35 28. TAX NOTE NH Hoteles, S.A. is the Controlling Company of a group that has been consolidated for tax purposes, made up of the following companies: NH Hoteles, S.A. Grupo Financiero de Intermediación y Estudios, S.A. NH Sarria, S.A. Retail Invest, S.A. NH Hotel Rallye, S.A. Inversores y Gestores Asociados, S.A. NH University, S.L. Cofir, S.L. NH Aránzazu Donosti, S.A. Hotel Albar Ciudad de Albacete, S.L. Hoteles Express, S.L. NH Pamplona, S.A. NH Málaga, S.A. Lenguados Vivos, S.L. Sotogrande, S.A. Hotel Palacio de Castilla, S.A. NH Logroño, S.A. Gran Círculo de Madrid, S.A. NH Santander, S.A. Casino Club de Golf, S.L. Hotelera Onubense, S.A. NH Ciutat de Reus, S.A. During 2003, the group headed by the company AHORA, S.L. has been integrated into the NH Hoteles, S.A. Group, in accordance with tax rules. Corporation Tax is calculated on the basis of the financial or book profit obtained in accordance with general accepted accounting principles, which is not necessarily the same as the figure for taxable income used as a basis for assessing the tax. Set out below is the reconciliation between the reported profit an the Basis of Assessment for Corporation Tax for the Consolidated Tax Group headed by NH Hoteles, S.A. (in thousand euros): 2003 REPORTED PROFIT/(LOSS) FOR THE YEAR (AFTER TAXES AND BEFORE OUTSIDE SHAREHOLDERS) 139,749.24 Corporation tax 4,873.23 144,622.47 Permanent differences (26,582.28) Timing differences 9,518.09 Consolidation adjustments (82,508.22) PRIOR TAXABLE INCOME 45,050.06 Tax loss carryforwards offset (1,285.25) BASIS OF ASSESSMENT 43,764.81 After being used for calculating the aforementioned Basis of Assessment, the Consolidated Tax Group has the following Tax Loss Carryforwards. The only tax loss carryforwards currently in effect relate to the companies, Retail Invest, S.A., Casino Club de Golf, S.L. and Hotelera Onubense, S.A. They may only be offset against profits made by said companies. They are as follows (thousand euros): TAX LOSS CARRYFORWARDS Year of origin Amount Limit of offsetting 1993 218.73 2008 1994 407.08 2009 1995 3,402.76 2010 1996 4,132.34 2011 1997 11,235.82 2012 1998 4,648.45 2013 1999 267.47 2014 2000 88.60 2015

36 DEDUCTIONS PENDING TO APPLY Year of origin Item Amount 2001 Investment in export business 29,589.91 2002 Investment in export business 181.44 2003 Capital expenditure on training 20.18 2003 Investment in export business 75.46 CORPORATION TAX EXPENSES Company Amount NH Lagasca, S.A. 471.31 Explotaciones Hoteleras Condor, S.L. 150.50 NH Marín, S.A. 640.57 NH Ciutat de Mataró, S.A. 245.28 NH Las Palmas, S.A. 87.62 NH Numancia, S.A. 440.29 NH Deutschland, GmbH (471.41) Grupo Krasnapolsky Hotels & Restaurants, N.V. 7,429.61 Grupo Latinoamericana de Gestión Hotelera, S.A. 1,014.45 Other 1,934.43 11,942.65 The years the Tax Consolidated Group are open to inspection are: Tax Periods outstanding Companies 1999 to 2003 VAT 2000 to 2003 Personal income tax 2000 to 2003 For the years open to inspection there may be contingent liabilities that cannot be objectively quantified. In the opinion of Group management, they are not significant. This year, the Tax Consolidated Group has applied deductions amounting to 6,301.86 thousand euros which were essentially for the deduction for investing extraordinary income. It has tax incentives yet to be used totalling 29.866,99 thousand euros under the same heading. They must be used by 2005. When calculating Corporation Tax for 2003 and 2002, the Consolidated Group has deducted no amount for reinvesting in measures aimed at reducing the environmental impact. Specifically, set out below are the deductions the Tax Consolidated Group has yet to apply (thousand euros): For all the other consolidated companies that have not been included in the consolidated tax system mentioned above, the Corporation Tax expense has been considered in accordance with the law currently in force in the relevant countries. It is as follows for each company (thousand euros): During 2003, the Tax Consolidated Group headed by NH Hoteles, S.A. has made use of the "Deduction for reinvesting extraordinary income" provided for in Section 26 of the Corporation Tax Act, Law 43/1995, dated 27 December, for the profit made on the sale of the Hotel NH Pedralbes, and the Hotel NH Sant Angelo, for a total of 1,224.61 thousand euros.

37 DEFERRAL FOR REINVESTING EXTRAORDINARY INCOME Amount included in the Basis of Assessment Year Rent qualifying Amount Final year of origin for deferral Prior years Year 2003 Outstanding deferral 1996 8,514.42 4,865.39 1,216.35 2,432.68 2005 1997 9,399.16 2,685.48 1,342.74 5,370.94 2007 1998 1,624.88 232.13 232.13 1,160.62 2008 1999 75,144.84 2,198.74 6,547.14 66,398.96 2009 2000 3,737.40 – – 3,737.40 2010 2001 4,335.35 – – 4,335.35 2011 In  the  same  way,  the  Tax  Consolidated  Group  made  use,  in  earlier  years,  of  the  "Deferral  for  reinvesting  extraordinary income". Set out below are the main features of this reinvestment (in thousand euros): The reinvestment of all this income took the form of various different financial holdings, except for the one that appeared in 1999, which was reinvested in acquiring properties. 29. CONTRIBUTION OF THE COMPANIES THAT HAVE BEEN CONSOLIDATED TO NET CONSOLIDATED PROFIT NET INCOME CONTRIBUTION BY COMPANY (thousand euros) Profit/(loss) Contribution to the net Individual attributable consolidated profit and loss Profit/(loss) Consolidation to minority 2003 adjustments shareholders 2003 2002 NH Hoteles, S.A. 106,070.09 (50,736.77) – 55,333.32 34,537.91 Hotel Subsidiaries 106,579.44 (124,553.96) (2,205.11) (20,179.63) 33,423.64 Latinoamericana de Gestión Hotelera and subsidiaries (6,442.49) – 4,661.81 (1,780.68) Shuaa Hotels, B.V. 112,042.08 (54,045.69) – 57,996.39 NH Participaties, B.V. and subsidiaries 3,670.93 (20.50) (6,877.89) (3.227,46) NH Central Europe GmbH & Co.K.G. and subsidiaries (17,813.19) – 4,360.02 (13.453,17) Other companies 15,122.11 (72,916.62) (1,920.20) (59.714,71) Non-Hotel Subsidiaries 17,875.01 (290.89) (2,561.69) 15.022,43 18.182,38 Sotogrande, S.A. 19,100.99 – (2,561.69) 16.539,30 Other companies (1,225.98) (290.88) – (1.516,85) CONTRIBUTION OF THE FULLY CONSOLIDATED 354,978.99 (302,855.31) (1,981.37) 50.176,12 86.143,93 COMPANIES Palacio de la Merced, S.A. 13.42 – – 13,42 (479,66) Fonfir 1, S.L. 1.59 – – 1,59 (4,25) Jolly, Hotels, S.p.A. 667.71 – – 667,71 – CONTRIBUTION OF THE COMPANIES CONSOLIDATED 682.72 – – 682,72 (483,91) USING THE EQUITY METHOD 50.858,84 85.660,02

38 Concession of year Number of shares Exercice price (in euros) Years 2001 1,700,000 11.17 2004 - 2006 2003 2,700,000 7.68 2007 - 2008 4,400,000 The Controlling Company has instrumented these plans coverage by selling the aforementioned shares to a financial institution, with the commitment to make up any financial loss suffered by said institution, in the event that the share price were to fall and not all the options are taken up at the end of the plans. • The minority shareholder in NH Deutschland, GmbH (formerly the Astron Group GmbH) and NH Austria GmbH (formerly the Astron-Austria Group) shall be entitled to call on NH Hoteles, S.A. to acquire the remaining 20% of the shares (see note 2b). 31. REMUNERATION AND OTHER STATEMENTS OF THE BOARD OF DIRECTORS A) REMUNERATION OF THE BOARD OF DIRECTORS The  amount  earned  in  2003  by  the  members  of  the  Board  of  Directors  of  the  Controlling  Company  for  the  statutory attendance and fees for the Board Meetings has amounted, in total,  to 432.73 thousand Euros (468.79 thousand Euros in 2002). There have been an average of 12 Board Members in 2003, compared to 11.5 in the previous year. In addition to the aforementioned salaries, the Directors that form part of the Audit and Control Commissions (3 members) and  Appointments  and  Salaries  Commissions  (3  members)  have  received  a  total  of  18.57  and  31.44  thousand  Euros, respectively, during the year 2003 (14.10 and 25.89 thousand Euros, respectively in 2002). An  amount  of  72  thousand  Euros  has  thus  been  paid  to  certain  members  of  the  Board  of  Directors  in  respect  of  their professional services. 30. GUARANTEES GIVEN TO THIRD PARTIES AND OTHER CONTINGENCIES i) Guarantees given On 3 October 2001, NH Hoteles, S.A., as pledgor, set up, together with all the other shareholders of Parque Temático de Madrid, S.A. (PTM, S.A.) a real right of pledge for the benefit of Caja de Ahorros y Monte de Piedad de Madrid on 3,255 registered shares it owns, as security for the bridging loan granted to PTM, S.A.  The pledge is security for the full, timely fulfillment of the obligations entered into by the Borrower and is set up on each and every one of the shares. In December 2002, NH Hoteles, S.A. issued a comfort letter for the benefit of the company Nacional Hispana Hoteles, S.R.L. de C.V. for 62.8 million dollars, in which it undertakes to provide financial support, whenever it is needed, to said company for the benefit of the banks granting the Syndicated Loan (see note 22). It also undertakes to keep a controlling majority while said loan is in force. ii)    Commitments with regard to third parties • The outside shareholder of the Consolidated Company Latinoamericana de Gestión Hotelera, S.A.: shall be entitled to call on NH Hoteles, S.A. to acquire 100% of its holding. This right of option to sell may be taken up as from 1 January 2004, and shall lapse after four years. The price to be paid for this option shall be as determined by an independent third party of recognised international repute based on the EBITDA generated by the company. Payment may be made in cash or shares, as NH Hoteles, S.A. chooses. •     The outside shareholder of the Consolidated Company Nacional Hispana Hoteles, S.R.L. de C.V., has an option to sell its shares between January 2005 and July 2006. The price is set on the basis of fair market value, as determined by a bank based on a multiple applied to the company's EBITDA. The price shall be paid in cash or NH Hoteles, S.A. shares, as NH Hoteles, S.A. chooses. • As at 31 December 2003 the Group, after approval by the Controlling Company's General Meeting of Shareholders, has granted its employees Share Option Plans, as analysed below:

39 The amounts accrued for these items by the Directors of the Controlling Company in consolidated companies both for fully and proportional integration and the use of the equity method during 2003 totalled 111.4 thousand Euros (121.80 thousand Euros in 2002). B)  INFORMATION  IN  ACCORDANCE  WITH  ART.  127  PARAGRAPH  4  OF  THE  PUBLIC  LIMITED  COMPANIES  LAW, INTRODUCED BY LAW 26/2003 OF 17TH JULY. During 2003, the Directors of the Controlling Company have not held participations in the share capital of companies that have lines of business that are the same as, similar or complementary to that of the company. Furthermore, the Directors of the Controlling Company do not hold, nor have they held any positions in companies outside the consolidated group that lines of business that are the same as, similar or complementary to that of the NH Hotels Group companies. Neither are the Directors carrying out, or have they carried out activities on their own behalf or on the behalf of a third party, in a line of business that is the same as, similar or complementary to that of the Consolidated NH Hotels Group companies. 32. INFORMATION ABOUT ENVIRONMENTAL POLICY The activities carried on by the Group through the Company Sotogrande, S.A. include managing the integrated water cycle in  the  area  covered  by  the  Sotogrande  Estate  and  its  surroundings.  This  management  includes  draining  and  purifying sewerage. The aim of these two latter activities is to reduce the damage to the environment. The Group's assets associated with its drainage and purification activity include two sewerage purification plant, capable of meeting the needs of a population of up to 20,000 inhabitants, connected to one another so that the cleaned affluent flows into the see through an undersea outlet. In some purifying plants, the Group is also building a tertiary treatment system aimed at purifying the water even more so that they may be used partially for watering the Real Club de Golf Sotogrande with which a contract has been signed to this effect. The tertiary treatment plant is currently in its trial period and is expected to  become  fully  operational  during  2004.  The  introduction  of  this  tertiary  system  will  make  for  a  reduction  in  the consumption of drinking water of between 200,000 and 300,000 m3/year. Furthermore, the Group, as part of its activity to promote and develop the Sotogrande Estate, is now focusing its attention on urban land with partial plans that have been approved. It therefore has no need to carry out any environmental impact studies prior to carrying out its property or tourist developments. However, the Group's policy is aimed at respecting the environment  to  the  utmost.  It  has  therefore  contracted  the  services  of  an  environmental  consultancy  to  diagnose  and provide advice on environmental matters in its actions. Environmental consultancy fees are not relevant. The assets of an environmental nature described total,  net of depreciation as at 31 December 2003, 1.01 million euros (0.73 million euros in 2002). The Group had set up no provision at the end of 2003 and 2002 for environmental contingencies or claims. Neither does it know of any liabilities relating to such contingencies or claims. 33. POST BALANCE SHEET EVENTS On 3 February 2004, after getting the final permission from the financial institutions who hold the syndicated loan, the Hotel NH Krystal Cancun has been sold for 28 million dollars. This operation has not have any effect in the Consolidated Profit and Loss Account for 2003. In this operation the buyer has assumed part of the Syndicated loan for 20 million euros (see note 22). 34. EXPLANATION ADDED FOR TRANSLATION TO ENGLISH These Consolidated Financial Statements are presented on the basis of accounting principles generally accepted in Spain. Certain accounting practices applied by the Group that conform with generally accepted accounting principles in Spain may not conform with generally accounting principles in other countries.

40 CONSOLIDATED STATEMENTS OF SOURCES AND USES 2003 2002 APPLICATIONS Purchases of fixed assets –   Start-up expenses 8,599.50 1,819.06 –   Intangible assets 7,948.48 22,568.03 –   Tangible assets 122,841.22 97,954.09 –   Investments 2,888.69 9,790.00 Change in the scope of consolidation 3,403.74 178,847.49 Goodwill – 9,572.63 Reserves of the Controlling Company – 3,201.05 Translation reserves – 74,767.80 Deferred expenses 1,700.00 – Outside shareholders – 39,140.17 Cancellation or transfer to short-term of borrowings and other similar liabilities 218,422.84 16,364.62 Funds absorbed by operations –   Deferred income – 7,518.71 –   Net profit proceeds from fixed assets 62,100.59 16,875.32 –   Profit of companies consolidated using the equity method 682.72 – 428,587.78 478,418.97 Surplus of sources over application (Increase in working capital) 14,073.82 – 442,661.60 478,418.97 Set out below are the changes that have occurred in working capital: 2003 Increases Decreases Inventories – 2,034.98 Debtors – 13,414.26 Receivable – 26,970.92 Own shares – 3,854.68 Current asset investments 14,592.81 – Cash at bank in hand 31,846.98 – Accrued expenses 6,735.73 – Provisions 7,173.14 – 60,348.66 46,274.84 Change in working capital – 14,073.82 60,348.66 60,348.66 35. CONSOLIDATED STATEMENTS OF SOURCE AND APPLICATION OF FUNDS FOR THE YEARS ENDED ON 31 DECEMBER 2003 AND 2002 (thousand euros)

41 CONSOLIDATED STATEMENTS OF SOURCES AND USES 2003 2002 SOURCES Proceeds from disposals of fixed assets –   Intangible assets 17,206.37 1,298.22 –   Tangible assets 212,668.02 104,520.24 –   Investments 18,365.61 7,949.97 Translation difference 22,877.06 74,127.45 Revaluation reserves – 6,036.98 Outside shareholders 14,808.81 17,114.70 Increase –   Issue of debenture loans and other traded securities – 3,841.71 Deferred income 452.39 – Funds generated from operations –   Profit/(loss) for the year 50,858.84 85,660.02 –   Fixed-asset deprec. and provisions 77,903.24 73,444.08 –   Provisions for charges and liabilities 26,431.26 29,018.72 –   Deferred expense 1,090.00 2.807,15 442,661.60 405,819.24 Surplus of applications over sources of funds (Decrease in working capital) – 72,599.73 442,661.60 478,418.97 2002 Increases Decreases Inventories 1,411.05 – Debtors 18,628.44 – Receivable – 39,808.24 Own shares – 11,739.26 Current asset investments – 5,443.17 Cash at bank and in hand – 36,259.02 Accrued expenses 2,698.77 – Provisions – 2.088,30 22,738.26 95,337.99 Change in working capital 72,599.73 – 95,337.99 95,337.99