CONSOLIDATED DIRECTORS’ REPORT
During 2005 NH Hoteles has continued to consolidate its presence in the urban hotel segment by organic growth. Thus, 20 hotels have been
opened with over 2,300 rooms. Particularly worth of mention is its first hotel opening in London.
Moreover, NH Hoteles has significantly stepped up its presence in the resort hotel segment, where it is participating in two new projects, one
in Cap Cana (Dominican Republic) and the other in Rivera Maya (Mexico), involving a high level of luxury residential development and
managing the hotels in these projects through rental pool agreements.
At the end of 2005 NH Hoteles was already present in 20 countries, with 260 hotels and 37,851 rooms, 27.1% of which are owned, 59.1% are
operated under lease agreements (12% with purchase options) and 13.9% are being operated under management agreements. 78% of the
rooms are in Spain, Germany and the Benelux.
In its real estate business, after reaching peak levels in 2004, Sotogrande has kept up a good level of recurring business in 2005, delivering
in particular the Ribera del Obispo and Guramí apartment developments.
During the first weeks of 2006, 3 hotels have been opened, adding nearly 900 further rooms to the group. Particularly worthy of mention is
the Santo Stefano hotel in the centre of Turin, which opened just as the 2006 Winter Olympics were beginning. 8 projects were signed in the
same period, with a total of 1,455 rooms, making for a portfolio of 19 operations signed with 3,800 rooms.
Noteworthy among the corporate operations performed during the year are the agreements reached to acquire the minority holdings in
Nacional Hispana de Hoteles, S.R.L. de C.V. (NH Mexico) and in the former Astron group from their shareholders. An agreement has also
been reached with Banca Intesa to step up hotel business expansion in Italy. As a result of this agreement, in 2006 this company will sign a
capital increase in NH Italy amounting to 50 million euros, which will give it control of 49%.
It has also been decided to propose capital increases to the General Meeting of Shareholders aimed at bringing in the minority shareholders
in two of the subsidiary companies of the group, Sotogrande, S.A. and Latinoamericana de Gestión Hotelera, S.A. as shareholders of NH
Hoteles. The Latinoamericana de Gestión Hotelera agreement means that NH Hoteles will become the holder of 100% of the investments
the Group has made in Latin America in exchange for issuing 4,250,000 new shares.
In order to carry out the operation with the minority shareholders in Sotogrande, NH Hoteles has announced a Takeover Bid to buy 100% of
the share capital of Sotogrande by exchanging shares at a ratio of one new share in NH Hoteles for every share in Sotogrande. A maximum
of 8,770,130 shares shall be issued.
NEW PRODUCTS
The expansion of the FAST GOOD restaurants, a product that has, like the NHUBE, come out of cooperation between Ferrán Adrià and NH
Hoteles, is now actually happening. After the success of the first restaurant, which opened in the NH Eurobuilding in Madrid in 2004, this new
innovative concept has been consolidated in 2005 with the opening of two further restaurants and the signing of agreements to open 7 more
restaurants in 2006. These restaurants offer simple, innovative fast food of the very highest quality.
Two new hotel concepts have also been created this year. One in the area of urban hotels: “NHOW”, the first example of which shall be the
hotel to be opened in Via Tortona in the new fashion centre in Milan, will be a new, exclusive category of hotels created for its most avant-
garde customers; and in the resort hotel sector, it has launched “SOTOGRANDE RESORTS” which will be the name used by NH Hoteles to
operate its high-end resorts aimed at replicating the lifestyle and the leisure opportunities of Sotogrande in new destinations.
Given the kind of business the Group is engaged in, no capital expenditures have been incurred in Research and Development.
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consolidated financial statements 05
