95%) SLIB needs to achieve 90% score minimum to get the extra points

√ √

Public Areas

Fitness Facilities

Each property to complete a minimum of 6 self-audits by 30/11/20/20 on I-Auditor or LQA Self-Audit platform

Extra 1%

Other

√ √

Transport

Spa Treatment

1. Excluding HJMD and THAD measured by LQA Upscale Standards

Our Community

Our Community Criteria (5%)

OUR COMMUNITY

Purpose

Comments

• Added community engagement activities • For volunteerism, Hotels get partial BSC scores if ≥ 50% of employees volunteer for ≥ 2hrs each

Volunteerism and Community Engagement

To encourage our employees to participate in CSR activities

Our Community

Internal Audit

Internal Audit Criteria

Purpose

Comments

Hotels get zero score if they fail IA

Drive efficiency and effectiveness in issue resolution •

Internal Audit

• Regardless of their IA results, Hotels get penalty points if they do not resolve issues within timeline

BSC 2019 FY Snapshot

BSC 2019 Dashboard – Shangri-La Regions Benchmark

Rank Total Score Our Business Our Guests Our People

Our Community

Max Score

114.0

48.0 26.9

34.0 29.4

20.0 20.0

12.0 11.8

All Hotels

88.1

N China S China E China JP/KR SEAA MEIIO EUNA HK/TW

96.1 95.6 91.0 89.7 86.7 80.5 76.6 73.0

33.1 34.8 29.6 29.4 26.6 19.7 16.0 12.2

31.2 28.9 29.8 28.3 28.2 29.3 29.6 29.0

20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

11.9 12.0 11.7 12.0 11.8 11.5 11.0 11.8

BSC 2019 Dashboard – MEIA Hotels Benchmark

Key Takeaways:

Rank

Total Score Our Business

Our Guests

Our People

Our Community

Main Area of Concern: Our Business category, significantly below the Group average

Max Score

114.0

48.0

34.0

20.0

12.0

All Hotels

88.1

26.9

29.4

20.0

11.8

MEIIO EUNA

80.5 76.6

19.7 16.0

29.3 29.6

20.0 20.0

11.5 11.0

• Impacted by: EBITDA, F&B Profit, Drive E-Direct

SLND HJMD

25 35 37 42 52 59 63 66 72 77 78 81 89 92

97.0 93.7 93.5 92.3 89.5 88.2 85.5 84.1 78.4 76.5 76.2 74.5 70.5 68.6 83.5 84.8

35.4 36.4 31.1 30.1 31.9 29.9 22.8 23.9 19.2 14.0 13.2 12.4 10.6

30.1 25.7 31.4 30.9 26.6 26.8 31.2 28.7 27.7 30.9 31.5 31.1 29.4 29.5 29.4 29.8

20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0

11.5 11.5 11.0 11.3 11.0 11.5 11.5 11.5 11.5 11.5 11.5 11.0 10.5 12.0 11.3 11.5

SLV

SLBL SLLN

Our Business category is the Key Focus Area for 2020

SLMU

SLIB

THAD SLTR SLTO SLAD SLDB SLPR SLMD

7.2

Average Median

22.7 23.4

BSC 2019 Dashboard – MEIA Hotels Benchmark – Individual Category

Our Business

Our Guests TrustYou Post- Stay Survey Security Food Safety

Our People

Our Community

EBITDA Fsct Accuracy E-Direct

TrustYou Comp Index

Core Learning Program

F&B Outlet Profit

Fire Life Safety Eng. PM

SLA Academy

Talent Review

Employee Exp.

Food Waste Volunt.

GOR EBITDA

RGI

Max Score

12.0

6.0

17.0

5.0

3.0

5.0

6.0

SLND HJMD

9.8

12.0 12.0

3.0 4.8 5.5 4.5 0.0 3.0 4.5 0.0 4.3 0.0 0.0 0.0 0.0 0.0

1.1 0.3 1.3 2.3 4.1 1.3 1.0 2.0 1.1 0.3 0.7 2.6 0.5 1.2

4.0 4.1 0.0 0.0 0.0 5.8 0.0 0.0 0.0 0.0 3.0 0.0 0.0 6.0

5.4 5.3 5.2 4.1 5.6 5.5 3.0 3.0 4.6 4.5 4.6 4.9 5.1 0.0

15.1 12.7 15.4 14.9 12.6 12.8 15.2 13.7 15.7 14.9 15.5 15.1 15.4 14.5

5.0 2.0 5.0 5.0 4.0 3.0 5.0 4.0 5.0 5.0 5.0 4.0 5.0 5.0

3.0 3.0 3.0 3.0 2.0 3.0 3.0 3.0 2.0 3.0 3.0 3.0 2.0 2.0

2.0 3.0 3.0 3.0 3.0 2.0 3.0 3.0 0.0 3.0 3.0 3.0 2.0 2.0

2.0 2.0 2.0 2.0 2.0 3.0 2.0 2.0 2.0 2.0 2.0 3.0 2.0 3.0

3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0

5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0

5.5 5.5 5.0 5.5 5.0 5.5 5.5 5.5 5.5 5.5 5.5 5.0 5.0 6.0

6.0 6.0 6.0 5.8 6.0 6.0 6.0 6.0 6.0 6.0 6.0 6.0 5.5 6.0

10.0

SLV

9.8 9.5

9.3 9.7

SLBL SLLN

10.2

12.0

SLMU

9.3 9.3 9.2 9.2 9.2 5.0 5.0 5.0 0.0

5.0 5.0 9.7 0.0 0.0 0.0 0.0 0.0 0.0

SLIB

THAD SLTR SLTO SLAD SLDB SLPR SLMD

Key Takeaways: • Common shortfalls: EBITDA, F&B Outlet Profit and E-Direct • Key Focus Areas for 2020: EBITDA, F&B Outlet Profit (Our Business) Fire Life Safety, and Food Safety (Our Guests)

Q&A Session

Appendices

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