ASHTON HOTEL GROUP BACKGROUND AND BRIEF HISTORY Ashton Hotel Group (AHG) commenced operation in 1967, marking its entry into the bustling Sydney hotel market. Initially operating three hotels, AHG has grown to the extent that it is now a listed company operating 43 hotels spread across Australia. AHG has focused on delivering quality hospitality in a competitive environment by diversifying its available room sizes and styles covering a broad range of price points to cater to various customer segments. While AHG owns 11 of these properties, it operates the others under management rights, a model that has allowed for broader reach without the capital intensity of outright ownership. In 2019, AHG welcomed Loris Deschamps as its CEO. Deschamps brought with him extensive experience in hotel management, a vital asset for a company at AHG's stage. Although there has been higher than usual turnover of executives and property general managers under his leadership, AHG has seen a shift from aggressive expansion to a phase of consolidation. This has led to a focus on strengthening its existing assets, particularly across the lucrative east coast market of Australia. Today, AHG stands as a significant player in the Australian hospitality industry. The company's long held practice of operating under a single brand across all its properties has helped establish a consistent and recognisable identity in the market. CURRENT STRATEGIC PILLARS AND PERFORMANCE MEASURES Mission Statement To deliver consistent hospitality experiences across Australia by providing diverse, quality accommodations and services that cater to the varied needs of customers, while responsibly managing resources and fostering positive relationships with all stakeholders. Vision Statement AHG's vision is to be Australia's most dependable and recognisable hotel group, known for its commitment to excellence, sustainability, and accessibility in the hospitality industry. AHG aims to responsibly enhance its portfolio and services to meet market expectations, creating value for guests and shareholders. Core Values AHG holds the following core values which are noted on the organisation's website and highly visible to all employees: Integrity and transparency Sustainable Practices Employee development and well-being Community engagement Performance measures AHG evaluates performance by grouping its properties into regions (e.g., Sydney, Melbourne etc). Currently, return on investment (ROI) for the aggregate of properties in each region is used as the principal financial measure used. Traditionally AHG has not used non-financial measures but has introduced a sustainability measure based on self reported energy efficiency and waste reduction calculations for each property, aggregated into regional results. CURRENT REMUNERATION PRACTICES Executives Executive remuneration is determined by AHG's board after consultation with the CEO. The CEO has been responsible for several new hires and some recent terminations. The board is comfortable with this as Loris Deschamps has immense industry experience, AHG has focused on incentivising members of executive with generous bonuses linked to annual ROI results. Prior to hiring Deschamps, AHG utilised a remuneration committee for executive remuneration, but this was considered inoperable following the termination of Mickey Powers, the Chief Operating Officer in 2018. The termination of Mickey was litigated with a $800,000 settlement paid by AHG. Directors Director remuneration is set by external consultants and subject to approval by motion at the AGM each year. Increases in director remuneration have averaged 8% per annum over the past 4 years. Some shareholders have expressed concerns that current remuneration levels exceed industry averages substantially. BOARD OF DIRECTORS Within the first year of Loris Deschamps' appointment, the AHG nomination committee was discontinued. The process for appointing new or additional directors involves an initial referral by Deschamps, followed by a consultation period of 2 months where directors are expected to perform their own due diligence prior to an appointment. Deborah Labrooy and Grant Svensson, two of the current independent directors, have been appointed in this manner. Of these Deborah was the first of AHG's directors subjected to an induction process as she represented the first incidence of gender diversity on the board. Grant did not undergo an induction due to his extensive industry experience. Feedback from shareholders has indicated a degree of concern that while AHG has a Board Charter, it is unclear where strategic and operational responsibility sits between board members and executive. Further, the AHG board is not subject to a performance review or evaluation process. Individual directors are subject to review against holistic, non-specific performance criteria with evaluation performed by Harvey Mbappe, a longstanding colleague and associate of Loris Deschamps. AHG provides detail relating to all current directors on its website (refer below). The board has deemed that this information is sufficient, and all directors are able discharge all aspects of governance, therefore a skills matrix is considered unnecessary and ceased to be maintained in 2015. AHG POLICIES AHG has a Code of Conduct which is highly visible to all employees. There are also regular communications from management highlighting acceptable and expected conduct. The Code has not been amended since its introduction in 2012, but several directives and other guidelines issued by management have highlighted exceptions and additional expectations. Further, AHG has an implicit culture of accepting rather than challenging internal rules and expectations. Although AHG does not have an explicit anti-corruption policy, matters concerning bribes and corruption are addressed in the Code of Conduct which requires self reporting of any benefits obtained in the course of employment that are additional to contracted remuneration. AHG's board and executive take pride that no employee of AHG has ever been found to be in breach of this. AHG has a clear and visible whistleblowing policy outlining the steps and protections available for the reporting of instances where the Code of Conduct is suspected of being breached. However, staff have privately expressed concerns regarding the consequences for their role with AHG and career for those that report matters under the policy. The policy does not specify who or how investigations into claims will be conducted or managed. Staff have also noted the higher turnover of managerial staff under the leadership of Loris Deschamps and do not believe that their line managers are likely to support them in the event of a disclosure (a feature of the current policy is that anonymity is not provided). AHG has an insider trading policy applicable to all staff. Apart from appropriate blackout periods where trading is not permitted, executives must disclose all intended transactions to the Board. AHG have not experienced any concerns regarding this policy. SUSTAINABILITY PRACTICES & BUSINESS CONCERNS AHG currently has a 10-year contract for the exclusive supply of linen and towels to all hotels in the group by Karmen Services Pty Ltd (Karmen). Karmen does not provide any information regarding its water and energy usage, nor its chemical footprint on the environment. Although none of the key personnel hold interest in Karmen, Chantelle Deschamps (wife of Loris) is the founder and remains a material shareholder in Karmen. AHG has sought to mitigate the impact of its contract with Karmen by upgrading all properties to feature water-saving taps and shower heads. Further, AHG has revised its customer loyalty program so that all program members receive triple rewards points for every stay where they do not utilise housekeeping services. AHG has noted that absenteeism due to illness has increased since the Covid pandemic. In response, AHG provides complementary quarterly health assessments with medical practitioners for all staff. AHG has several properties where it holds the management rights for units that are widely held by individual owners. There is current concern with AHG's inability to compel the owners of these units to upgrade their lighting and appliances to energy-efficient options. Although not directly connected to sustainability, AHG has a community support program where verified victims of domestic violence are able to access up to 2 weeks of accommodation at a 60% discount off regular room rates. This program has been used frequently and has received a favourable reception across communities that have local AHG properties. RISK MANAGEMENT & CONCERNS AHG has recently appointed a Chief Risk Officer (CRO) to oversee all aspects of risk management across the organisation. Reporting directly to Loris Descamps, Kylie Mander, the newly appointed CRO, was previously engaged in a similar role with Foodway, a large chain of retail supermarkets. Mander has been provided with 3 direct reports and has access to the AHG internal audit team who perform ad hoc checks on risk related controls and processes. Current risk issues facing AHG include the significant increase in insurance premiums due to several claims relating to bushfires and floods in recent years. AHG has been unable to find a single insurer willing to accept policies across all its properties. There is also concerned with the instability of the AHG booking application. Apart from difficulties in obtaining bookings, customers have reported the sudden loss of access and personal data from their account. A consequential impact is the increase in bookings with third party agents as a result. DIRECTORS & KEY MANAGEMENT PERSONNEL The current directors of AHG include: Loris Deschamps - Chair and Chief Executive Officer Loris has been the CEO since 2019 and became Chair in 2021. Loris holds postgraduate business and hospitality qualifications and has over 30 years of experience leading hospitality teams globally. In his spare time, Loris enjoys yacht racing. Deborah Labrooy - Independent Director Deborah was appointed as a director in 2023. Deborah brings a wealth of corporate experience to the board having worked in a national bank for 18 years, most recently leading its small business lending team. Along with Loris, Deborah is a longstanding member of Central Harbour Yacht Club and also enjoys gardening. Grant Svensson - Independent Director Grant was appointed director in 2022 and holds certification as a Chartered Accountant as well as postgraduate qualifications in business administration and viticulture. Grant also sits on the board of Fairway Car Rentals, Lightning Rod Productions, and giant retailer Clive Porters. During his corporate career, Grant held the role of Chief Operating Officer with a hotel group in Europe. Marnus Carbon - Independent Director Marnus has been a director of AHG since 2018 when he retired from his role as an AHG regional manager. As a long serving member of the AHG team, Marnus' operational experience is unique and invaluable. Marnus received a community award in 2020 for saving 2 children from a house fire. Arnold Tulk - Director and Chief Operating Officer Arnold has held his current role with AHG since 2018. Arnold had previously been retained since 2013 as an independent director with AHG drawing on his extensive experience in both logistics and restaurants. Arnold has become an indispensable member of the AHG executive and has regularly acted as CEO during periods of absence for Loris Deschamps. Neville Bracks - Director and Chief People Officer Neville was appointed to his current role with AHG in 2019 when he was also appointed as a director. Neville's professional expertise is in corporate litigation and Neville's tenure as CPO has become notable for the absence of public liability and employee related legal matters.

You must identify a contemporary accounting issue of relevance for an assigned case study and perform the preparatory work for a research proposal by completing a literature review documented using an annotated bibliography.