NH Amaltea - Murcia (Spain) INTEGRATION: AREAS AND ADVANTAGES From the corporate viewpoint, the main integrating element is the NH brand itself. A corporate culture symbol and a unique offering in the different markets. The company completed the brand integration process in early 2004 and today, all company establishments, employees and structures operate under a single brand. A) INTEGRATED HUMAN RESOURCES Human resources are NH Hoteles’ most important asset. A series of very important and differentiating activities have therefore been carried out with a view to integrating staff, including the creation of an employee card, “NH Friend Voucher” and a welcome DVD that is given to all new employees and which graphically and simply shows the spirit, values and main features of NH Hoteles, how it operates, the product, our global strategy in addition to an extensive and detailed training and exchange plan. B) COMPULSORY MEETING POINTS The corporate website has been an integrating element for sales strategies. A veritable common channel for marketing products and services, the Corporate website, just like the Intranet, keeps the entire company up to date on the different sales strategies and serves as a forum where employees can share ideas and learn about the latest company initiatives. “NH World”, NH Hoteles’ new loyalty programme, is undoubtedly the project in which the teams in each country have been the most directly involved. This project concludes the systems and management integration process and unites all of the company’s customer relationship strategies. “NH World” has, moreover, served as a platform on which other important programmes have been based, 19 WE HAVE DONE OUR HOMEWORK 4 The company has managed to almost totally integrate human resources, now with the exact same training, as well as sales policies and channels, the loyalty programme, systems, marketing strategies, gastronomy… accordingly, NH expects to achieve better service, greater efficiency and increased sales < NH Palacio de Ferrera - Avilés (Spain)

20 including the employee card, which identifies and recognises all NH Hoteles employees and enables them to enjoy special benefits like preferential employee rates. In addition, a special version of “NH World” has also been created for shareholders with a view to rewarding the company’s stakeholders. With the “NH Friend Voucher”, the NH community has been extended to include employees’ family and friends who want to get to know the “NH World” under special conditions. The “NH Idea” has also contributed towards all employees actively participating in the management of the company and provides a suggestion box where they can contribute their viewpoints and recommendations on how to improve company operations and services. This initiative has led to many ideas being selected for implementation. Important events like the sponsorship of the Davis Cup also greatly contribute towards creating a common corporate culture. As this was a project of corporate scope, many sales and marketing teams worked together to achieve maximum results. C) SYSTEMS, TOOLS AND MARKETING STRATEGY INTEGRATION The integration of customer and market intelligence systems is undoubtedly the key to coordinated marketing management and these tools and activities have now been implanted internationally. As a result, market and customer satisfaction studies are available to each country, making them aware of the different areas requiring improvement at the operations and brand level, showing them how to use the new market intelligence tools to segment and create customer profiles and track campaigns and results, all with common parameters. These initiatives, together with a single NH database, are something few international companies can boast of. All of this is supported and directed by a joint sales and marketing strategy for all countries, based on NH Ciudad de Almería (Spain)

21 customer segmentation and prioritisation and whose development is defined at the international level. RESTAURANT INTEGRATION In 2004 we continued to work on standardising and improving the “Breakfast Buffet Service”, one of the features that NH Hoteles’ customers in the different countries appreciate most. They especially like a uniform service across hotels, yet with the gastronomic wealth typical of each region. On the other hand, the first two “nhube” facilities were opened outside of the Iberian Peninsula; in Austria (NH Vienna Airport) and Germany (NH Frankfurt Airport). The coordinated efforts of teams in different countries made this initiative a total success. In both Northern Europe and Latin America efforts were focused on improving productivity and the quality of the different points of sales with a view to increasing the average revenue per customer. Above all, gastronomic enhancements have been made to the services offered to groups. Training programmes were conducted in all business units and special emphasis was placed on Customer Services with a view to achieving a more professional service, which is at the same time adapted to the needs of each individual customer. The objective is to increase customer satisfaction and, consequently, the average revenue per customer. Overall, we continue to work on a service that is adapted to local needs, but without losing sight of NH Hoteles’ global reach. Gran Salón Andalucía at the NH Central Convenciones - Seville (Spain)

22 OTHER IMPORTANT ACHIEVEMENTS IN THE GASTRONOMY AREA: • Completion of the first NH gastronomy scholarships and launch of the new ones. • We launched a gastronomy website within NH Hoteles’ corporate website. • We consolidated the “nhube” project in the following openings: at the NH Cartagena (Spain), NH San Sebastián de los Reyes (Madrid/Spain), NH Alcorcón (Madrid/Spain), NH Central (Seville/Spain), NH Pacífico (Madrid/Spain), NH Vienna Airport (Austria) and NH Frankfurt Airport (Germany). • Promotional activities: gastronomic days, Jacobean Menu. • Hotel refurbishment inaugurations where gastronomy played a major role: Geneva, Budapest, etc. • María José Huertas received the Best Sommelier of the Year Award and Ángel San José the Best Cocktail Maker. • The Casino de Madrid team, led by Ferran Adrià, prepared the dinner served on the eve of the royal wedding. • Kukuarri: revelation restaurant “Madrid Fusión 2005” (NH Aránzazu - San Sebastián - España). TECHNOLOGY INTEGRATION In 2004, NH Hoteles launched and improved the technology infrastructure and applications, which play an important role in the company’s integration process. NH Hoteles was able to provide new functionalities targeted at cutting costs and improving customer relations, based on system infrastructures that were implanted over the past two years.

23 From an internal operations perspective, the company provided the tools required to centralise administration processes. Hitherto, all administration employees were assigned to a particular hotel where they carried out all of the administrative tasks associated with that particular hotel. These operations have now been centralised and the administrators have been moved to other areas of responsibility (accounts receivable, accounts payable and general accounting) enabling employees to reach a higher level of specialisation, while increasing service coverage and putting the organisation’s resources to better use. The Human Resources Department has also benefited from the tools created by the Technology Infrastructure Department, such as the automation of employee evaluation and management by objectives processes. We have worked hard at creating new products that optimise information for customers, such as the “Client Page” and “Travel Page”, which give NH Hoteles’ customers a broader view of the common business through contracts, reservations and production reports. Improvements to the Central Reservations System mean that NH Hoteles not only has access to real-time availability, but can also track bookings at each stage of the reservation’s process. Direct reservations through the web page have also been enhanced, enabling customers to choose room types and identify special offers. Such improvements mean that receptionists and central reservations agents are able to make all types of reservations for customers and potential clients. NH Hoteles launched a Checkout Express system enabling guests to check out more easily and quickly and avoid unnecessary delays at reception. All of the projects described required an important training effort on the part of the hotels where employees have been trained on the use of technology infrastructure systems, applying standard procedures and understanding the new business rules targeted at increasing customer satisfaction and sales. NH Krystal Puerto Vallarta (Mexico)

24 SALES POLICY INTEGRATION NH Hoteles has sales teams in the countries where it operates hotels as well as in other source markets such as New York, Miami, Houston, London, Paris and Stockholm. All countries follow the same segmentation procedure and sales teams are specialised in: Key Accounts, Small and Medium-sized Enterprises, Travel Agencies, Tour Operators and Congress and Convention Organisers. In addition, a single database has enabled us to integrate promotion and contracting policies, as well as facilitate and foster cross-selling, greater customer knowledge, segment tracking and more effective analysis of customer needs, thus facilitating the search for new opportunities in each segment. NH Hoteles manages over 110,000 sales agreements with companies and travel agencies all over the world. All of these accounts and agreements are entered on a single database, which enables customers to reserve their negotiated rates through the different reservation channels. NH Hoteles’ Central Reservations and Information System is operative 24 hours a day 365 days a year allowing customers to reserve any hotel in the chain through a single toll-free reservations number in Europe and the USA. Our operators will attend to potential customers in 9 languages: Spanish, English, French, Italian, Dutch, German, Portuguese, Arabic and Swedish. The Central Reservations System enables agents to view availability and make reservations in real time at any hotel in the chain. NH Hoteles’ own loyalty programmes (NH World and NH Club), as well as the frequent flyer programmes (Iberia Plus, Lufthansa, Alitalia, KLM and Aerolíneas Argentinas), are managed by Central Reservations. NH Hoteles’ Central Reservations System also manages reservations from the GDS (Global Distribution Systems) to which the world’s main travel NH City - Buenos Aires (Argentina)

25 agencies are connected through more than half a million terminals and can reserve our hotels using the “NS” code. Rate loading and data maintenance services are also carried out internally, thanks to an integrated and common rate model for all NH hotels. In 2004, reservations via the GDS increased 25.1%, which demonstrates that the cross-selling activities conducted from other countries are being rewarded. The web page (www.nh-hotels.com) enables users to make on-line reservations at NH Hoteles at the best available rate at the time and receive information on the latest promotions. On the web page, potential customers will also find up-to-date information on NH hotels in general, meeting rooms and gastronomic offers, as well as details of the different activities offered by the cities where NH operates. The web page is available in seven languages: Spanish, English, Dutch, German, Italian, Chinese Mandarin and Cantonese. In addition, NH Hoteles has developed a service within the web page that is targeted and designed for companies, “Client Pages”. The companies at issue can access to all the on-line information and services required to efficiently manage their reservations, always respecting their negotiated rate and providing access to detailed and transparent information on their business relationship with NH Hoteles. With regard to technological innovations in the area of distribution, the company has begun to integrate customers’ reservations systems with its own system, in order to speed up and optimise the reservations process.

26 Elysium, the Spa of Madrid - NH Eurobuilding (Spain) COST-CUTTING PLAN 2004 Throughout 2004, NH Hoteles intensified efforts to accomplish the Cost-cutting Plan which the group committed itself to in mid 2003. The desire to improve in each of the company’s Business Units yielded results that far surpassed initial expectations. Quarter after quarter, progress improved and by the end of the year, the company had accomplished cost savings of €38 million, compared to the €30 million it had set as an initial target. In 2004, costs were mainly cut in the Benelux where they totalled €16.8 million, and in Spain where they amounted to €10.4 million. These results are very satisfactory considering the increased hotel occupancy and cost inflation increases in both countries. In the Netherlands and Belgium, efforts were focused in particular on operating efficiency, hotel staff optimisation, negotiations with suppliers and technology improvements. Significant savings were made in Spain thanks to improvements in hotels and central services. New hotel projects joining the chain in the coming months will produce operating efficiency improvements as a result of synergies between existing hotels and new openings. SPAIN ¤€10.4 THE BENELUX ¤€16.8 SWITZERLAND AND AUSTRIA ¤€2 GERMANY ¤€3.8 MERCOSUR AND MEXICO ¤€4 CENTRAL SERVICES €1 TOTAL SAVINGS IN 2004 (IN MILLIONS) TOTAL €38

27 Net savings totalling €3.8 million were also accomplished at the operations level in Germany, despite increased costs incurred by adapting hotels to the NH brand standards and improvements made to sales teams and activities. MERCOSUR and Mexico had already made quite a lot of headway in 2003, especially through resizing hotel workforces and operative management improvements. Synergies between hotels were consolidated, therefore, in 2004 and resulted in additional savings of €4 million. It is also worth mentioning the efforts of the company’s Central Services, which generated cost savings of €1 million. EFFICIENCY RATIOS Company results far surpassed the targets set in the Cost-cutting Plan and consequently produced notable improvements in efficiency ratios. Accordingly, operating costs in nominal terms fell 3.1% in all of the chain’s hotels and total operating costs per occupied room decreased 7%.    The following table shows the evolution of other company parameters: NH Cartagena façade - Murcia (Spain) TOTAL HOTELS 2004 2003 % VAR Average no. rooms 30,859 30,767 0.3% Occupied rooms/day 19,376 18,657 3.9% Average no. FTE* 11,011 11,512 -4.4% FTE* per Room 0.36 0.37 -2.7% Staff costs per available room (€/day) 26.35 26.99 -2.4% Other operating costs per available room (€/day) 18.68 19.77 -5.5% Total operating costs per available room (€/day) 45.03 46.76 -3.7% FTE* per occupied room 0.57 0.62 -7.9% Staff costs per occupied room (€/day) 41.97 44.51 -5.7% Other operating costs per occupied room (€/day) 29.75 32.60 -8.7% Total operating costs per occupied room (€/day) 71.71 77.11 -7.0% * FTE: Unit equivalent to a full-time employee. NH HOTELES EFFICIENCY RATIOS

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