NH Corporate Responsibility 2006 23 PART II. MANAGING CORPORATE RESPONSIBILITY 2006

General Shareholders Meeting 2006 General Shareholders Meeting 2006 4

4 NH Hoteles and shareholders Creating Sustainable Value All contact with our shareholders, individual, institutional and potential, are centralized through different channels from the Investor Relations Department. On the NH Hoteles website, the “Shareholder Information” section collects the latest news on the group, the calendar of relative events, information on Corporate Management and even a direct website link to the CNMV (Spanish Stock Exchange Supervisor). We at NH Hoteles have designed this section out of the requirement for transparency and courtesy that we owe our shareholders for the confidence they have placed in our management. Information obtained through this medium is clear, direct and practical, conditions we have marked from the beginning as an objective in our shareholder relations so that their view of the business would not be distorted or affected by high or low periods. The same section of our website contains the “Shareholders’ Corner”, where direct contact may be made with the department, via email or telephone, to discuss any question or request more information. Stock market analysts and investment funds are periodically called together though conference calls, as well, to broaden their knowledge of our economic movements and those in which they can actively participate at the time or else access hearings at which they were not present. The Investor Relations Department is constantly proactive in its communication with our investors by supplying them with company quarterly results and any other relevant information produced. NH Hoteles has quadrupled its size in fewer than seven years. This has meant a daily effort to pass on these corporate movements with maximum rigor to make our shareholders collaborators and participants in this growth strategy. NH Hoteles also promotes the active participation of potential shareholders by organising different road shows each year for financial analysts and investment groups along with conferences coordinated by financial intermediaries. In this way NH Hoteles introduces the company to the most important financial centres and then obtains an evaluation afterwards from the attendees on the information they received. This lets us continually improve our strategy on collaborating with present and with present and potential shareholders. The NHWorld program for special client service has an expanded version for our shareholders to help them feel even more a part of the company. When they access the services, they help us improve in the search for excellence in quality and detail. The Corporate Management Report for the 2006 year offers all the information on the company's economic activity during the past year along the same lines of transparency and truthfulness. OUR RESPONSIBILITY AS A BUSINESS IS TO CREATE VALUE FOR OUR SHAREHOLDERS, WHO FORM A KEY PUBLIC GROUP BEFORE WHOM WE MUST BE ACCOUNTABLE IN A TRUTHFUL AND TRANSPARENT MANNER. NH HOTELES BELIEVES IT HAS SHOWN ITS CREDIBILITY AS A QUOTED ENTITY WHEN THE INVESTOR BECOMES A STABLE SHAREHOLDER AND THUS BASES HIS RELATIONSHIP ON CONSTANT, COMPLETE AND AUTHENTIC COMMUNICATION. NH Corporate Responsibility 2006 25 Number of entities making analysis reports covered at the national level for NH Hoteles during the year Number of international entities making analysis reports covered for NH Hoteles during the year Number of telephone conferences attended by shareholders and investors Number of one-on-one meetings attended by shareholders and investors Number of analyst follow-up reports Number of institutional investor visits during the year 18 5 1,037 62 18 80 15 4 925 47 15 170 Indicators 2006 2005 Gabriele Burgio Executive President NH Hoteles

NH Prisma Madrid - Spain 5

5 NH Hoteles and Employees The Value of People In 2006 we have grown not only in the volume of business, number of hotels and rooms, but also in the number of people. One thousand four hundred eighty-seven new hires have been created as a result of the expansion plan in which the company is immersed. In this regard and of special interest is the detail on the creation of stable employment (indefinite hires) in Spain during 2006, with an 11.13% increase in indefinite contracts. Of those, it is important to point out that groups benefiting the most have been women and people over the age of 40, who make up a total of 56.7% and 40.5% of indefinite contracts respectively, followed by the hiring of young people and immigrants at 9.7% and 9.8% of the total. The group with the greatest increase in the creation of stable employment in 2006 has been immigrants, showing a hiring increase of  48.96% compared to 2005. AT NH HOTELES WE ARE CONVINCED THAT EMPLOYEES ARE THE MAIN PERFORMERS OF OUR CORPORATE RESPONSIBILITY. THEIR COMMITMENT LETS US CONTINUE TO OFFER OUR HIGHEST LEVEL OF SERVICES AND LIVE A PROCESS OF CONTINUOUS IMPROVEMENT. CONSEQUENTLY, WE MAKE BI-DIRECTIONAL INTERNAL COMMUNICATION A PRIORITY BY LISTENING TO WHAT OUR EMPLOYEES HAVE TO OFFER AND FOSTERING THEIR TRAINING, DEVELOPMENT AND DIRECT PARTICIPATION. NH Corporate Responsibility 2006 27 7.22% 19.73% 3.73% 8.92% 19.04% 27.11% 9.70% 10.11% • Mexico: 519   New Hires 27.11% • Austria, Switzerland, Hungary and Rumania: 119   New Hires 19.73% • Italy 28  New Hires 19.04% • Mercosur: 52  New Hires 9.70% • Germany: 244   New Hires 8.92% • Spain and Portugal: 411   New Hires 7.22% • Benelux / United Kingdom / Africa: 115   New Hires 3.73% • TOTAL JOBS CREATED IN 2006: 1,487      New Hires, representing 10.11% compared to the year before CREATION OF EMPLOYMENT IN 2006 BY BUSINESS UNIT CREATION OF STABLE EMPLOYMENT IN SPAIN AND PORTUGAL IN 2006 INDEFINITES 2005 2006 INCREASE TOTAL 3,667 4.075 11.14% YOUNG PEOPLE (25 OR YOUNGER) 333 395 18.65% WOMEN 2,021 2,310 14.32% 40 OR OLDER 1,480 1,652 11.66% IMMIGRANTS 268 400 48.96% INDEFINITE PERCENTAGES BY EMPLOYEE TYPE 2005 2006 INCREASE % YOUNG PEOPLE (25 OR YOUNGER) 9.1% 9.7% 6.76% % WOMEN 55.1% 56.7% 2.86% % 40 OR OLDER 40.3% 40.5% 0.47% % IMMIGRANTS 7.3% 9.8% 34.03%

NH Corporate Responsibility 2006 28 Internal Communication Communication with our employees begins at the time of their joining the company by giving them a Welcome DVD containing the values, culture and style of NH Hoteles. From then on the relationship starts to flow from both parties through the use of the most basic tool, the IntranHet, and its “Employee Mailbox”, where they can ask any question that will be answered within 72 hours. An internal study confirmed that only 37% of employees had access to the IntranHet, so in 2006 the Project PC Corner was initiated through which computers with Internet connection are being installed in some work centres. This lets employees who up to that time had no access to them use this method of internal communication together with access to the E-learning Lounge and employee portal, where internal vacancies are published. 2006 saw the project totally implemented in Europe (except for Spain, with 30% connectivity). Furthermore, in 2006 Internal Communication Managers at each hotel have been named, brining to 326 the total number of people who will make the communication job part of their regular work, just like each Business Unity Manager. These appointments have been positively evaluated by the employees, since they have eased bi-directional communication, and have been adapted to the needs of each work centre. Another of NH Hoteles’ initiatives, coordinated by the Internal Communications Department, is its Employee Club, which offers a host of special bargains and prices for NH Hoteles employees plus other employee benefits. In this last area, NH Hoteles tries to offer advantages in the use of products and services from other brands. A general line of activity involves seeing that each agreement signed with one of our suppliers also includes a bargain or discount for the NH Hoteles employees. All these advantages can be found at our employee portal (IntranHet) with details for each bargain and how to access it. At NH Hoteles we know that employee satisfaction directly influences the quality of the services we offer, which is why we send out Satisfaction Surveys once every 2 years so our employees can tell us their levels of motivation, involvement and suggestions for improvement. Employee Club (IntranHet) Welcome CD NH Hoteles Employee Mailbox

NH Corporate Responsibility 2006 29 The last edition took place in 2005. In 2006 it was repeated at the 30% of work centres with the least participation and/or satisfaction and by selecting those with the greatest potential for improvement. In the last survey, not only did the participation level rise (from 71.1% to 71.3%), but the satisfaction level of those surveyed rose, too, to a 2.08 level of satisfaction on a 3-point scale. Identification of the areas for improvement, the survey outcome, has resulted in the annual Action Plans at each Hotel / Business Unit and Corporate, with a pledge of quarterly follow-up of its level of implementation. Once the action plans are defined, they are included in the Management by Objectives (MBO) of the Hotel Directors and Department Heads. EVOLUTION SATISFACTION SURVEY RESULTS: NH World 2003 2005 2006 2.03 2.04 2.08 With 0 being the lowest and 3, the highest mark Questions showing the greatest satisfaction in 2006 are those on the Employee Card, the “Bono Amigo” and special employee pricing, respect in the work environment for cultural, racial, sexual, age, and other differences, and employees' involvement in improving client satisfaction. As we have noted, we understand the areas with the lowest ratings to be opportunities for improvement through action plans. But we take great pride in the fact that the turnover rate is 13.6%, much below the industry average of around 20%, due to having satisfied employees. This last piece of information encourages us to continue improving the job climate, which puts us ahead in identifying present and future needs. In this way we measure the ratings the employees give for the company and their jobs, and we are able to discern areas for improvement. These surveys also provide suggestions and actions to set in motion for client satisfaction itself. Following the surveys we began fostering employee participation in business development through the NH Hoteles Idea Program. Here employees generate new ideas about specific matters posed to them. Two hundred and sixteen new ideas have been collected this way, and the 20 best were rewarded. One of this program’s results has been the Breakfast Kit, designed for our clients’ children and a big success among both parents and children, or the placement of lifters under the beds to prevent injuries to the housekeepers. This program’s great reception and usefulness has promoted inclusion of the concept of employee participation into Project Quality Focus, which tries to maximise positive experiences through the perception of employees and clients, using their ratings and suggestions in a continuous process of quality improvement. Our employees’ experiences let us improve our services and products. In 2006 we began the “Anecdote Contest”, in which between October and December we collected all the anecdotes employees have experienced at our hotels and wanted to share. NH UNIVERSITY One of our employees’ most important satisfaction points is the promotion of their training and professional development. At NH Hoteles we are aware of this, and so NH University was created in 1996. It is the first corporate university in the hotel industry for the purpose of supporting and collaborating to achieve corporate objectives: transforming the chain’s mission and values into concrete action by working together in the introduction and development of new work systems, processes and tools, by accelerating and facilitating the continuous evolution of the company and by maintaining the "living flame" of commitment and pride in the people who make up the organisation. Over the course of more than 10 years, NH University is professionally handling training, both internal and external, while having to exceed the high quality standards year after year required by and agreed to with different NHU Steering Committees at each Business Unit. NH University Training for Management Employees

Every year an NH Hoteles Corporate Training Plan is set up with objectives and a global view. Corporate training programs common to all Business Units are designed with custom programs designed to satisfy the specific training needs of each Unit. The total training investment made in 2006 was €2.37M, with a per- employee investment of €154.85. Not included in these investment data are the costs of lodging, food and unworked hours. The Corporate Programs are needed to achieve the incorporation of practices, policies and procedures. They have thus become a valid tool to blend how things are done, differentiate ourselves from the competition and reinforce our idea of quality and service orientation to be a step ahead of the client's needs. At the present time NH University is structured on 8 NHU Campuses. In 2006 the one in Benelux/UK, which is common to Holland, Belgium, Luxemburg and the United Kingdom, was reactivated. In addition, a few years ago the new NH University Learning Lounge campus got underway, through which we offer on-line training designed to overcome physical distances and favour flex time (totalling 5% over the total hours of training received). Listing of Training Given at Hotels and Central Services (SC) Grouped by Duty Areas and Worldwide at Hotels and Service Centres: The participation of internal trainers in NH University programs helps us make possible the offering of “100% NH Hoteles training” year after year. Thanks to the efforts of 162 internal trainers of all nationalities, NH University is making our company more competitive every day by its ever more prepared and motivated professionals. Specifically, internal training focuses on blending the philosophy of “Excellence in Client Service” and is a key instrument in incorporating new Business Units and employees who continue to join us in this process of expansion and integration. To accelerate this process, NH University has designed an NH Hoteles Welcome Plan. It involves the first contact of new entrants into the NH Hoteles world with the goal of generating pride in belonging to the organisation, excitement about joining a big multi-national company, passion for detail and transferral of the values and essence of what makes the NH Hoteles spirit. If we include these results with the distribution of training data by type and ages, we find the following results worldwide: NH Corporate Responsibility 2006 30 • 8% Administration • 28% F&B • 7% Sales • 6% Maintenance • 6% Management • 21% Front Office • 15% Housekeeping • 7% SSCC • 2% Others 7% 2% 8% 28% 7% 6% 6% 21% 15% • 18% Less than 25 years old •  70% Between 25 and 45 years old • 12% More than 45 years old 18% 70% 12% 48% 52% • 52% Women •  48% Men

In 2006 NH University provided more than 180,000 hours of training. Its goal centres on truly identifying needs in line with the company’s strategy by working together with attractive training methods on employee understanding and participation in achieving the NH Hoteles corporate goals. Continuous training through high quality levels then becomes its daily goal. An important part of the training is achieved in dynamic classrooms where the employee/student must participate actively and, in other instances, training is moved to specific rooms and open spaces that notably help assimilate different concepts. NH Corporate Responsibility 2006 31 Internal/External Business Unit Nº hours Nº participants External BU Benelux/UK 8,208.50 1,036 BU Germany 15,473.00 1,821 BU Headquarters 3,965.50 212 BU Italy BU Mercosur 12,296.00 1,433 BU Mexico/Cuba 21,881.50 2,968 BU Sotogrande 631.00 128 BU Spain & Portugal 45,235.00 1,635 BU SwAHR 3,875.00 516 Total External 111,565.50 9,749 Internal BU Benelux/UK 1,571.00 288 BU Germany 9,167.50 1,124 BU Headquarters 757.00 73 BU Italy 3,943.00 66 BU Mercosur 8,184.00 750 BU Mexico/Cuba 20,177.50 2,380 BU Sotogrande 400.00 14 BU Spain & Portugal 14,647.50 718 BU SwAHR 2,251.00 301 Total Internal 61,098.50 5,714 E-learning BU Benelux/UK 559.50 47 BU Germany 509.90 41 BU Headquarters 168.32 21 BU Italy 497.65 12 BU Mercosur 132.60 10 BU Mexico/Cuba 1,878.31 117 BU Sotogrande 24.00 1 BU Spain & Portugal 4,235.59 318 BU SwAHR 44.37 12 Total E-learning 8,050.23 579 Total 180,714.23 16,042 Nº of Hours / FTE’s 11.27

By following the “Back to Basics” corporate strategy, several training initiatives have been developed, among which we should highlight: •  Back-to-Basics Corporate Programs: “Excellence in Client Service” and “Client Focus” •  Preparation for Back-to-Basics Corporate Programs: “Quality Focus” and “Quality through People” •  Campaigns on Service Principles (One Pagers) •  “The 6 Steps for Rational Use of Natural Resources” Program •  Immersion in Operations of Service Centres Personnel •  Fast Good Training Openings •  Nhube International Convention •  New Openings strategic training at BU Italy to transmit the know-how and way of working characteristic of NH Hoteles •  NH Talent Scout (Internship) at BU Germany •  NH Estafette (Sales) at 7 BU Benelux/UK •  Training and Integration at NH Cuba: Spirit, Management & Supervision with Passion and Back to Basics •  Teacher Training at Hotel Schools in the Community of Madrid (CAM) Another program in the “Back to Basics” framework is the Immersion in Operations, allowing all employees from service centres, beginning with the Corporate Directors, to get a close up, real view of the work done by other companions at NH Hoteles. Over several workdays, the participating employees in this training accompany other companions in their daily tasks, combining it with theoretical training about the job. When training is completed the experience is rated and suggestions for improvement requested in each area. Internal Development and Talent Management NH Hoteles has always been committed to the development of its internal employees. Talent development has come to play an especially important role when faced with NH Hoteles’ growth strategy. The need to proactively identify and develop a reservoir of professionals who will ensure leadership and succession at the company in the medium and long term has become one of the goals of our Human Resources Department. Because of this every year NH University forms a new reservoir of high potentials in the Internal Development Program (PDI) with an eye towards acquiring a global, strategic view of the different areas in the chain and developing their abilities as future managers. In 2006 we launched a new version of the PDI (TalenHt Management) at the international level that covers different specialisations: Operations, Sales, Leisure and Food and Beverages. The common portion of this program has been coordinated simultaneously in 3 languages (English, Spanish and German) in Holland, Spain and Germany, respectively. Finally, during the closing international convention at year's end, all the members from the different countries had the chance to share strategy with General and Corporate Managements at the International Conference for TalenHt Management, where they got to know first hand the strategy to follow in coming years. In 2007 we foresee giving this program in Italian, for which a careful identification of talented personnel has been made for their participation in the program, set to begin in May of 2007. NH University thus tries to respond proactively to future needs of the company. Thanks to this program, in 2006 we identified a total of 62 “top talents” from 14 countries to whom we gave 22,952 hours of training distributed among various modules and duty specialties. This program ties in with NH Hoteles’ priority to provide internal training. It has become a reality, given that more than 90% of the appointments to Hotel Director in the chain are PDI participants, proving the success of this program and that NH Hoteles is committed to its internal employees’ development. NH Hoteles also has a commitment to collaborating with Universities and Schools of Tourism, Professional Training Centres from all countries and regions where we have a presence and which train our potential collaborators.   NH Corporate Responsibility 2006 32

In fact, we are following a scholarship program in practice with these institutions, a program in which we firmly believe, as shown by the fact that more than 60% of recipients are finally incorporated into the staff. In Spain’s case, 750 students have developed their practice programs throughout the year and internationally, 1,450 students in practicum in 2006. Another example of our training policy and the confidence we place in the talent of our young apprentices is the initiative taken 3 years ago at the Business Unit in Germany: NH Talent Scout. The goal of this project is to improve training and development of the industry's future professionals. More than 600 scholarship recipients came to this last edition, of whom 50 were finalists and many of whom were hired at NH Hoteles. The finalists participated in the NH Career Centre project, where they ended their professional training to join our staff. Besides collaboration with the Universities and Schools insofar as Scholarship Programs, another proof of these close relationships is the presence of the chain’s General Director of Operations as a member of the Advisory Council of the prestigious Advanced School of Tourism in Glion (Switzerland) since May of 2006. In 2005 this School created an “NH Hoteles Classroom” as a complement for its students who were learning about managing a hotel chain. We have reached agreement with the San Roque (Cadiz) City Hall to award scholarships to 12 of the attendees at the courses at the Sotogrande Golf Training Centre. The courses taught at the NH Sotogrande Hotel and the Sotogrande Golf Academy are designed to train and hire young residents of the area for different job opportunities offered by the world of golf and that need certain specialisation. NH Corporate Responsibility 2006 33 NH Talent Scout NH Hoteles Employees