Gabriele Burgio, Chairman & CEO of NH Hoteles < NH Palacio de la Merced - Burgos (Spain) Dear shareholders, Once again, I am addressing you to inform you about NH Hoteles main innovations in 2004 and to give you an insight into the company’s strategy for 2005. After two years of internal integration and adaptation work, NH Hoteles is today a uniform and consolidated company with a single work method for internal and customer operations. During the last year, we completed the first stage in the process of unifying systems, which means that all of the hotels, from Mexico and Argentina, to Germany and Romania, now have access to the same information on customers, rates, promotions, and innovations and can, therefore, offer a uniform service in all markets. This integration will also enable the company to take advantage of synergies to increase sales and achieve significant cost savings. In addition, efforts in the area of training and communication mean that the chain’s 12,600 employees now have a single work culture, which undoubtedly results in a better service to our customers. On the other hand, at NH Hoteles we have continued to innovate and create concepts and services for our clients. The launch of the loyalty programme “NH World” is noteworthy, an intelligent programme, pioneer in the hotel industry, flexible and speedy, and with which the company wishes to offer a better service, adapted to customers’ needs and providing important membership advantages. “Fast Good”, a concept created by NH Hoteles and Ferran Adrià, was the chain’s star launch in 2004. This is a new gastronomic culture, an offer tailored to today’s client who does not have a lot of time to eat but who wants to take care of himself and is looking for the best quality. NH Hoteles has now begun to expand “Fast Good”, after the enormous success of the first establishment in Madrid. 9 Of 2004, we can highlight NH Hoteles’ consolidation as an integrated company, the launch of new products and innovative concepts such as “Fast Good”, leisure offerings and the new web products, as well as our entry into the Italian market where the chain has great potential LETTER FROM THE PRESIDENT 2

10 NH Liberdade room - Lisbon (Portugal) The company has also undertaken different innovative services and leisure alternatives for its customers. Noteworthy examples include the new web page initiatives that offer highly personalised products for each type of customer, the new “content weekends” or, for example, the “check out” terminals that are being installed in several establishments and which enable customers to save considerable time during hotel peak hours. Health is becoming more important for NH Hoteles and here too we want to be different. Our “Elysium Spa” concept is being expanded and there are now three establishments in operation. NH Hoteles has also grown during 2004 and we entered new markets like Italy and Romania. The chain is heavily committed to expanding on the Italian market, which is ideally suited to NH Hoteles, where the hotel sector is highly dispersed, and products like ours -uniform and of high quality- are practically non- existent. We have taken our first steps and believe that we have great potential for growth in Italy and are therefore currently studying different possibilities. In Eastern Europe, where NH Hoteles has already had a very positive experience with the hotel it opened over a year ago in Budapest (Hungary), the company has signed contracts to add two new hotels in Bucharest and Timisoara (Romania). Expansion plans are also focused on countries where the chain is already present and, in particular, on South America where business is evolving very favourably. In addition, late March 2005, the chain entered the United Kingdom with the Harrington Hall hotel, located in the heart of London. On the other hand, we have prepared the company so that it can meet the challenge of continued growth and maintain its leading position in a highly competitive environment and an economy that is in the process of recovery in Europe. We have, in

addition, accomplished significant cost savings; exceeding initial targets. Savings were made totalling €38 millions, and debt has been refinanced and has been set to a considerably lower interest rate strip. We have also reorganised the company structure in the Benelux and Germany and have adapted the sales force in order to achieve a multiple effect. These initiatives have already shown very positive results. Specifically during 2004 the chain’s overall employee ratio per occupied room and operating costs per occupied room have been reduced by 7.9% and 7% respectively. Sotogrande, which in 2004 set a new sales record, will continue growing in Spain and will be expanded into Italy. After receiving several offers and witnessing the success of Sotogrande, a unique concept in the world of golf, tourism and quality residences and with over 40 year’s experience, we decided to export the concept to other destinations. In the future we will endeavour to improve customer services, internal efficiency, increase and facilitate our sales and distribution channels, as well as take advantage of any opportunity for profitable growth that may emerge. In conclusion, I would like to thank most sincerely our customers, employees and shareholders, without whom it would have been impossible to accomplish all of these achievements. Thank you very much, Gabriele Burgio Chairman & CEO of NH Hoteles 11 Casino de Madrid (Spain)

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