NH Hoteles

NH Consolidated financial statements 2006 30 8 TANGIBLE FIXED ASSETS Shown below are the breakdown and the movements in the different tangible fixed asset accounts in 2006 and 2005 (thousands of euros): In 2006 and 2005 the column “Change in scope of consolidation” records the effect of the inclusion/retirement of tangible fixed assets of certain companies that were included/excluded in the consolidated group during each of these years (see Note 2.4.6). The column “Translation differences” records the effect of the change in the exchange rate used for translating the different tangible fixed asset captions. The most significant movements in this item during 2006 and 2005 are as follows: i) The most significant additions in tangible fixed assets during 2006 and 2005, analysed by business unit, were as follows: Worthy of note for 2005 were the renovation of the hotels NH Calderón (5.3 million euros) and NH Numancia (4.6 million euros), both in Barcelona, the NH Central de Convenciones hotel (4.7 million euros) in Seville, the NH Almenara hotel (5.6 million euros) in Sotogrande (Cadiz) and the NH Vienna Airport hotel(4.7 million euros) in Vienna. Change in Change in Balance at scope of Translation Balance at scope of Translation Balance at 01.01.05 consolidation differences Additions Disposals 31.12.05 consolidation differences Additions Disposals 31.12.06 COST Land and buildings 1,207,315 755 27,233 19,004 (14,166) 1,240,141 22,754 (60,738) 22,160 (11,541) 1,212,776 Technical plant and equipment 345,946 (215) 5,027 36,866 (1,621) 386,003 (355) (13,509) 45,812 (3,584) 414,367 Other plan, tools and furniture 256,025 (249) 3,985 21,887 (3,638) 278,010 2,061 (4,266) 31,466 (122) 307,149 Other tangible fixed assets 20,238 (223) 2,017 11,449 - 33,481 (117) (307) 9,168 (500) 41,725 Fixed assets in progress 25,835 32 239 32,235 (21,817) 36,524 13,409 (1,377) 11,091 (18,815) 40,832 1,855,359 100 38,501 121,441 (41,242) 1,974,159 37,752 (80,197) 119,697 (34,562) 2,016,849 ACCUMULATED DEPRECIATION Technical plant and equipment (111,860) 275 (7,817) (13,072) 1,764 (130,710) 1,152 23,826 (11,140) 2,941 (113,931) Other plan, tools and furniture (160,748) 271 (704) (17,772) 1,540 (177,413) 2,758 9,729 (26,263) 700 (190,489) Other tangible fixed assets (145,419) 100 (2,343) (25,950) 2,065 (171,547) 1,461 329 (21,069) 56 (190,770) Fixed assets in progress (12,083) 219 (1,924) (3,524) - (17,312) 12 1,892 (2,418) 425 (17,401) (430,110) 865 (12,788) (60,318) 5,369 (496,982) 5,383 35,776 (60,890) 4,122 (512,591) Provisions (67,675) - (1,111) (799) 722 (68,863) - 422 (10,588) 8,415 (70,614) NET BOOK VALUE 1,357,574 1,408,314 1,433,644 2006 2005 Spain 45,305 48,173 Benelux 16,379 13,402 Germany 14,425 16,012 Italy 5,684 - Switzerland 7,450 - Latin America 29,949 21,041 Rest of Europe 505 996 Total 119,697 99,624

NH Consolidated financial statements 2006 31 Euros 000s Country Book value Fair value Value impairment Effect on Reserves Germany 2,609 2,147 (462) 462 Belgium 16,889 14,400 (2,489) 1,742 The Netherlands 47,304 35,593 (11,711) 8,198 South Africa 881 422 (459) 321 Total 67,683 52,562 (15,121) 10,723 Euros 000s Country Book Value Fair Value Provision Effect on reserves Attributable to minority interests Germany 9,472 - (9,472) 6,579 - Belgium 2,195 832 (1,363) 954 - Spain 16,299 2,344 (13,955) 11,416 1,123 The Netherlands 47,248 29,555 (17,693) 12,385 - South Africa 1,634 - (1,634) 1,144 - Uruguay 7,189 3,146 (4,043) 3,645 113 Mexico 63,636 59,389 (4,247) 4,206 41 Brazil 8,022 4,936 (3,086) - - Total 155,695 100,202 (55,493) 40,329 1,277 Also, the most significant additions in 2006 were the renovation of the hotels NH Calderón (3.5 million euros) in Barcelona and Nhow Milano (5.4 million euros) in Milano, the extension of NH City hotel (9.2 million euros) in Buenos Aires, the investment made in NH Santa Fe hotel (5.3 million euros) in México D.F. and the refurbishment of several Fast Good restaurants (4.3 million euros). All the other additions in these two years are capital expenditures at different hotels for amounts of less than 3.5 million euros. ii) The most significant retirements in 2005 were, for the most part for land and buildings, technical plant and/or furniture of the NH Sport and NH Orus Hotels (4.6 million euros) in Zaragoza. The most significant retirements in 2006 were fittings and furniture of the NH Frankfurt Raunheim (1.4 million euros) in Frankfurt. As at 31 December 2006, there were tangible fixed assets acquired under finance leases totalling 2,579 thousand euros in cost and 587 thousand euros in accumulated depreciation (1,682 thousand euros in cost and 418 thousand euros in accumulated depreciation in 2005). As at 31 December 2005, the main asset under a finance lease was the furniture in the NH Príncipe de la Paz Hotel, in Aranjuez (Spain). Set out below is a breakdown, as at 31 December 2006, of the tangible fixed assets of the Group where an impairment of value has been detected. Provision attributed to land: Provision assigned to other fixed assets: The Group has contracted insurance policies to cover against the exposure to risk of its different tangible fixed assets, as well as against any claims that may be brought against it for carrying on its business. These policies are deemed to provide sufficient cover for the risk exposure of these assets.

NH Consolidated financial statements 2006 32 9 HOLDINGS IN ASSOCIATED COMPANIES Shown below is the breakdown as at 31 December 2006 and 2005 of the holdings in companies consolidated using the equity method (in thousands of euros): The Group's holding in Jolly Hotels, S.p.a. includes a positive difference on consolidation of approximately 21 million euros, which can be allocated to the assets of this company. On 11 November 2006 a “Framework Agreement” was signed by NH Italia, S.r.l., Joker Partecipazioni, S.r.l. and Banca Intesa, S.p.a. (today Banca Intesa Sanpaolo, S.p.a.), companies with respective holdings of 20%, 50.05% and 4.42% in the share capital of Jolly Hotels, S.p.a. for the purpose of controlling no less than 74.47% of the share capital of Jolly Hotels, S.p.a through a newly created vehicle, Grande Jolly, S.p.a., and for the latter to launch a tender offer for the rest of the share capital. The effectiveness of that agreement is subject, as condition precedent, among others, to its approval by Italian antitrust authorities. Said approval had not yet been given as of 1 February 2007. In addition, at 31 December 2006 the Company neither held the majority of the representative and decision-making bodies of Jolly Hotels, S.p.a., nor had the capacity to control or direct the financial and operating policies of the said company (NH Hoteles, S.A. was represented on the Board of Directors of Jolly Hotels, S.p.a. at year-end 2006 by one Director out of a total of ten). Therefore, at 31 December 2006 the Parent Company had only consolidated using the equity method the 20% interest it held in Jolly Hotels, S.p.a. through NH Italia, S.r.l. Net balance Profit (loss) Net balance Translation Profit (loss) Net balance at 31.12.04 Additions Retirements 2005 at 31.12.05 Additions Retirements differences 2006 at 31.12.06 Jolly Hotels, S.p.a. (*) 36,075 - (1,225) (232) 34,618 131 - - 747 35,496 Palacio de la Merced, S.A. 739 376 - (38) 1,077 - - - 38 1,115 Fonfir1, S.L. 20 - - - 20 - - - - 20 Harrington Hall Hotel, Ltd. (**) - 1,259 - (379) 880 - - - 485 1,365 Caribe Puerto Morelos, S.A. de C.V. (**) - 16,552 - - 16,552 12,492 - - - 29,044 Corporación Hotelera Dominicana, S.A. (**) - 33,268 - - 33,268 702 (16,707) (1,770) - 15,493 Corporación Hotelera Oriental, S.A. (**) - 4,121 - - 4,121 68 (2,060) (224) - 1,905 Promociones Marina Morelos, S.A. de C.V. (**) - 2,192 - - 2,192 2,611 - - - 4,803 Losan Investment, Ltd. (**) - - - - - 2,192 - - - 2,192 36,834 57,768 (1,225) (649) 92,728 18,196 (18,767) (1,994) 1,270 91,433 (*) Records the audited net equity for 2005 and an estimate of profit (loss) for 2006. (**) See Note 2.4.6

NH Consolidated financial statements 2006 33 10 LONG-TERM FINANCIAL INVESTMENTS 10.1 Loans and accounts receivable not available for trading Set out below is the composition of this heading as at 31 December 2006 and 2005 (in thousands of euros): The line “Call and put options for Jolly Hotels operation” records the value of a series of contracts providing purchase options for the benefit of NH Italia, S.r.l. and sale options for the benefit of Joker Partecipazioni, S.r.l. and Banca Intesa, S.p.a. (today Banca Intesa Sanpaolo, S.p.a.), which were signed within the framework of the operation to acquire control of Jolly Hotels, S.p.a. on 29 November 2006, for the purpose of arranging the gradual transfer to the NH Hoteles Group of the stakes held by the aforesaid companies at that date in Jolly Hotels, S.p.a., which would give the Group control of 74.47% of the share capital of Jolly Hotels, S.p.a. The compensation is recorded on the balance sheet under the “Other long-term liabilities” heading in the same amount (see Note 18). The main features of the contracts are as follows: - Put option for the benefit of Joker Partecipazioni, S.r.l. and call option for the benefit of NH Italia, S.r.l., for the purpose of transferring to NH Italia, S.r.l. or to Grande Jolly, S.r.l., at the discretion of NH Hoteles Group, the residual holding of 24.35% in the Jolly Hotels, S.p.a. share capital (after Joker Partecipazioni, S.r.l. has transferred the other 25.7% it holds in Jolly Hotels, S.p.a. over the course of June and July 2007). The time limit for exercising the sale option runs from 1 June 2007 to 31 December 2009. The call option for the benefit of NH Italia, S.r.l. or Grande Jolly, S.r.l. will be exercisable during the following six months after the expiration of the time limit for exercising the put option. The amount of the option, valued at 25 euros per share, totals 121.76 million euros. - Put option for the benefit of Banca Intesa, S.p.a. (today Banca Intesa Sanpaolo, S.p.a.) and call option for the benefit of Grande Jolly, S.r.l., for the purpose of transferring to Grande Jolly, S.r.l. the 4.42% equity stake held by Banca Intesa, S.p.a. in Jolly Hotels, S.p.a. The time limit for exercising the put option runs from liquidation date of the tender offer for the capital not controlled by the parties or from 30 September 2007 (if earlier) to 31 October 2007. The call option exercise period starts on 1 November 2007 and finish on 30 November 2007. The amount of the option, valued at 25 euros per share, totals 22.11 million euros. - Put option for the benefit of Joker Partecipazioni, S.r.l. and call option for the benefit of NH Italia, S.r.l., where under Joker Partecipazioni, S.r.l. transfers to NH Italia, S.r.l. the 42% interest it holds in Grande Jolly, S.r.l., (after having transferred 25.7% between June and July of 2007 and having exercised the preceding option over the remaining 24.35%). The time limit for exercising the put option runs from 1 June 2007 to 31 December 2010. The call option for the benefit of NH Italia, S.r.l. will be exercisable during the following six months after the expiration of the time limit for exercising the put option. The amount of the option will be conditional on the way in which Joker Partecipazioni, S.r.l. has transferred to the NH Group the 25.7% tranche of Jolly Hotels, S.p.a. If done by means of a sale-purchase and successive capital increase, the option is for 87.39 million euros, and if the transfer is done by means of a non-cash capital increase, the option will be worth 133.54 million euros. The option is carried at the latter value. The line “Subordinated loans granted to companies owing hotels buildings operated by the Group under lease agreements” records a series of loans granted by NH Hoteles Group to different companies owning hotel buildings in different countries like Germany, Austria and Luxemburg, which are operated by the Group under lease agreements. From a total amount of 57.78 million euros recorded as at 31 December 2006, 56.27 million euros are related to subordinated loans granted to owners of hotels located in Germany and Austria, which rents has been refinanced. 2006 2005 Call and put options for the Jolly Hotels operation (Note 18) 277,405 - Subordinated loans granted to companies owing hotel buildings operated by the Group under lease agreements 57,782 51,657 Loans to staff 14,720 14,320 Residencial Marlin, S.L. loan (Note 18) 9,000 9,000 Advance lease payments 5,766 5,964 Project advances 3,500 375 Los Alcornoques de Sotogrande, S.L. loan (Note 18) 1,400 - Harrington Hall, Ltd. loan 2,250 2,250 Golden Tulip Worldwide, BV loan 1,823 1,923 Long-term deposits and guarantee deposits 12,537 7,567 Other 11,268 1,425 397,451 94,481

NH Consolidated financial statements 2006 34 This rent refinancing operation that has had the following effects on the Group: - A lease cost saving of 6.29 million euros in 2006 and 2005. - The rents of these hotels are not pegged to inflation or to any other index. - These subordinated loans accrue interest at a fixed rate of 3% per annum (1.6 million euros for 2006 and 1.5 million euros the previous year). - The new rent agreements provide for call options for the buildings leased under the contracts, which may be exercised, as a general rule, on the tenth and fifteenth anniversaries as from when they come into force. - These rent agreements have been considered as operating leases, based on the assessment of two independent experts of recognised prestige. The positive difference between the market value, being this the purchase price due to the proximity of the building purchasing transactions and the price at which it is estimated these rights may be exercised amounts, as at 31 December 2006, to approximately 6.07 million euros (1.02 million euros at 31 December one year earlier). The caption “Loans to staff” includes the loans made to senior managers who joined the Group in order to buy shares in the Parent Company, for a total of 14.32 million euros as at 31 December 2006 and 2005. Those loans are appropriately secured and mature in January 2007, and the borrower may extend the maturity date annually until 9 January 2008. As at the date these consolidated annual accounts were drawn up, all the borrowers had exercised their right to extend the loans. In addition, at 31 December 2006 a loan is recorded that was granted to a Group executive in the amount of 0.4 million euros, which accrues interest rate at the 1-year Euribor and whose repayment is tied to his variable compensation and to exercise of the Rights of the Compensation Plan based on share price to which he is entitled. The lines “Residencial Marlin, S.L. loan” and “Los Alcornoques de Sotogrande, S.L. loan” record the proportional part of the subordinated participating loans granted to said companies by Sotogrande, S.A. to acquire the “Ribera del Marlin” plots (see Note 18). The line “Advance lease payments” record advances paid to the owners of certain hotels that are operated under leases so that said owners could buy decoration items and furniture. They are discounted from future lease payments. The line “Project advances” records, as at 31 December 2006, the advance paid by the Parent Company to the company Tourist Ferry Boat, S.r.l. (former owner of the Framon hotels chain), in respect of the concession the said company was awarded by the Amalfi municipal government to restore the Gran Hotel Convento de Amalfi, which will be transferred to the NH Group once the relevant processing has been completed with the authorities for the change of owner. The line “Harrington Hall Hotel, Ltd. loan” records the subordinated loan granted by the NH Hoteles Group to the company Harrington Hall Hotel, Ltd. for the purpose of refinancing the acquired company's prior financial debt. The line “Golden Tulip Worldwide, BV loan” records the account receivable from that company in respect of the assignment of the Golden Tulip trademark, previously bought by the NH Group in the Krasnapolsky chain acquisition, to the former owner. Set out below is the breakdown of the various loans by maturity and interest rate: Maturity Average Balance at interest 31/12/06 2007 2008 2009 2010 2011 Other rate Subordinated loans granted to companies owing hotel buildings operated by the Group under lease agreements 57,782 - - - - - 57,782 3% Residencial Marlin, S.L. loan* 9,000 9,000 - - - - - 2.85% Advance lease payments 3,500 - 3,500 - - - - N/A Harrington Hall, Ltd. loan 2,250 - - - 112 112 2,026 5.70% Golden Tulip Worldwide, BV loan 1,823 380 380 380 380 303 - 3% Los Alcornoques de Sotogrande, S.L. loan 1,400 - - 1,400 - - - 3.75% Total 75,755 9,380 3,880 1,780 492 415 59,808 * The Directors of the Parent Company planned to extend the loan at its maturity.

NH Consolidated financial statements 2006 35 10.2 Other long-term financial investments Set out below is a breakdown of this caption as at 31 December 2006 and 2005: 10.2.1 Long-term securities portfolio Shown below is a breakdown of corporate holdings stated at cost: On 28 July 2006 the Group acquired through Sotogrande, S.A. 50% of the share capital of Desarrollos Isla Blanca, S.L. for 25 million dollars. This investee company is 50% owned by the Mexican company Desarrollos Inmobiliarios del Caribe, S.A. de C.V., owner of 220 hectares in the town of Isla Mujeres where a tourism real estate project is to be carried out once the Urban Development Plan currently being processed is approved. Notwithstanding the above, if the building rights finally approved are lower than initially set, Sotogrande, S.A. has the right to continue the project or to sell its share to the seller at the acquisition price plus the interest accrued to the return date at a interest rate equal to the Libor plus 100 basis points. On 27 December 2006 the Group acquired the company NH Finance, S.A., whose main business is financing Group companies. This company has not been included in the scope of consolidation because its main business had not yet begun as at 31 December 2006. On 23 June 2006 a 12% stake was acquired in the company Varallo Comercial, S.A., owner of two properties located in La Altagracia (Dominican Republic), on which there are plans to build two hotel complexes (one of 660 rooms and the other of 375 rooms) that will be operated by NH Hoteles. The result of the transaction was not significant. 10.2.2 Traded financial assets As at 31 December 2006 and 2005, the NH Hoteles Group had a number of interest-rate derivative contracts, which originally hedged a syndicated credit facility that was cancelled in 2004 and have therefore not been described as hedges. The fair value of these derivatives as at 31 December 2006 amounted to 1.19 million euros (4.09 million euros in 2005, some 0.68 million euros of which were due to mature short-term), of which 0.01 million euros are classified as short term (see Note 13.2). In addition, at 31 December 2006 the Company also maintained various currency derivative contracts which have not been qualified as hedges, for a total of 0.13 million euros (see Note 19). The Parent Company also has an equity swap to hedge the obligations arising under the Compensation Plan based on share price designed for certain specific employees of the NH Hoteles Group (see Note 4.15). The fair value of the equity swap, as at 31 December 2006, amounted to 16.09 million euros (12.79 million euros in 2005) (see Note 20). 2006 2005 Holdings stated at cost 28,463 6,239 Traded financial assets 17,402 16,197 45,865 22,436 Company Address 31.12.06 31.12.05 Desarrollos Isla Blanca, S.L. Mexico 19,532 - Parque Temático de Madrid, S.A. Spain 8,789 8,789 NH Finance, S.A. Luxembourg 2,623 - Varallo Comercial, S.A. Dom. Rep. 2,174 - Hanuman Investment, S.L. Spain 2,162 2,162 Donnafugata Resort, S.R.L. (Note 2.4.6) Italy - 2,700 Other investments 2,254 1,659 Parque Temático de Madrid provision (8,789) (8,789) Other provisions (282) (282) 28,463 6,239