Consolidated Financial Statements - Logo NH Hoteles - NH Hotels

Consolidated
Financial
Statements
2006

Consolidated Financial Statements
2006

“nhube” at NH Central Convenciones
Seville - Spain

Index
CONSOLIDATED MANAGEMENT REPORT 7
CONSOLIDATED BALANCE SHEETS 12
CONSOLIDATED PROFIT AND LOSS ACCOUNTS 14
STATEMENTS OF CHANGES IN CONSOLIDATED NET EQUITY 15
CONSOLIDATED CASH FLOW STATEMENTS 16
NH HOTELES, S.A. AND DEPENDENT COMPANIES NOTES TO
THE CONSOLIDATED ANNUAL ACCOUNTS FOR 2006 17
1. ACTIVITY AND STRUCTURE OF THE PARENT COMPANY 17
2. BASIS OF PRESENTATION OF THE CONSOLIDATED ANNUAL ACCOUNTS
AND CONSOLIDATION PRINCIPLES 17
2.1 Basis of presentation of the annual accounts 17
2.2 Currency of presentation 18
2.3 Responsibility for information, estimates made and sources of uncertainty 18
2.4 Consolidation principles used 18
3. DISTRIBUTION OF NET RESULT 21
4. ACCOUNTING POLICIES 22
4.1 Tangible fixed assets 22
4.2 Goodwill on consolidation 22
4.3 Intangible assets 23
4.4 Impairment in value of tangible and intangible assets not including goodwill 23
4.5 Leases 24
4.6 Financial instruments 24
4.7 Inventories 25
4.8 Transactions and balances denominated in foreign currencies 25
4.9 Classifying financial assets and debts as current and long-term 25
4.10 Income and expense 26
4.11 Official grants 26
4.12 Corporation tax 26
4.13 Commitments to staff 26
4.14 Onerous contracts 26
4.15 Compensation Plans based on share price 27
4.16 Own shares held as treasury stock 27
4.17 Environmental policy 27
4.18 Consolidated cash flow statements 27
5. EARNINGS PER SHARE 28
6. GOODWILL 28
7. INTANGIBLE ASSETS 29
7.1 Rights of beneficial use 29
7.2 Lease premiums 29
7.3 Software 29
8. TANGIBLE FIXED ASSETS 30
9. HOLDINGS IN ASSOCIATED COMPANIES 32

10. LONG-TERM FINANCIAL INVESTMENTS 33
10.1 Loans and accounts receivable not available for trading 33
10.2 Other long-term financial investments 35
11. INVENTORIES 36
12. TRADE DEBTORS 36
13. SHORT-TERM FINANCIAL INVESTMENTS 37
13.1 Financial investments at maturity 37
13.2 Traded financial assets 37
14. CASH AND BANKS AND OTHER CASH EQUIVALENTS 37
15. NET EQUITY 37
15.1 Subscribed capital stock 37
15.2 Reserves of the Parent Company 39
15.3 Reserves of subsidiaries 39
15.4 Equity valuation adjustments 40
15.5 Own shares 40
15.6 Minority interests 40
16. DEBTS TO CREDIT INSTITUTIONS 41
17. CREDITORS UNDER FINANCE LEASES 44
18. OTHER LONG-TERM LIABILITIES 45
19. FINANCIAL DERIVATIVES 46
20. PROVISIONS FOR LIABILITIES AND CHARGES 48
21. TAX MATTERS 49
22. TRADE CREDITORS 53
23. OTHER CURRENT LIABILITIES 53
24. GUARANTEES GIVEN TO THIRD PARTIES AND CONTINGENT LIABILITIES 53
25. INCOME AND EXPENSES 55
25.1 Income 55
25.2 Financial income 56
25.3 Staff costs 57
25.4 Other operating expenses 57
25.5 Operating leases 58
25.6 Financial expenses 58
26. INFORMATION BY SEGMENT 58
26.1 Information on main segments 59
26.2 Information on secondary segments 60
27. REMUNERATION AND OTHER DECLARATIONS OF THE BOARD OF DIRECTORS
AND SENIOR MANAGEMENT 60
27.1 Remuneration of the Board of Directors 60
27.2 Senior management remuneration 60
27.3 Details of participation by the Directors in similar businesses and pursuit of similar
activities for their own account or the account of others 61
28. POST-BALANCE SHEET EVENTS 61
29. INFORMATION ABOUT ENVIRONMENTAL POLICY 62
30. EXPLANATION ADDED FOR TRANSLATION TO ENGLISH 62
APPENDIX I: DEPENDENT COMPANIES 63
APPENDIX II: JOINT VENTURES 65
APPENDIX III: ASSOCIATED COMPANIES 65

Consolidated Financial Statements
CONSOLIDATED MANAGEMENT REPORT
In 2006 NH Hoteles continued to strengthen its presence in the medium city hotel segment through sustained organic growth
and the signing of two agreements that have consolidated its position in the Italian market; one with Tourist Ferry Boat, S.r.l. for
the acquisition of the Framon chain, and one with Joker Partecipazione, S.r.l. and Banca Intesa, S.p.a. (today Banca Intesa
Sanpaolo, S.p.a.) to acquire no less than 74.47% of Jolly Hotels, S.p.a.
As regards organic growth, in 2006 some 15 hotels were opened with 2,486 rooms and projects were signed for a further 3,911
rooms. These projects are in countries where NH Hoteles already has a strong presence (Spain, Netherlands and Germany) and
in those where its presence is scanty (Eastern Europe and the UK).
As a result of the agreement with Tourist Ferry Boat, S.r.l. (TFB), a joint venture have been created (75% NH Italia 25% TFB) to
which NH Hoteles contributes the assets held to date in the Italian market and TFB contributes fifteen hotels operated under the
“Framon” brand and four projects under development, of which twelve are located in Sicily and seven in the Italian cities of
Rome, Genoa, Venice, Florence, Padova and Amalfi. As a result of this operation, the Group operates a total of 1,807 new rooms
all in the Italian market.
Of greater significance is the agreement with Joker Partecipazione, S.r.l. and Banca Intesa, S.p.a. (today Banca Intesa Sanpaolo,
S.p.a.) to assume majority control of Jolly Hoteles, S.p.a.; a listed company with 45 hotels, 38 located in Italy and 7 abroad. This
deal consolidates NH Hoteles’ position as the leading chain on the Italian market with an additional 5,863 rooms to those
previously operated in Italy. This acquisition also enables NH Hoteles to consolidate its position in markets where it was already
present (Netherlands, Germany, Belgium and the UK) and to enter other international markets where it was not present such as
Paris and New York.
When this deal is concluded, NH Hoteles will be present in 21 countries, with 334 hotels and 48,502 rooms, of which 27% are
owned, 57% leased (8% with a purchase option) and 16% under management. Contracts have also been signed for 31 projects
and a total of 5,907 rooms.
The purchase of minority shareholdings begun in 2005 was concluded in 2006 with the purchase via the exchange of NH Hoteles,
S.A. shares of the shareholdings that Equity International Properties, Ltd. held in Latinoamericana de Gestión Hotelera, S.A. and
the conclusion of the takeover of those shares of Sotogrande, S.A. not controlled by the Group at the time of the takeover.
As a result of the operations described above, two capital increases have been approved and subscribed in NH Hoteles: one to
acquire the shareholding held by Equity International Properties, Ltd. in Latinoamericana de Gestión Hotelera, S.A. for a total of
57.38 million euros through the issuance of 4,250,000 new shares, and another to exchange for shares of Sotogrande, S.A. held
by minority shareholders subscribing to the takeover, for a total amount of 101.6 million euros, through the issuance of 7,815,589
new shares.
With the conclusion of the takeover, NH Hoteles owned 97.72% of Sotogrande and the Group has begun to reorganise the
company’s assets. Real estate projects previously owned by NH Hoteles have been transferred to Sotogrande (for example the
Cap Cana development) and other, non real estate assets have been transferred to NH Hoteles (such as the NH Alanda and NH
Marbella hotels and the company Gran Círculo de Madrid, S.A.) converting Sotogrande in a purely real estate operator.
In addition to these two capital increases, in November 2006 the Board of NH Hoteles approved a capital increase of up to 250
million euros, via the issuance of a maximum of 16,371,971 new shares, to fund the acquisition of Jolly Hotels, S.p.a. finance an
ambitious organic growth plan for the next three years and maintain the Group's healthy financial leverage ratio. As at the date
these annual accounts were prepared, this capital increase was fully subscribed and paid-in.
The Growth Plan envisages opening 18,000 rooms in 2007-2009, of which 1,198 have been signed to date, evidence of the good
progress of this ambitious plan.
NH Consolidated financial statements 2006 7

New products
Expansion of the FAST GOOD restaurants continued in 2006. Like NHUBE, this product was a result of the cooperation between
Ferrán Adrià and NH Hoteles. After the success of the first restaurant, which opened in the NH Eurobuilding in Madrid in 2004,
two new restaurants were opened in 2005 and three more in 2006, proving the success of this new product based on simple,
innovative fast food of the very highest quality.
The “NHOW” concept developed in 2005 as a new and exclusive category of hotels for avant-garde clients, became a reality in
2006 with the opening of a hotel in Via Tortona, in Milan’s new fashion centre. In the holiday hotel area, the Group has recently
launched “SOTOGRANDE RESORTS” which will be the name under which NH Hoteles will operate its top of the range resorts
aimed at replicating the lifestyle and the leisure opportunities of Sotogrande in the new locations.
Given the Group’s activity, no investments have been made nor expenses incurred in R&D.
Results
The most positive figure for 2006 is that average revenue per room (Revpar) has increased significantly from the previous year in
all business units, with an increase of 10.47% in comparable hotels.
The key to this good performance lies in the price-centred revenue management strategy. In 2006 the Group managed to
increase the average price by 8.39% in comparable hotels with a slight improvement on occupancy levels from the previous year.
In Germany and Austria Revpar improved by 12.04% and 11.65% respectively, which together with cost savings on rents due to
refinancing has meant that positive EBITDA was obtained in these countries for the first time.
In 2006, Revpar in Spain grew by 8.36%, thanks mainly to the increase in the average price during periods of low occupancy. NH
Hoteles’ positioning in city hotels in Spain means it is benefiting from the growing popularity of Spanish cities as alternative
tourist destinations, resulting in significant improvements in occupancy levels during periods of traditionally low demand.
Also of note is the excellent performance of the Benelux business unit, which saw growth in Revpar of 10.19%, confirming the
good trend maintained by the Group in these countries.
As regards the hotel activity, between 2005 and 2006, the chain’s sales rose 12.05% and its Ebitda by 8.5%, thanks to the good
business performance by all business units.
Sotogrande’s real estate activity declined by 16.9% in 2006 compared to the previous year. This result is not only due to the
growing weight of sales of houses and apartments compared to sales of plots of land in total real estate products currently for
sale, but because a large plot of land was sold in the last quarter of the previous year for 35 million euros. Sales recorded in 2006
amounted to 69.37 million euros with EBITDA of 27.09 million euros. Unrecorded sales commitments amounted to 74.6 million
euros at the end of the year with an estimated margin of some 29.6 million euros.
As regards the outlook for 2007, NH Hoteles expects to improve revenue from the sale of rooms in all its business units with the
main goal of increasing customer loyalty and numbers but maintaining the pro-active price management strategy that proved so
successful in 2006.
General description of the risk policy
Next year NH Hoteles will continue to seek out new opportunities to expand, while attempting to minimise the risks inherent to
its sector which is sensitive to economic cycles and has a high level of operating leverage.
One of the main goals of NH Hoteles is the management of the risks it is exposed to in its business activities, in order to preserve
the value of its assets and consequently the investment of its shareholders. In this regard, Group Management analyses risk maps
in an attempt to minimise risks and optimise their management.
Financial risks are analysed by the Corporate Financial Management Area which has the necessary instruments to control,
depending on economic variables, the exposure to changes in interest and exchange rates in addition to liquidity and credit risk.
Credit risk is mainly attributable to the Group’s trade payables. Amounts are shown net of provisions for bad debts, although the
risk is very small as the client portfolio is fragmented among a large number of agencies and companies.
8
NH Consolidated financial statements 2006

As regards interest rate risk, information concerning the derivative instruments the company owns at 31 December 2006 and its
policies in this respect are described in the accompanying notes to the consolidated annual accounts.
Consolidated debt at the end of 2006 excluding the Jolly Hotels operation has slipped to 620.8 million euros from 678.57 million
euros at December 2005, with a gearing ratio (net debt/equity) of 0.60x, well below the Group’s target of 1x. Taking into account
the Jolly operation, debt would amount to 1,124.8 million euros, including the call and put options for 277.4 million euros and
Jolly’s debt at 31 December 2006 that totalled 227 million euros. With this level of debt, the gearing ratio would be around 1x,
falling well below the target ratio of 1x after the 250 million euro capital increase recently fully subscribed.
Maintaining cash flow sources depends on the performance of the hotel business and on sales of plots of land and developments
made by the Group’s real estate activity. These variables depend on the general state of the economy and on the market situation
as regards supply and demand.
Consolidated management account (in millions of euros)
NH HOTELES, S.A. AND DEPENDENT COMPANIES 2006 2005 2006/2005
P&L ACCOUNT AS AT DECEMBER, 31 ST 2006 M Eur. % M. Eur % Var. %
Room revenues 1,005.58 92.18% 897.45 91.14% 12.05%
Real estate sales and other 69.37 6.36% 83.44 8.47% -16.86%
Other non-recurring revenues 15.99 1.47% 3.77 0.38% 324.14%
TOTAL REVENUES 1,090.94 100.00% 984.66 100.00% 10.79%
Cost of real state sales -32.26 -2.96% -16.89 -1.72% 91.00%
Staff cost -344.09 -31.54% -316.04 -32.10% 8.88%
Other operating expenses -332.41 -30.47% -299.29 -30.40% 11.07%
Other non recurring expenses -9.10 -0.83% -2.10 -0.21% 333.33%
GROSS OPERATING PROFIT 373.08 34.20% 350.34 35.58% 6.49%
Lease payments and property taxes -184.19 -16.88% -169.49 -17.21% 8.67%
EBITDA 188.89 17.31% 180.85 18.37% 4.45%
Depreciation -75.00 -6.87% -68.82 -6.99% 8.98%
EBIT 113.89 10.44% 112.03 11.38% 1.66%
Interest income (expense) -29.79 -2.73% -23.13 -2.35% 28.82%
Profit (loss) of companies carried out using the equity method 1.28 0.12% -0.65 -0.07% -296.92%
EBT 85.38 7.83% 88.25 8.96% -3.26%
Corporation tax -24.09 -2.21% -17.85 -1.81% 34.99%
NET INCOME before minorities 61.29 5.62% 70.41 7.15% -12.95%
Minority interests 1.16 0.11% -8.17 -0.83% -114.20%
NET INCOME 62.45 5.72% 62.24 6.32% 0.34%
Note: This consolidated operating account has been prepared using hotel management grouping criteria that do not always coincide with accounting
criteria used in the consolidated annual accounts of the NH Hoteles Group.
NH Consolidated financial statements 2006 9

Shares and shareholders
The execution of the agreement with minority shareholders of Latinoamericana de Gestión Hotelera, S.A. (LGH) resulted in a
capital increase in 2006 of 4,250,000 shares with an issue value, for exchange purposes, of 13.50 euros per share. In exchange,
NH Hoteles has received 35.4% of the shares of LGH.
The conclusion of the takeover bid for the share capital of Sotogrande, S.A. resulted in a capital increase in 2006 of 7,815,589
shares with an issue value, for exchange purposes, of 13 euros per share. In exchange, NH Hoteles now owns 97.72% of
Sotogrande, S.A.
In 2006, the Group bought (616,762 shares) and sold (411,219 shares) own shares, within legally stipulated limits and sending the
required notifications to the Spanish Securities Exchange Commission, obtaining a total capital gain of 3,890 euros. At the year
close, the NH Hoteles Group held 230,543 own shares representing 0.18% of share capital for a total cost of 3.5 million euros.
In 2006, 220,118,673 shares in NH Hoteles, S.A. were traded on the Continuous Market (228,305,659 in 2005), which represents
1.78 times (1.91 times in 2005) the total number of shares in which the share capital is divided, with average daily trading of
866,608 shares.
Average daily trading in shares 1995 - 2007
1,200,000
1,100,000
1,079,910
1,000,000
900,000
800,000
808,156
911,729
820,896
891,818
866,608
700,000
693,650
600,000
577,128
500,000
400,000
439,104
497,391
380,789
300,000
200,000
100,000
109,713
207,116
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
until
28/02/07
Average daily trading in millions of euros 1996 - 2007
20
19
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
0.35
1996
1.66
1997
4.97
1998
4.38
1999
7.12
2000
10.02
2001
7.8
2002
8.1
2003
7.47
2004
10.26
2005
12.56
2006
17.94
until
28/02/07
10
NH Consolidated financial statements 2006

The following charts show fluctuations in the share price and in the stock market capitalisation in the last two years.
Performance NH Hoteles vs IBEX december 2004 - february 2007
180
175
170
165
160
155
150
145
140
135
130
125
120
115
110
105
100
95
90
12/
04
01/
05
02/
05
03/
05
04/
05
05/
05
06/
05
07/
05
08/
05
09/
05
10/
05
11/
05
12/
05
01/
06
02/
06
03/
06
04/
06
05/
06
06/
06
07/
06
08/
06
09/
06
10/
06
NH Hoteles
IBEX
11/
06
12/
06
01/
07
The average price of the share in 2006 was 14.49 euros compared to 11.50 euros the previous year, with a maximum of 18.19
euros in August and a minimum of 12.25 in June. The maximum price in 2005 was 14.11 euros, and the minimum 9.31 euros.
Capitalisation in millions of euros 1996 - 2007
2,300
2,200
2,100
2,000
1,900
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
1,017.69
410.66
213.67
1996 1997 1998
916.76
1999
1,565.88
2000
1,335.18
2001
1,250.31
2002
1,088.94
2003
1,166.64
2004
1,583.81
2005
1,857.98
2006
2,281.92
until
28/02/07
NH Consolidated financial statements 2006 11

NH HOTELES, S.A. AND DEPENDENT COMPANIES
Consolidated annual accounts for 2006 prepared in accordance with
International Financial Reporting Standards adopted by the European Union.
Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with IFRSs, as adopted by
the European Union. In the event of a discrepancy, the Spanish language version prevails.
CONSOLIDATED BALANCE SHEETS
at 31 december 2006 and 31 december 2005 (Euros 000s)
ASSETS Note 31.12.2006 31.12.2005
NON-CURRENT ASSETS:
Tangible fixed assets 8 1,433,644 1,408,314
Goodwill 6 114,402 113,586
Intangible assets 7 59,258 59,397
Holdings in associated companies 9 91,433 92,728
Long-term financial investments- 443,316 116,917
Loans and accounts receivable not available for trading 10.1 397,451 94,481
Other long-term financial investments 10.2 45,865 22,436
Advance taxes 21 34,639 35,868
Other non-current assets 1,324 3,998
Total non-current assets 2,178,016 1,830,808
CURRENT ASSETS:
Inventories 11 109,673 96,902
Trade debtors 12 126,888 130,356
Non-trade debtors 38,592 27,894
Tax receivables 21 16,194 13,527
Other non-trade debtors 22,398 14,367
Short-term financial investments - 207,969 27,844
Financial assets held to maturity 13.1 207,586 26,621
Negotiable financial assets 13.2 383 1,223
Cash and banks and other cash equivalents 14 42,369 18,039
Other current assets 12,985 10,947
Total current assets 538,476 311,982
TOTAL ASSETS 2,716,492 2,142,790
12
NH Consolidated financial statements 2006

NET EQUITY AND LIABILITIES Note 31.12.2006 31.12.2005
NET EQUITY:
Share capital 15.1 263,197 239,066
Reserves of the Parent Company 15.2 293,102 287,548
Reserves in fully consolidated companies 15.3 235,130 150,317
Reserves in proportionally consolidated companies 15.3 412 468
Reserves in companies consolidated using the equity method 15.3 7,624 8,651
Equity valuation adjustments 15.4 2,100 4,772
Translation differences (5,899) 17,821
Own shares 15.3 (3,504) (301)
Consolidated profit for the year 62,448 62,243
Net equity attributable to shareholders of the Parent Company 854,610 770,586
Minority interests 15.6 176,678 119,682
Total net equity 1,031,288 890,268
LONG-TERM LIABILITIES:
Issue of debentures and other marketable securities 57 83
Debts to credit institutions 16 529,577 592,871
Creditors under finance leases 17 122 316
Other long-term liabilities 18 346,156 81,335
Provisions for liabilities and charges 20 50,280 42,999
Deferred taxes 21 99,125 124,438
Total long-term liabilities 1,025,317 842,042
CURRENT LIABILITIES:
Issue of debentures and other marketable securities 38 25
Payable to credit institutions 16 349,756 136,829
Creditors under finance leases 17 251 399
Trade creditors and other accounts payable 22 218,943 169,394
Other current financial liabilities 1,319 1,130
Tax payables 21 26,549 26,787
Provisions for liabilities and charges 20 5,652 7,892
Other current liabilities 23 57,379 68,024
Total current liabilities 659,887 410,480
TOTAL NET EQUITY AND LIABILITIES 2,716,492 2,142,790
Notes 1 to 30 of the Report and Appendices I/III form an integral part of the consolidated balance sheet at 31 December 2006.
The consolidated balance sheet at 31 December 2005 is presented solely for purposes of comparison.
NH Consolidated financial statements 2006 13

CONSOLIDATED PROFIT AND LOSS ACCOUNTS
for the years ended on 31 december 2006 and 2005
(Euros 000s)
Note 2006 2005
Net turnover 25.1 1,094,521 976,543
Other operating income 25.1 14,381 17,466
Net result on disposal of assets 25.1 10,491 2,689
Supplies (131,947) (108,533)
Staff costs 25.3 (339,775) (300,802)
Amortisation and depreciation (71,549) (68,101)
Net losses due to asset impairment (3,190) (799)
Other operating expenses 25.4 (458,682) (406,513)
OPERATING PROFIT/(LOSS) 114,250 111,950
Profit and loss of companies carried using the equity method 9 1,270 (649)
Financial income 25.2 6,978 9,961
Financial expenses 25.6 (40,157) (35,188)
Exchange gains/losses (Gain / (Loss)) 4,604 2,152
PROFIT BEFORE TAXES FROM ONGOING ACTIVITIES 86,945 88,226
Corporation tax 21 (25,395) (17,813)
NET INCOME FOR THE YEAR 61,550 70,413
Attributable to:
Shareholders of the Parent Company 62,448 62,243
Minority interests 15.6 (898) 8,170
Earnings per share in euros (base and diluted) 5 0.51 0.52
Notes 1 to 30 of the Report and Appendices I/III form an integral part of the consolidated profit and loss accounts for 2006.
The consolidated income statement for 2005 is presented solely for purposes of comparison.
14
NH Consolidated financial statements 2006

STATEMENTS OF CHANGES IN CONSOLIDATED NET EQUITY
for 2006 and 2005
(Euros 000s)
Share
Capital
Share
Premium
Reserves of the Parent Company
Legal
Reserve
Voluntary
Reserve
Reserve
for own
shares
Full
consolidation
Reserves in companies
consolidated by
Proportional
consolidation
The equity
method
Translation
differences
Equity
valuation
adjustments
Own
shares
Profit
Attributable
to the
Parent
Company
Total
Minority
Interests
Total
Equity
Balances at 31
December 2004 239,066 91,784 26,791 141,756 37,587 116,883 990 2,663 (2,788) - - 55,203 709,935 137,266 847,201
Profit for the
year 2005 - - - - - - - - - - - 62,243 62,243 8,170 70,413
Translation
differences - - - - - - - - 20,609 - - - 20,609 - 20,609
Cash flow hedges - - - - - 959 - - 1,280 - 2,239 (23,117) (20,878)
Revenues and
expenses recognised
in the period - - - - - 959 - - 20,609 1,280 - 62,243 85,091 (14,947) 70,144
Effect of first
application of
IAS 32 and 39 (Note 2.3) - 37,587 - - (37,587) - - - - 3,492 (259) - 3,233 - 3,233
Distribution of
profit/(loss) -
- To Reserves - - 2,086 (2,753) - 32,475 (522) 5,988 - - - (37,274) - - -
- To Dividends - - - - - - - - - - - (17,929) (17,929) (2,637) (20,566)
Distribution
of reserves - - - (11,953) - - - - - - - - (11,953) - (11,953)
Variation in
own shares - 2,251 - - - - - - - - (42) - 2,209 - 2,209
Balances at 31
December 2005 239,066 131,622 28,877 127,050 - 150,317 468 8,651 17,821 4,772 (301) 62,243 770,586 119,682 890,268
Profit for the
year 2006 - - - - - - - - - - - 62,448 62,448 (898) 61,550
Translation
differences - - - - - - - - (23,720) - - - (23,720) (255) (23,975)
Cash flow hedges - - - - - - - - - (2,672) - - (2,672) (2,672)
Revenues and
expenses recognised
in the period - - - - - - - - (23,720) (2,672) - 62,448 36,056 (1,153) 34,903
Capital increase 24,131 134,847 - - - - - - - - - - 158,978 - 158,978
Distribution of
profit 2005
- To Reserves - - - (21,487) - 84,813 (56) (1,027) - - - (62,243) - - -
Distribution of reserves - - - (31,080) - - - - - - - - (31,080) (2,042) (33,122)
Variation in own shares - 103 - - - - - - - - (3,203) - (3,100) (3,100)
Changes in the scope
of consolidation - - - - - - - - - - - - - 142,516 142,516
Acquisition of
minority interests - (76,830) - - - - - - - - - - (76,830) (82,325) (159,155)
Balances at 31
December 2006 263,197 189,742 28,877 74,483 - 235,130 412 7,624 (5,899) 2,100 (3,504) 62,448 854,610 176,678 1,031,288
Notes 1 to 30 of the Report and Appendices I/III form an integral part of the statements of changes in consolidated net equity for the years ended
31 December 2006 and 2005.
The Statement of changes in consolidated net equity for the year ended on 31 December 2005 is presented solely for purposes of comparison.
NH Consolidated financial statements 2006 15

CONSOLIDATED CASH FLOW STATEMENTS
for the years ended on 31 december 2006 and 2005 (Euros 000s)
Note Year 2006 Year 2005
1. OPERATING ACTIVITIES
Consolidated profit before tax 86,945 88,226
Adjustments to profit:
Depreciation and amortisation of tangible and intangible assets (+) 71,549 68,101
Asset impairment losses (net) (+/-) 3,190 799
Provisions (net) (+/-) 25.4 3,244 878
Gains/losses on sale of tangible and intangible assets (+/-) (10,491) (2,689)
Gains/losses in companies accounted for by equity method (+/-) 9 (1,270) 649
Financial income (-) 25.2 (6,978) (9,961)
Financial expenses (+) 25.6 40,157 35,188
Other non-cash items (+/-)
Adjusted profit 186,346 181,191
Net variation in assets / liabilities:
(Increase)/Decrease in inventories 11 (12,771) (13,383)
(Increase)/Decrease in trade debtors and other accounts receivable (7,230) (42,790)
(Increase)/Decrease in other current assets (2,038) (1,538)
Increase/(Decrease) in trade creditors 22 49,549 20,627
Increase/(Decrease) in other current liabilities (23,131) 38,031
Increase/(Decrease) in provisions for liabilities and charges (4,180) (40,773)
Income taxes paid (12,720) (16,573)
Total net cash flows from operating activities (I) 173,825 124,792
2. INVESTING ACTIVITIES
Financial income 25.2 6,978 9,961
Investments (-):
Group and associated companies, joint ventures (62,973) (59,455)
Tangible and intangible assets and property investments (83,368) (145,494)
Long-term financial investments (48,687) (55,437)
Financial investments and financial assets held short-term 13.1 (200,000) (723)
(395,028) (261,109)
Divestments (+):
Group and associated companies, joint ventures 17,753 5,967
Tangible and intangible assets and property investments 40,898 16,736
Long-term financial investments 10.1 & 10.2 2,998 10,458
Financial investments and financial assets held short-term 13.1 & 13.2 19,875 37,778
Other assets 3,903 7,048
85,427 77,987
Total net cash flows from investing activities (II) (302,623) (173,161)
3. FINANCING ACTIVITIES
Dividends paid (-) (31,080) (29,882)
Interest paid on debts (-) (37,539) (36,388)
Variations in (+/-):
Equity instruments
- Capital 24,131 -
- Reserves 31,197 23,518
- Minority interests 57,894 (25,754)
Liability instruments (+/-):
- Payable to credit institutions 147,015 128,582
- Finance leases 19 (342) (13,468)
- Debentures and other negotiable securities 17 (13) (25)
- Other long-term liabilities (38,135) (3,926)
Total net cash flows from financing activities (III) 153,128 42,657
5. GROSS INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS (I+II+III) 24,330 (5,712)
4. Effect of exchange rate fluctuations on cash and cash equivalents (IV) (612) 743
6. NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS (I+II+III-IV) 24,942 (6,455)
7. Cash and cash equivalents at start of year 18,039 23,751
8. Cash and cash equivalents at end of the year (7+5) 42,369 18,039
Notes 1 to 30 in the Report and Appendices I/III form an integral part of the consolidated cash flow statements for 2006
The Consolidated Cash Flow Statement for 2005 is presented solely for purposes of comparison.
16
NH Consolidated financial statements 2006

NH HOTELES, S.A. AND DEPENDENT COMPANIES NOTES TO THE CONSOLIDATED
ANNUAL ACCOUNTS FOR 2006
1 ACTIVITY AND STRUCTURE OF THE PARENT COMPANY
NH HOTELES, S.A. (hereinafter the Parent Company) was incorporated as a Spanish public limited company (“sociedad
anónima”) in Spain on 23 December 1881 under the name “Material para Ferrocarriles y Construcciones, S.A.”, which was
subsequently changed to “Material y Construcciones, S.A.” (MACOSA) and then to “Corporación Arco, S.A.”
In 1992, Corporación Arco, S.A. took over Corporación Financiera Reunida, S.A. (COFIR) taking the corporate name of the
absorbed company and adapting its corporate purpose to the new activity of the Parent Company, based on management of its
portfolio of shareholdings.
In 1998 Corporación Financiera Reunida, S.A. (COFIR) merged with Grupo Catalán, S.L. and subsidiaries and Gestión NH, S.A.
via their takeover. Corporación Financiera Reunida, S.A. (COFIR) later took over NH Hoteles, S.A. and took the corporate name
of the absorbed company and extended its corporate purpose to allow it to directly carry out hotel activities, activities it was
already carrying out indirectly through its subsidiary companies.
The information relating to these mergers is set out in the annual accounts for the years in which these transactions took place.
In October 1999 a takeover bid was made for 100% of the capital of Sotogrande, S.A. which has enabled NH Hoteles to obtain
a majority shareholding of over 75% at all times.
In 2000 the expansion strategy began, essentially in Europe, aimed at creating a strong world brand in the city hotel segment.
This began with the integration of the Dutch Hotel firm “Krasnapolsky Hotels and Restaurants, N.V.”, continued with the
acquisition of the Mexican company “Nacional Hispana de Hoteles, S.R.L. de C.V.” in June 2001 and in 2002 with the purchase
of the German hotel company Astron Hotels.
In 2003-2005, through organic growth, the Group entered several European markets, such as Italy and Romania, and new cities
such as London. In 2005, it also embarked on its growth strategy in the quality tourism sector and with a high real estate
component with projects in Cap Cana (Dominican Republic) and Rivera Maya (Mexico).
In 2006, after the consolidation of the acquisitions made in previous periods, the Group continued its international expansion
strategy, with the acquisition of the Italian chain Framon and the agreement with Joker Partecipazioni, S.r.l. and Banca Intesa,
S.p.a. (today Banca Intesa Sanpaolo, S.p.a.) to acquire not less than 75% of the share capital of Jolly Hoteles, S.p.a.
At the end of 2006, NH Hoteles was already present, with operating hotels, in 19 countries, with 269 hotels and 38,990 rooms,
70% of which are in Spain, Germany and the Benelux countries.
NH Hoteles S.A.'s registered address is in Madrid.
2 BASIS OF PRESENTATION OF THE CONSOLIDATED ANNUAL ACCOUNTS AND
CONSOLIDATION PRINCIPLES
2.1 Basis of presentation of the annual accounts
The consolidated annual accounts for 2006, prepared by the Directors of NH Hoteles, S.A. at a Board Meeting held on 27 March
2007, have been obtained from the accounting records and annual accounts of the Parent Company and its Dependent Companies.
These consolidated annual accounts have been prepared in accordance with the International Financial Reporting Standards
(IFRS) adopted by the European Union in accordance with the terms of Regulation (EC) Nº 1606/2002, of the European Parliament
and the Tax, Administrative and Social Policy Measures Act, Law 62/2003, dated 30 December, to give a true and fair view of the
equity and financial situation of the Group as at 31 December 2006 and the results of its operations, changes in net equity and
the cash flows that have occurred in the Group during the year then ended in accordance with prevailing legislation.
The consolidated annual accounts of the Group and of the companies that comprise it for 2006 are pending approval by their
respective shareholders’ meetings. However, the Directors of the Parent Company believe these annual accounts will be
approved without significant changes.
The NH Hoteles Group has decided to implement earlier than required the changes of IAS 1: “Presentation of Financial
Statements”, that requires the inclusion of new breakdowns that enable users to assess the objectives; policies and procedures
for the management of capital (see Note 15).
Other standards issued by the appropriate bodies but whose implementation is not obligatory in 2006 would not have a
significant impact on these consolidated annual accounts.
NH Consolidated financial statements 2006 17

2.2 Currency of presentation
These annual accounts are presented in euros. Foreign currency transactions are recorded according to the criteria described in
Note 4.8.
2.3 Responsibility for information, estimates made and sources of uncertainty
The information contained in these annual accounts is the responsibility of the Directors of the Parent Company.
In these consolidated annual accounts management of the Group and of the consolidated companies have used estimates
(subsequently ratified by their Directors) to quantify some of the assets, liabilities, revenues, expenses and commitments
recorded therein. Basically, these estimates refer to:
- Impairment losses on certain assets
- The assumptions used in the actuarial calculation of pension liabilities and other personnel commitments
- The useful life of tangible and intangible assets
- The valuation of goodwill on consolidation
- The market value of certain assets
- Estimates of onerous contracts
These estimates are made on the basis of the best information available (see Note 4). However, future events might require these
to be changed, which would be done in accordance with IAS 8.
At the date of publication of these consolidated financial statements no event exists that might represent a significant source of
uncertainty as regards the accounting impact such events might have in future years.
2.4 Consolidation principles used
2.4.1 Dependent companies
Dependent companies are defined as subsidiaries included in the scope of consolidation which are directly or indirectly managed
by the Parent Company because it holds a majority of the voting rights in their representative and decision-making bodies and
is able to exercise control, as demonstrated when the Parent Company is able to direct the financial and operating policies of an
investee company for the purpose of obtaining a profit from its activities.
The annual accounts of the dependent companies are fully consolidated with those of the Parent Company. Consequently, all
significant balances and effects of the transactions carried out among these companies have been eliminated on consolidation.
Minority shareholders’ interest in the equity and income of the Group are presented respectively under “Minority Interests” in
the consolidated balance sheet and consolidated income statement.
The profit and loss of dependent companies acquired or disposed of during the year are included in the consolidated income
statement as from the effective date of acquisition or disposal, as appropriate.
2.4.2 Joint Ventures
Joint ventures are managed jointly by the Parent Company and by third parties unrelated to the Group, with all parties having
equal control. The annual accounts of joint ventures are consolidated using the proportional method so that the aggregation of
balances and subsequent eliminations are made in the same proportion as the Group’s shareholding represents of the capital of
these entities.
Whenever necessary, the financial statements of these companies are adjusted to bring their accounting policies into line with
those used by the Group.
2.4.3 Associated companies
Associated companies are defined as companies where the Parent Company has the ability to exercise a significant influence,
although neither control nor joint control. In general, significant influence is deemed to exist whenever the percentage of the
(direct or indirect) shareholding of the Group exceeds 20% of the voting rights, provided it does not exceed 50%.
In the consolidated annual accounts, associated companies are consolidated using the equity method, i.e. at the fraction of their
net worth represented by the Group's shareholding in their capital, after taking into account any dividends received and any other
equity eliminations.
2.4.4 Valuation of consolidated companies on acquisition
Prior to 1 January 2004, when the NH Group changed over to IFRS, the difference between the cost of acquisition of a
shareholding in a consolidated company and its underlying book value on the date of purchase that could not be allocated so
as to increase or reduce the value of assets to their market value, were included, if positive, in the “Goodwill” caption of the
consolidated balance sheet.
18
NH Consolidated financial statements 2006

Assets and liabilities of dependent companies and joint ventures acquired after IFRS came into force are valued at their market
values on the date of acquisition. Any excess cost of acquiring the identifiable net assets with respect to their market values is
included in the “Goodwill” caption of the consolidated balance sheet.
Goodwill generated in acquiring associated companies is recorded as an increase in the value of the shareholding.
2.4.5 Translation of foreign currency
Balance sheet and income statement captions of foreign companies included in the scope of consolidation have been translated
into euros using the following criteria:
- Assets and liabilities have been translated at the official year-end exchange rate.
- Equity has been translated using the historical exchange rate. The historical exchange rate used for companies included in the
scope of consolidation prior to the transition date is that prevailing on 31 December 2003.
- The income statement has been translated using the average exchange rate for the year.
The differences resulting from the use of these criteria have been included in the caption “Translation differences” under the
“Equity “ caption of the consolidated balance sheet.
Adjustments made to the market value and goodwill of a foreign company when this is acquired, due to the application of IFRS,
are treated as assets and liabilities of the company and are translated at the year-end exchange rate.
2.4.6 Changes to the scope of consolidation
Set out below are the most significant changes in the scope of consolidation during 2006 and 2005 that affect the comparison of
figures from one year to the next:
A. Changes in the scope of consolidation during 2006
Additions
The companies which the NH Hoteles Group brought into the scope of consolidation during 2006, and the consolidation method
used, were as shown below:
Company Methods of consolidation Effective date of acquisition
NH-Framon Italy Hotel Management, S.r.l. Full 31/12/2006
Satme Invest, S.r.l. Full 31/12/2006
Immobiliare Quattro Canti, S.r.l. Proportional 31/12/2006
Donnafugata Resort, S.r.l. Full 01/01/2006
Grande Jolly, S.r.l. (a) Full 31/12/2006
Los Alcornoques de Sotogrande, S.L. (a) Proportional 31/12/2006
Fast Good Islas Canarias, S.L. (a) Full 07/02/2006
Losan Investment, Ltd. Equity method 10/03/2006
(a) Companies incorporated by the NH Hoteles Group
On 10 March 2006 the company Losan Investment, Ltd. was incorporated, with the NH Hoteles Group, through its subsidiary NH
Hotel Rallye, S.A., taking a 30% interest for a total of 2.19 million euros. This company acquired ownership of a hotel in Kensington
(London) operated under lease by NH Hoteles, S.A.
On 25 May 2006 the acquisition was executed of 35.63% of the share capital of Latinoamericana de Gestión Hotelera, S.A. by
means of an exchange of the shares held by Equity International Properties, Ltd. in the said company (1,162,439 shares) for
4,250,000 newly issued shares of NH Italia, S.r.l. with a nominal value of 2 euros each and a share premium of 11.50 euros per share.
On 2 August 2006 an agreement was signed between NH Italia, S.r.l. and Tourist Ferry Boat, S.r.l. to set up a joint venture, NH-
Framon Italy Hotel Management, S.r.l. 75% owned by NH Hoteles, S.A. and 25% by Tourist Ferry Boat, Srl. Under the agreement,
NH Hoteles contributed to the joint venture the assets it held at that date in Italy, and Tourist Ferry Boat, S.r.l contributed fifteen
hotels and four projects operated under the Framon brand through the sale of two companies (Satme Invest, S.r.l. and
Immobiliare Quattro Canti, S.r.l.), the sale of a hotel it owned and a spin-off of the rest of its assets. The total investment by NH
Hoteles, S.A. in this deal, which is performing at 31 December 2006, will amount to 23 million euros.
NH Consolidated financial statements 2006 19

On 26 December 2006 there concluded the tender offer formulated by the Parent Company for 100% of the share capital of
Sotogrande, S.A., through the issue, once the result of the tender offer was known, of 7,815,589 ordinary shares with a nominal
value of 2 euros each and a share premium of 11 euros per share. The tender offer, which has resulted in acquisition of 18.66% of
Sotogrande, S.A., initially targeted 20.939% of the share capital, represented by 8,770,130 shares, with an exchange ratio of one
new share of NH Hoteles, S.A. per share of Sotogrande, S.A.
Shown below is the impact on the consolidated balance sheet at 31 December 2006 of the companies added to the scope of
consolidation during present year:
Book value Adjustments Fair value
Tangible Fixed Assets 39,291 12,142 51,433
Other intangible assets 872 (247) 625
Deferred tax assets 242 - 242
Inventories 93 - 93
Trade debtors and other accounts receivable 12,609 - 12,609
Cash and other cash equivalents 20,404 - 20,404
Trade creditors and other accounts payable (25,625) - (25,625)
Bank loans (372) - (372)
Tax liabilities (15,441) - (15,441)
Deferred tax liabilities (11) - (11)
Net assets acquired 32,062 11,895 43,957
Goodwill (Note 6) 984
Total investment 44,941
As at 31 December 2006, investment in Jolly Hotels, S.p.a. has not been brought into the scope of consolidation of the Group
because at that date the Group neither held a majority of the voting rights in the representative and decision-making bodies, nor
was able to exercise its control, or had power to manage financial and operating policies of the said company (see Note 9).
Retirements
On 31 January 2006 the 56.9% interest held by the Group through Sotogrande, S.A. in Aymerich Golf Management, S.L. was sold
for a total of 1.84 million euros. Capital gains of 1.1 million euros were recorded on the transaction.
On 30 December 2006 some 75% of the company Casino Club de Golf, S.L. was sold for 10.2 million euros. In addition, the parties
signed cross call and put options over the remaining 25%, to be exercised within the following 18 months, for an amount ranging
between 3.6 and 3.7 million euros. The capital gain recorded on this transaction was 6.6 million euros.
Shown in the following table is the effect that retirement of the aforesaid companies has had on the consolidated balance sheet
at 31 December 2006:
Value of retirement Amount 31.12.05
Tangible Fixed Assets 8,298 6,736
Other intangible assets 33 31
Inventories 1,401 98
Trade debtors and other accounts receivable 3,127 5,398
Cash and other cash equivalents 41 37
Trade creditors and other accounts payable (859) (989)
Tax liabilities (3,498) (3,491)
Bank loans (731) (1,317)
Goodwill attributable (223) (223)
Total 7,589 6,280
Profits generated on disposal 7,711
Total contribution 15,300
20
NH Consolidated financial statements 2006

On 3 November 2005, the NH Hoteles Group acquired a 50% holding in the companies Corporación Hotelera Dominicana, S.A.
and Corporación Hotelera Oriental, S.A., both with registered office in Santo Domingo. The purpose of the two companies is to
pursue a property and hotel project in the province of La Altagracia, Dominican Republic. The shareholder structure of these
companies was modified in 2006, by means of the sale to Caja Duero of 25% of the holding. The result of that transaction was
not significant.
B. Changes in the scope of consolidation during 2005
Additions:
The companies which the NH Hoteles Group brought into the scope of consolidation during 2005 were as shown below:
- Caribe Puerto Morelos, S.A. de C.V.
- Promociones Marina Morelos, S.A. de C.V.
- Corporación Hotelera Dominicana, S.A.
- Corporación Hotelera Oriental, S.A.
- NH Romanía, S.r.L. (Hotel NH Bucarest and NH Timisoara)
- Inmobiliaria y Financiera Aconcagua, S.A. (Hotel Crillón, Buenos Aires)
- Atardecer Caribeño, S.L.U. (manager of the Cayo Coco hotels)
- Fast Good América, S.L.
- Fast Good Península Ibérica, S.L.
- Cofir, S.L.
- NH Domo, S.L.
- Desarrollo Inmobiliario Santa Fé México, S.A. de C.V.
During January 2005 the minority shareholder of Nacional Hispana de Hoteles, S.R.L. de C.V. exercised its put option on its shares,
representing 38% of the share capital of that company, for 33 million euros, as a result of which the direct and indirect holding of
NH Hoteles rose to 78.03%.
On 1 April 2005 the Group paid 1.3 million euros for a 25% holding in the share capital of Harrington Hall Hotel, Ltd. This company
operates the NH Harrington Hall hotel in London under a lease agreement.
Furthermore, on 6 April 2005 the Group acquired the remaining 20% of NH Hoteles Deutschland, GmbH and NH Hoteles Austria,
GmbH for a total of 45 million euros. Further goodwill totalling 16.7 million euros arose as a result of this acquisition (see Note 7).
On 28 June 2005 the company Caribe Puerto Morelos, S.A. de C.V. was set up with registered office in Mexico City. This company,
together with the company Promociones Marina Morelos, S.A. de C.V., with registered address in Cancun, has as its object the
development of two hotels and a real estate project in Rivera Maya (Mexico). The NH Group currently has a 20% holding in
Promociones Marina Morelos, S.A. de C.V. and a 90% holding in Caribe Puerto Morelos, S.A. de C.V., although the shareholder
structure of this latter company has not been fully defined and is likely to change in the short term.
Retirements:
During 2005 the companies Desarrollo Hotelero Lázaro Cárdenas, S.A. de C.V. and Servicios Inmobiliarios de Balsas, S.A. de C.V.,
the companies that own the NH Lázaro Cárdenas hotel, were sold and therefore were taken out of the scope of consolidation.
The result of these operations was not significant.
3 DISTRIBUTION OF NET RESULT
The application of profit/(loss) for 2006 proposed by the Board of Directors of the Parent Company is as follows:
Euros 000s
Accumulated losses (2,290)
Loss of the Parent Company (2,290)
Reserves in companies consolidated by:
Full Consolidation 63,434
Proportional method 34
The equity method 1,270
Profit of the Consolidated Group 62,448
The distribution of the result for 2005 is set out in the Statement of Changes in Consolidated Net Equity.
NH Consolidated financial statements 2006 21

4 ACCOUNTING POLICIES
Set out below are the main valuation rules, accounting principles and policies applied by the Group when drawing up these
consolidated accounts:
4.1 Tangible fixed assets
Tangible fixed assets are stated at cost, less accumulated depreciation and any recognised loss for impairment, except for those
dependent companies whose tangible fixed assets were acquired before 31 December 1983 where the cost price was restated
in accordance with different legal provisions. Later additions have been stated at cost.
At the time of the transition to IFRS, the Group restated at fair value certain pieces of land based on assessments made by an
independent expert, in a gross total amount of 217 million euros. The restated cost of this land has been regarded as cost in the
transition to the IFRS. The Group's policy has been not to revalue any of its tangible fixed assets when closing its accounts for
subsequent financial years. Set out below is the information concerning said revaluation:
Euros 000s
Country Book value Fair value Capital gain Effect on Reserves Attributable to minority interests
Argentina 18,063 39,550 21,487 6,594 8,877
Belgium 3,484 16,108 12,624 11,993 -
Spain 63,613 157,570 93,957 67,912 2,556
Netherlands 118,728 207,039 88,311 83,051 844
Switzerland 3,904 4,600 696 452 -
207,792 424,867 217,075 170,002 12,277
The costs of expansions or improvements which represent an increase in productivity, capacity or efficiency, or extend the life of
existing assets are recorded as an increase in the cost thereof. Expenditure for maintenance and repairs is charged to
consolidated expense as incurred.
The Group charges depreciation for its tangible fixed assets on a straight-line basis. The cost of the assets is spread over the years
of their useful lives as shown in the following table:
Years estimated useful life
Constructions 33-50
Plant and machinery 10-12
Other plant, tools and furniture 5-10
Other fixed assets 4-5
4.2 Goodwill on consolidation
The goodwill arising on consolidation represents the excess of the acquisition cost over the Group's interest in the fair value of
identifiable assets and liabilities of a subsidiary company or joint-venture on the date of acquisition.
Any positive differences between the cost of the holdings in the capital of consolidated and associated companies and the
corresponding theoretical book values acquired, adjusted on the date of first consolidation, are allocated as follows:
1. If they can be assigned to specific assets and liabilities of the companies acquired, increasing the value of the assets for which
the fair values are higher than their net book values as recorded on said companies' balance sheets.
2. If they can be assigned to specific intangible assets, by being explicitly recognised in the consolidated balance sheet provided
that their fair value as at the date of acquisition can be reliably determined.
3. Any other differences that cannot be allocated are recorded as goodwill which is assigned to one or more specific cash-flow
generating units (in general, hotels) which are expected to make a profit.
Goodwill is only recorded when it has been acquired in return for valuable consideration.
The goodwill generated on the acquisition of associated companies is recorded in the accounts as an increased value of the holding.
22
NH Consolidated financial statements 2006

The goodwill generated on acquisitions made prior to the date of the transition to the IFRS, 1 January 2004, remains at its net
book value as recorded as at 31 December 2003 in accordance with Spanish accounting principles.
Goodwill is not amortised. In this regard, every year end, or whenever there are signs of decline in value, the Group will estimate,
using the “impairment test”, if there is a permanent impairment that reduce the recoverable value of the goodwill to below the
net cost recorded. If this is the case, it is charged to the income statement. Any write-off recorded cannot be reversed later on.
In order to carry out this impairment test, all the goodwill is assigned to one or more cash-flow generating units. The recoverable
value of each cash-flow generating unit is calculated as the higher of the useful value and the net sale price that would be
obtained from the assets associated with the cash-flow generating unit. The useful value is calculated based on estimated future
cash flows, discounted at a rate before taxes that reflects the present market value with regard to the value of money and the
specific risks associated with the asset.
The discount rates used by the NH Hoteles Group for these purposes are between 7.5% and 9%, depending on the different risks
associated with each specific asset.
4.3 Intangible assets
Intangible assets are defined as non-monetary assets that can be specifically identified, that have been acquired from third
parties or have been developed by the Group. They are only recognised in the accounts when their cost can be reliably
determined and financial benefits are expected to be made from them in the future.
They are deemed to have an “indefinite useful life” whenever it is concluded that they will contribute indefinitely to the
generation of benefits. All other intangible assets are deemed to have a “definite useful life”.
Intangible assets with indefinite useful lives are not amortised. They are therefore subject to the “impairment test” at least once
a year, using the same criteria as for goodwill (see note 4.2).
Intangible assets with defined useful lives are amortised on a straight-line basis on the basis of the estimated useful lives of the
respective assets.
“Intangible assets” records, fundamentally, the following items:
i) “Rights of beneficial use” records the cost of the right to operate the Hotel NH Plaza de Armas in Seville, acquired in 1994,
which is being written off against the consolidated income statement over the 30 years of the term of the contract at a rate
that is increasing by 4% a year.
ii) “Lease premiums” records the amounts paid as a condition for obtaining certain leases contracts for hotels and are written off
on a straight-line basis over the term of the lease agreement.
iii) “Concession, patents and trademarks” records, basically, the disbursements made by Gran Círculo de Madrid, S.A. on the
construction work to renovate the building which houses the “Casino de Madrid”. The amortisation of this work is calculated
on a straight-line basis taking into account the term of the concession contract for operating and managing the services
provided in the building where the “Casino de Madrid” is housed (which expires on 1 January 2037).
iv) “Software” includes different software that have been acquired by the different consolidated companies. These programs are
stated at cost and are amortised on a straight-line basis at an annual rate of 25%.
4.4 Impairment in value of tangible and intangible assets not including goodwill
Every year, the Group makes a valuation of the possibility of value impairments that require that the book values of its tangible and
intangible fixed assets be reduced. An impairment is deemed to exist whenever the recoverable value is lower than the book value.
The recoverable value is calculated as the higher of net sale value and useful value. The useful value is calculated based on
estimated future cash flows, discounted at a rate before taxes that reflects the present market value with regard to the value of
money and the specific risks associated with the asset.
The discount rates used by the NH Hoteles Group for these purposes are between 7.5% and 9%, depending on the different risks
associated with each specific asset.
If it is estimated that the recoverable value of an asset is lower than its book value, its book value is written off to its recoverable
value and the corresponding write off is charged to the income statement.
In the event that a loss due to impairment is reversed later on, the amount recorded for the asset in books is written up to the
limit of the original value at which said asset had been recorded prior to the recognition of said impairment in value.
The information concerning impairment charges recorded in 2006, is set out in Note 8 to these accounts.
NH Consolidated financial statements 2006 23

4.5 Leases
In general the Group classifies all leases as operating leases. It only classifies them as financial leases when they substantially
transfer the risks and advantages of ownership to the lessee and when, furthermore, the lessee holds an option to purchase the
asset when the contract ends under terms that may be deemed to be clearly better than market terms.
4.5.1 Operating leases
In operating leases, the ownership of the asset leased and substantially all the risks and advantages of ownership of the asset
remain with the lessor.
In this regard, the hotels operated under a lease agreement for a period longer than the estimated useful life of said assets, for
the purpose of their technical depreciation (see Note 4.1.), are regarded by the Directors of the Parent Company as operating
leases given their particular characteristics and conditions of maintenance, which makes their useful life significantly higher.
Whenever the Group is the lessee, the lease expenses are taken to the income statement on a straight-line basis.
4.5.2 Finance leases
The Group recognises finance leases as assets and liabilities on the balance sheet, on inception of the lease, at the market value
of the leased assets or at the present value of the minimum lease instalments, whenever this is lower. To calculate the present
value of the lease instalments, the contractual interest rate is used.
The cost of the assets acquired under finance leases is presented on the consolidated balance sheet, according to the nature of
the asset that is the object of the contract.
Interest expense is distributed over the period of the lease on a pay-back basis.
4.6 Financial instruments
4.6.1 Financial assets
Financial assets are recognised on the consolidated balance sheet when they are acquired, and are recorded initially at their fair
value. The financial assets maintained by the Group companies are classified as:
- Traded financial assets: are assets acquired by the companies for the purpose of making a short-term gain on changes in their
prices or on the differences between their purchase and sale prices. This caption also includes financial derivatives that are not
regarded as accounting hedges.
- Financial assets at maturity: assets for which the collections are for a fixed or determinable amount with preset maturity dates.
The Group states that it intends and is able to hold these assets since they are purchased until they mature.
- Loans and accounts receivable generated by the company itself: financial assets originated by the companies in exchange for
providing cash or for supplying assets or services.
Traded financial assets are carried after their acquisition at their “fair value”, and any changes in their fair value are taken to
income for the year.
The fair value of a financial instrument on a particular date is defined as the amount at which it could be bought or sold on that
date between two properly informed parties, acting freely and prudently on an arm’s length basis.
Financial assets at maturity and loans and accounts receivable originated by the Company are stated at amortised cost. Accrued
interest is taken to the income statement on the basis of their effective rate of interest. Amortised cost is defined as the initial cost
less the collections or repayments of the principal, taking into account any potential reductions for impairment or non-payment.
4.6.2 Cash and other cash equivalents
This caption of the consolidated balance sheet records cash at hand, deposits and other highly liquid short-term investments that
can be quickly converted into cash and with no risk of a change of value.
4.6.3 Financial liabilities
Bank loans
Bank loans are recorded at the amount received, net of the costs incurred in the transaction. They are subsequently stated at
amortised cost. Financial expenses are recorded on the accruals basis in the income statement using the effective interest
method. Any amounts not settled in the period they occur are added to the amount of liabilities recorded in the books.
Trade creditors and other accounts payable
Trade accounts payable are initially recorded at their fair value and, later, are carried at amortised cost using the effective interest
rate method.
24
NH Consolidated financial statements 2006

Financial derivatives and accounting for hedges
Hedges used to cover the risk to which the Group's business is exposed, chiefly exchange rate and interest rate exposures, are
stated at market value on the date they are contracted. Any subsequent changes in market value are recorded as follows:
- Differences arising in the hedges items and hedged items in fair value hedges, in so far as they refer to the type of risk hedged
against, are taken directly to the consolidated income statement.
- For cash-flow hedges, the differences in valuation arising in the effective part of the hedge are recorded on a transitional basis
in the caption “Equity Valuation Adjustments - Cash flow hedge”. They are not taken to the income statement until the losses or
gains on the hedged item are taken to income or until the date the hedged item matures. The ineffective part of the hedge is
taken directly to the consolidated income statement.
Hedges stop being recorded in the accounts when the hedging instrument expires, or is sold, terminated or exercised, or no
longer qualifies to be recorded as cover in the accounts. At that moment in time, any accumulated profit and loss corresponding
to the hedging instrument that has been recorded in net equity is kept in net equity until the planned operation takes place.
When the operation that is being hedged is not expected to take place, the accumulated net gains or losses recognised in net
equity are taken to the income statement of the year. Any changes in the fair value of the financial derivatives that fail to qualify
to be recorded as hedges in the accounts are taken to the consolidated income statement as they occur.
Financial derivatives implicit in other financial instruments or other main contracts are recorded separately as derivatives just
when their risks and characteristics are not closely linked to those of the main contracts and whenever said main contracts are not
stated at their fair value with the changes taken to the income statement.
4.7 Inventories
The various different categories of stocks have been stated using the following criteria:
Real estate business - Sotogrande (see Note 11)
All the costs incurred are identified for each area and product in order to determine the cost of each item when it is sold. This
method enables a proportional part of the total value of the land and the development costs to be assigned to the cost of the
sale, based on the percentage that the metres sold represent in proportion to the total metres available for sale in each area.
All the land and sites are classified under current assets even though it may take more than one year to build and sell them.
i) Undeveloped land: Stated at cost, which includes the legal costs of executing deeds, registration and taxes that cannot be
directly recovered from the Tax Authorities.
ii) Developed land: Stated at the lowest of cost or market value. The cost mentioned above includes the cost of the land, the
external cost of urban development and the technical projects.
iii) Buildings under construction and completed buildings: Stated at cost, which includes the proportional part of the costs of land
and infrastructure of the Pleasure Port and Inner Marina and the costs that are directly incurred in connection with the different
developments (projects, building permits, works certificates, legal expenses relating to the declaration of new construction
work, registration, etc.). The Group takes into account the market value and the time it takes for its finished products to be
sold, making the necessary adjustments in values whenever they are required.
Hotel business
The food in the catering services is stated at the lower of cost or realisable value.
4.8 Transactions and balances denominated in foreign currencies
The Group uses the euro as its functional currency. Consequently, operations in currencies other than euro are deemed to be
denominated in “foreign currency” and are recorded in accordance with the exchange rates prevailing on the date the operations
are carried out.
On every balance sheet date, the monetary assets and liabilities denominated in foreign currency are translated into the
functional currency at the exchange rates prevailing on the balance sheet date. Any gains or losses that arise are taken directly
to the income statement.
4.9 Classifying financial assets and debts as current and long-term
In the accompanying consolidated balance sheet, the financial assets and the debts are classified depending on when they fall
due, as current when they fall due in or before twelve months and as long-term when they fall due after more than twelve months.
NH Consolidated financial statements 2006 25

4.10 Income and expense
Income and expenses are recorded on an accrual basis, i.e. when the flow of assets and services which they represent actually
takes place, irrespective of when the resulting monetary or financial flow occurs.
Specifically, income is calculated at the fair value of the consideration to be received and represents the amount receivable for
the assets handed over or the services provided in the ordinary course of business, after deducting discounts and taxes.
Interest income and expenses accrue on a pay-back basis, based on the principal outstanding and the applicable effective rate
of interest.
4.11 Official grants
The Companies of the Group have recorded grants received in accordance with the following criteria:
- Non-refundable capital grants (linked to assets) are stated for the amount granted. They are recorded as deferred income and
released to income in proportion to the depreciation recorded during the year by the assets that are being financed by these grants.
- Operating grants are taken to the income statement when they accrue.
4.12 Corporation tax
The corporation tax expense for the year is calculated by adding the current tax resulting from applying the tax rate to the basis
of assessment for the year after applying any allowable deductions, plus the change in deferred tax assets and liabilities.
The deferred tax assets and liabilities include any timing differences that are identified as the amounts that are expected to
become payable or collectible on the differences between the book values of the assets and liabilities and their tax values, as
well as any tax loss carryforwards and credits for pending tax deductions. These amounts are recorded by applying the rate of
taxation at which the corresponding timing difference or credit is expected to be refunded or paid.
In some countries the rate of taxation varies depends on the form taken by the asset transfer. In these cases the Group's policy
has been to apply the effective rate at which the tax is expected to be refunded or paid. The Directors of the Group are of the
opinion that, in this case, the deferred tax calculated covers any amount that may eventually be paid in tax.
Deferred tax liabilities are recognised for all taxable timing differences, except when the timing difference comes from the initial
recognition of goodwill on which the write offs are not tax deductible or the initial recognition of other assets and liabilities in
operations that affect neither the tax result nor the book result.
For their part, deferred tax assets, identified with timing differences are only recognised when it is deemed probable that the
consolidated companies are going to record sufficient taxable income in the future to be able to make them effective and do not
come from the original recognition of other assets and liabilities in an operation that affects neither the tax result nor the book
result. All other deferred tax assets (tax loss carryforwards yet to be offset and deductions yet to be compensated) are recognised
only in the event that the consolidated companies are going to recording sufficient taxable income in the future to be able to
make them effective.
The deferred tax assets and liabilities recorded are reviewed in every closing, in order to check that they remain in force and to
make whatever corrections may be appropriate on the basis of the results of the analyses carried out.
4.13 Commitments to staff
The Spanish companies in the hotel and restaurant trade are required to pay a certain number of months’ pay to employees of
certain seniority and who meet certain prerequisites when they leave the company’s employ, retire, become permanently disabled
or reach a certain age.
The liabilities accruing on these commitments to staff are recorded in the caption “Provisions for liabilities and charges” on the
accompanying consolidated balance sheet (see Note 20).
On 31 December 2006, according to Royal Decree Law 16/3005, the Group externalised the aforesaid commitments, financing
the whole of services accrued previously.
4.14 Onerous contracts
The NH Hoteles Group classifies as onerous contracts those agreements in which the unavoidable costs of performing the
obligations stipulated therein exceed the economic benefits it expects to receive under the contracts.
26
NH Consolidated financial statements 2006

The NH Hoteles Group policy is to record a provision for the present value of the aforesaid difference between the costs and
benefits of a contract.
The pre-tax discount rates used reflect the present value of the money in the market, and the specific risks of these contracts;
specifically, rates between 7.7% and 9% have been used.
4.15 Compensation Plans based on share price
As indicated in Note 24, NH Hoteles, S.A. has implemented two compensation plans based on the share trading price, for
Directors with executive duties, senior managers and employees.
In general, these plans are settled in cash by differences. The Group has calculated the market value of each right as at the
concession date, taking into account the specific characteristics of these plans, using binomial valuation methods, taking that
value to the income statement on a straight-line basis over the period between concession of the compensation and exercise of
the right. Furthermore, until the liabilities are paid, the Group recalculates the fair value of the liabilities at the end of every year,
and takes any recognised change in the value to the income statement for the year.
The charge to the consolidated income statement for these plans in 2006 has involved an increase in staff expenses of 5,977
thousand euros. The balancing entry has been made in the account “Provisions for liabilities and charges - Provision for
Compensation Plan based on share price” under liabilities on the consolidated balance sheet (see Note 20).
The Group has contracted a derivative (“equity swap”) to hedge against fluctuations in the payments of the obligations that may
arise as a result of the compensation plans contracted. This derivative has been stated at fair value. The balancing account as at
the date of first application is an equity account, and for subsequent periods in the income statement for the same amount as
the staff expense charged as there is efficient cover for the payment streams (see Note 4.6.3).
4.16 Own shares held as treasury stock
The NH Hoteles Group own shares held as treasury stock which are carried at their cost of acquisition and at year-end are
recognised as a decrease in the heading “Net equity– Own shares” of the consolidated balance sheet.
Profits and losses obtained by the Group on disposal of own shares are recorded under “Share premium” on the consolidated
balance sheet.
4.17 Environmental policy
Capital expenditures stemming from environmental activities are stated at cost and capitalised as an increased cost of fixed
assets or inventories in the year they are incurred.
Expenses arising from the protection and improvement of the environment are charged to expense in the year they are incurred,
regardless of when the related monetary or financial flow takes place.
The provisions for probable or certain contingencies, disputes under way or indemnities or obligations outstanding for an
undetermined amount of an environmental nature, not covered by the insurance policies that have been taken out, are set up
when the liability or the obligation that sets off the indemnity or payment arises.
4.18 Consolidated cash flow statements
The following terms with the following definitions are used in the consolidated cash flow statements, prepared using the indirect
method:
- Cash flows: the inflow and outflow of cash and cash equivalents. Cash equivalents are defined as high-liquidity short-term
investments with little risk of change in value.
- Operating activities: the normal activities of the companies that make up the consolidated group, and any other activities that
cannot be classified as capital expenditure or financing.
- Investment activities: the activities relating to the acquisition, or disposal by other means of long-term assets and other capital
expenditures not included in cash and cash equivalents.
- Financing activities: the activities that give rise to changes in the size and structure of net equity and the liabilities that are not
part of the operating activities.
NH Consolidated financial statements 2006 27

5 EARNINGS PER SHARE
The basic earnings per share is calculated by dividing the net profit attributed to the Group (after taxes and minority interests) by the
weighted average number of shares outstanding during the year, as shown below:
2006 2005 Change
Profit/(loss) for the year (000s euros) 62,448 62,243 0.33%
Weighted average number of shares issued (000s shares) 122,209 119,533 2.24%
Weighted average number of own shares held (000s shares) 76 215 -64.65%
Weighted average number of shares outstanding 122,133 119,318 2.36%
0.51 0.52 -1.98%
6 GOODWILL
The balance recorded under this caption is for the net goodwill that has arose on the purchase of certain companies. Shown
below is the breakdown of this balance (in thousands of euros):
2006 2005
NH Hoteles Deutschland, GmbH and NH Hoteles Austria, GmbH 108,674 108,674
Nacional Hispana de Hoteles, S.R.L. de C.V. 3,218 3,176
Others 2,510 1,736
114,402 113,586
Set out below is the movement in this chapter of the consolidated balance sheet in 2006 and 2005 (in thousand euros):
Net
Net
goodwill Translation goodwill
31.12.04 Additions difference 31.12.05
NH Hoteles Deutschland, GmbH and
NH Hoteles Austria, GmbH 91,984 16,690 - 108,674
Nacional Hispana de Hoteles, S.R.L. de C.V. 3,130 - 46 3,176
Others 1,720 - 16 1,736
96,834 16,690 62 113,586
Net
Net
goodwill Translation goodwill
31.12.05 Additions (Retirements) difference 31.12.06
NH Hoteles Deutschland, GmbH and
NH Hoteles Austria, GmbH 108,674 - - - 108,674
Nacional Hispania de Hoteles, S.R.L. de C.V. 3,176 - - 42 3,218
Others (Note 2.4.6.a) 1,736 984 (223) 13 2,510
113,586 984 (223) 55 114,402
The recoverable value of the goodwill of NH Deutschland, GmbH and NH Hoteles Austria, GmbH has been allocated to each
cash flow generating unit using projections for results, capital expenditures and working capital, for the remaining years of
operation of the lease agreements of the hotels.
All other recoverable values of remaining goodwill have been assigned to each cash flow generating unit using five-year forecasts
and applying a methodology similar to that used for NH Deutschland, GmbH and NH Hoteles Austria, GmbH goodwill.
28
NH Consolidated financial statements 2006

7 INTANGIBLE ASSETS
Shown below are the breakdown and the movements on the different intangible asset accounts in 2006 and 2005 (in thousands
of euros):
Change in
Balance at Additions/ Balance at scope of Additions/ Balance at
31.12.04 Allocations Disposals 31.12.05 consolidation Allocations Disposals Transfers 31.12.06
COST
Rights of beneficial use 31,057 81 - 31,138 - - (65) - 31,073
Lease premiums 13,403 559 - 13,962 742 632 (44) - 15,292
Concessions, patents and trademarks 30,668 287 (138) 30,817 (2) 3,632 (5) (218) 34,224
Software 17,031 3,390 (33) 20,388 (10) 2,367 (113) 218 22,850
92,159 4,317 (171) 96,305 730 6,631 (227) - 103,439
ACCUMULATED AMORTISATION
Rights of beneficial use (7,676) (912) - (8,588) - (934) - - (9,522)
Lease premiums (4,486) (448) 75 (4,859) (109) (1,626) - - (6,594)
Concessions, patents and trademarks (10,171) (884) 86 (10,969) 1 (1,368) 372 - (11,964)
Software (7,859) (4,652) 19 (12,492) 3 (3,723) 111 - (16,101)
(30,192) (6,896) 180 (36,908) (105) (7,651) 483 - (44,181)
NET BOOK VALUE 61,967 59,397 59,258
7.1 Rights of beneficial use
On 28 July 1994, NH Hoteles, S.A. established a right of beneficial use on the hotel NH Plaza de Armas Hotel in Seville, owned
by the “Red Nacional de Ferrocarriles Españoles (RENFE)”, for a period of 30 years as from the date the agreement was
signed. The price to be paid for this by NH Hoteles, S.A. to RENFE is 30.20 million euros, in instalments that will be paid up
to the year 2014.
The Group has recorded under “Rights of beneficial use” all the amount agreed as the price for the operation and, in order to
properly time allocate that price, it takes the result of spreading the cost of the right over the thirty years of the term of the
agreement to the consolidated income statement, using an amount that increases by 4% every year. In turn, the captions “Other
current liabilities” and “Other long-term liabilities” (see Notes 23 and 18) on the accompanying consolidated balance sheet
record the amounts pending payment in the short and long term as at 31 December 2006, which amount to 1.49 million euros
and 10.47 million euros, respectively (1.49 million euros and 11.96 million euros as at 31 December 2005).
7.2 Lease premiums
In 2006, the column “Additions/Allocations” records 632 thousand euros, mainly in respect of the premium paid to obtain various
lease contracts for hotels located in Germany. These premiums are written off on a straight-line basis over the term of the related
contracts, which range between 15 and 19 years.
7.3 Software
The column “Additions/Allocations” chiefly records the costs incurred in the project to install a new computer system in the
Group during 2006 and 2005.
NH Consolidated financial statements 2006 29

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):
COST
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
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
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:
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
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.
30
NH Consolidated financial statements 2006

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:
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
Provision assigned to other fixed assets:
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
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 31

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):
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
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.
32
NH Consolidated financial statements 2006

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):
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
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.
NH Consolidated financial statements 2006 33

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.
34
NH Consolidated financial statements 2006

10.2 Other long-term financial investments
Set out below is a breakdown of this caption as at 31 December 2006 and 2005:
2006 2005
Holdings stated at cost 28,463 6,239
Traded financial assets 17,402 16,197
45,865 22,436
10.2.1 Long-term securities portfolio
Shown below is a breakdown of corporate holdings stated at cost:
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
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).
NH Consolidated financial statements 2006 35

11 INVENTORIES
Set out below is the breakdown of inventories as at 31 December 2006 and 2005 (in thousands of euros):
2006 2005
Developed land 30,681 32,318
Undeveloped land 18,972 17,096
Construction work in progress 49,507 31,806
Finished construction work 2,993 7,203
Auxiliary materials and others 7,520 8,479
109,673 96,902
The Group now owns approximately 1,809,000 square metres of land in Sotogrande (Cadiz). The planning status of this land is
governed by the General Urban Land Use Plan of San Roque, approved by the Provincial Town Planning Committee of Cadiz on
2 November 1987, which classifies the land owned by the Group mostly as programmed land that qualifies for development. The
average cost of the developed land, as at 31 December 2006, is 22 euros per square metre and 12 euros per square metre for
the undeveloped land. Moreover, assessments have been carried out by independent third parties according to which the market
value of this land is higher than its book value.
12 TRADE DEBTORS
Trade debtors record the different accounts receivable in respect of the Group's activities. Set out below is the breakdown of
“Trade debtors” as at 31 December (in thousands of euros):
2006 2005
Customer receivable for services 119,445 96,042
Customer receivables for real estate sales 18,317 45,542
137,762 141,584
Less, provision for bad debts (10,874) (11,228)
126,888 130,356
In general terms, these accounts receivable do not earn any interest, fall due within less than 90 days and are subject to no
restrictions on their disposal.
Movements of the provision for bad debts during the years ended on 31 December 2006 and 2005 are as follows (in thousands
of euros):
2006 2005
Balance at 1 January 11,228 11,042
Translation differences (49) 96
Allocations 1,475 90
Applications (1,780) -
Balance at 31 December 10,874 11,228
36
NH Consolidated financial statements 2006

13 SHORT-TERM FINANCIAL INVESTMENTS
13.1 Financial investments at maturity
Shown below is the composition of this heading in the accompanying consolidated balance sheet at 31 December 2006 and 2005:
2006 2005
Fixed-income financial assets 7,586 26,621
Short-term deposits 200,000 -
207,586 26,621
The line “Short-term deposits” records the placement in a short-dated interest-earning deposit of the cash value of the 200
million euros capital increase carried out in NH Italia, S.r.l. on 27 December 2006 for the purpose of financing for part of the
acquisition of Jolly Hotels, S.p.a.
As at 31 December 2006 and 2005, the fixed-income financial assets and short-term deposits all mature in less than one year and
earn an average market rate of interest.
13.2 Traded financial assets
This caption of the accompanying consolidated balance sheet as at 31 December 2006 and 2005 has the following composition:
2006 2005
Variable-yield financial assets 417 638
Interest rate swap (see Note 10.2.2) 11 680
Provision for impairment of equity securities (45) (95)
383 1,223
14 CASH AND BANKS AND OTHER CASH EQUIVALENTS
This caption mainly includes the Group's cash and bank accounts, as well as bank loans and deposits with maturity of no more
than three months. The average interest rate earned by the Group on the balances of its cash and banks and other cash
equivalents during 2006 and 2005 was a floating rate benchmarked to the Euribor. These assets are recorded at their fair value.
There are no restrictions on the disposal of cash.
15 NET EQUITY
15.1 Subscribed capital stock
As at December 31 2005 the Parent Company’s share capital was represented by 119,532,898 fully subscribed and paid-in bearer
shares each with a nominal value of 2 euros.
On 15 August 2005 the shares in the Parent Company were delisted permanently from Euronext Amsterdam, after the approval
by the governing body of the Amsterdam Stock Exchange.
On 5 May 2006, the annual General Meeting of shareholders approved two capital increases with the following characteristics
and disapplication of pre-emption rights:
- Capital increase by a nominal value of 8.5 million euros, with issue and placement in circulation of 4,250,000 ordinary shares with
a nominal value of 2 euros, of the same class and series as the existing shares, and a share premium of 11.5 euros per share. The
new shares issued were subscribed for and paid up in full by Equity International Properties, Ltd., by means of a non-cash
contribution of 1,162,439 shares of Latinoamericana de Gestión Hotelera, S.A. The capital increase was registered in the
Companies Registry of Madrid on 25 May 2006.
NH Consolidated financial statements 2006 37

- Capital increase for a maximum nominal value of 17.54 million euros, with the issue and placement in circulation of up to
8,770,130 ordinary shares with a nominal value of 2 euros, of the same class and series as the existing shares, and a share premium
of 11 euros per share. The capital increase was approved for purposes of settling the tender offer made by the Parent Company
by means of a stock swap over all of the 8,770,130 shares in the company Sotogrande, S.A. that it did not yet own.
On 26 December 2006 the tender offer for Sotogrande, S.A. was closed, with the placement in circulation of 7,815,589 ordinary
shares with a nominal value of 2 euros, and a share premium of 11 euros per share.
As a result of the transactions described above, at 31 December 2006 the share capital of the Parent Company was represented
by 131,598,487 bearer shares each with a nominal value of 2 euros and fully subscribed and paid in. All the shares have equal
voting and financial rights and are listed on the Continuous Market in the Madrid Stock Exchange and included in the IBEX 35.
As at the date these annual accounts were drawn up, an additional capital increase by a total value of 250 million euros has been
fully subscribed and paid in, with the issue of 16,371,971 new ordinary shares with a nominal value of 2 euros and a share premium
of 13.27 euros per share (see Note 28).
According to the latest notifications the Parent Company has received and to the notifications made to the Spanish Securities
Exchange Commission before the end of each year, the most significant shareholdings were as follows as at 31 December:
2006 2005
Grupo Inversor Hesperia, S.A. 22.19% 5.02%
Caja de Ahorros y Monte de Piedad de Madrid 10.04% 5.00%
Pontegadea Inversiones, S.L. 9.33% 10.27%
Caja de Ahorros y Monte de Piedad de Gipuzkoa y San Sebastian 5.09% -
Caja de Ahorros de Valencia, Castellón y Alicante 5.56% 6.12%
Caja de Ahorros y Monte de Piedad de Zaragoza, Aragón y Rioja 4.54% 5.00%
Finaf 92, S.A. - 5.24%
Hoteles Participados, S.L. 5.04% 5.25%
Shares used for Compensation Plans plus Management Team’s holding 3.32% 4.14%
At the end of 2006 and 2005, the different members of the Board of Directors held or were the stable representatives of
shareholdings representing approximately 30.97% and 33.02% of the share capital, respectively.
The main objectives in the management of the NH Hoteles Group’s capital are to ensure short and long-term financial stability,
positive performance of the NH Hoteles, S.A. shares and adequate funding of investments, while maintaining the level of
indebtedness. All with the aim of having the NH Hoteles Group maintain its financial strength and financial ratios so as to support
its businesses and maximise shareholder value.
During 2006 the NH Hoteles Group strategy did not vary with respect to the previous year, maintaining a financial leverage of
0.60x, far below the 1x ratio always proposed as the Group’s objective. The leverage ratios at 31 December 2006 and 2005 were
as shown below:
Euros 000s
2006 2005
Debts to credit institutions (*) (Note16) (886,633) (735,669)
Liability derivatives (Note 19) (1,909) (4,983)
Gross debt (888,542) (740,652)
Asset derivatives (Note 19) 17,413 16,877
Financial assets at maturity (Note 13.1) 207,586 26,621
Traded financial assets (Note 13.2) 372 543
Cash and bank and other cash equivalents (Note 14) 42,369 18,039
Treasury assets 267,740 62,080
Total Net Debt (620,802) (678,572)
Total Net Equity 1,031,288 890,268
Financial leverage 0.60 0.76
(*) Short-term and long-term debt to credit institutions not including the debt formalisation expenses.
38
NH Consolidated financial statements 2006

15.2 Reserves of the Parent Company
i) Legal reserve
According to the consolidated text of the Spanish Public Limited Companies Act, 10% of the net profits of the year must be allocated
to the Legal reserve until it reaches at least 20% of share capital. This reserve may be used to increase capital to the extent that its
balance exceeds 10% of the capital already increased. Except for this purpose, and for so long as its balance does not exceed 20%
of share capital, this reserve may only be used to offset losses if no other reserves are available sufficient for that purpose.
ii) Share premium
The consolidated text of the Public Limited Companies Act expressly permits use of the balance of this reserve for capital
increases and does not establish any restrictions on its distribution.
As indicated in Note 2.4.6. to the accompanying consolidated financial statements, during 2006 the Parent Company carried out
two capital increases to acquire the equity stakes held by minority interests in Latinoamericana de Gestión Hotelera, S.A. and
Sotogrande, S.A., by means of a swap for those holdings for shares in the Parent Company, with an aggregate increase in the
value of the paid-in surplus there of 134.85 million euros.
Given that the Parent Company controlled the aforesaid subsidiaries and consolidates them by the global integration method
prior to the aforesaid capital increases, the difference between the value of the minority interests acquired and the subscription
price of each of the increases, plus the expenses associated therewith, has been recorded in an aggregate of 76.83 million euros
in the heading “Share premium” of the accompanying consolidated balance sheet at 31 December 2006.
iii) Other reserves not available for distribution
Until such time as start-up expenses and goodwill (not including goodwill on consolidation) recorded in the individual Annual
Accounts of the companies that are included in the scope of consolidation of the NH Hoteles Group have been written off in full,
no dividends may be distributed, unless the amount of reserves available for distribution is at least equal to the balances write-off.
iv) Dividends
The General Meeting of shareholders held on 5 May 2006 approved the distribution of a gross dividend against voluntary reserves
of 0.26 euros per share, giving a total dividend payout of 31.08 million euros.
15.3 Reserves of subsidiaries
Shown below is the breakdown for each company of the balances of this account in the consolidated balance sheets -after taking
into account the effect of the consolidation adjustments- and the exchange differences recognised in net equity as a result of the
consolidation process:
Euros 000s
2006 2005
Fully consolidated and consolidated Exchange Exchange
using the proportional method Reserves differences Reserves differences
NH Participaties, N.V. and subsidiaries 196,957 (84) 167,185 152
Sotogrande, S.A. and subsidiaries 72,027 - 54,136 -
Latinoamericana de Gestión Hotelera, S.A. and subsidiaries (6,902) (3,412) 3,460 17,553
NH Private Equity, B.V. and subsidiaries 80 - 72 -
NH Central Europe GmbH & Co.KG. and subsidiaries (60,939) (21) (101,164) (46)
NH Italia, S.r.l. and subsidiaries (2,869) - (1,216) -
Other Spanish hotel companies 37,188 (387) 28,312 162
Subtotal 235,542 (3,904) 150,785 17,821
Consolidated using the equity method
Jolly, S.p.a. 8,463 - 9,073 -
Palacio de la Merced, S.A. (456) - (418) -
Fonfir, S.L. (4) - (4) -
Harrington Hall Hotel, Ltd. (379) - - -
Corporación Hotelera Dominicana, S.A. - (1,771) - -
Corporación Hotelera Oriental, S.A. - (224) - -
Subtotal 7,624 (1,995) 8,651 -
TOTAL 243,166 (5,899) 159,436 17,821
NH Consolidated financial statements 2006 39

15.4 Equity valuation adjustments
Cash flow hedges
This caption on the consolidated balance sheet records the net amount of the changes in value of the financial derivatives
designated as cash-flow hedging instruments (see note 4.6.3).
Set out below is the movement in the balance of this caption during 2006 and 2005:
Euros 000s
2006 2005
Opening balance 4,772 -
First application of IAS 32 and 39 - 3,492
Additions 3,306 7,118
Retirements (5,978) (5,838)
Closing balance 2,100 4,772
The reserve for equity valuation adjustments will expire in full over the course of 2007 and 2008 depending on how the rights of
the Compensation Plan based on share price are exercised (see Note 24).
15.5 Own shares
During 2006, the Group has carried out several operations to purchase 616,862 shares (2,203,349 shares in 2005) and sell 411,219
shares (2,228,349 shares in 2005) of its own shares, within the limits stipulated by law and has made the required notifications to
the Spanish Securities Exchange Commission and the Governing Corporations of the Stock Exchanges.
At the year end, the Group held 230,543 shares in NH Hoteles, S.A. (25,000 at the end of 2005), representing 0.18% of its share
capital, at a cost of 3,504 thousand euros.
15.6 Minority interests
Set out below is the breakdown by company of the balance of the heading “Minority Interests” on the consolidated balance
sheets as at 31 December 2006 and 2005 and the participation of outside shareholders in the income statement for 2006
and 2005:
Euros 000s
2006 2005
Profit (loss)
Profit (loss)
Minority attributed to Minority attributed to
Company interests minority interests interests minority interests
Latinoamericana de Gestión Hotelera, S.A. and subsidiaries 12,745 130 63,729 2,128
Sotogrande, S.A. and subsidiaries 11,893 179 37,970 6,818
NH Participaties N.V. and subsidiaries 4,147 696 4,030 362
NH Italia, S.p.a. and subsidiaries 136,756 (2,996) 130 (1,332)
Other Spanish hotel companies 11,137 1,093 13,823 194
176,678 (898) 119,682 8,170
40
NH Consolidated financial statements 2006

Shown below is a summary of the movement in this caption during 2005 and 2006:
Euros 000s
2006 2005
Opening balance 119,682 137,266
Profit (loss) for the year attributed to minority int. (898) 8,170
Changes in the scope of consolidation 142,517 2,643
Change in percentage holdings (82,326) (31,704)
Dividends paid to minority interests (2,042) (2,637)
Differences on exchange (255) 6,193
Other movements - (249)
Closing balance 176,678 119,682
The line “Changes in the scope of consolidation” records in 2006 and 2005 the balances of certain companies which were
included for the first time in the scope of consolidation of the Group in those years (see Note 2.4.6) and the incorporation of
Banca Intesa (today Banca Intesa Sanpaolo, S.p.a.) in the share capital of NH Italia, S.r.l. by means of a cash contribution of 133.74
million euros.
The line “Change in percentage holdings” basically records, in 2006, the purchase of 35.63% of the share capital of
Latinoamericana de Gestión Hotelera, S.A. and of 18.66% of Sotogrande, S.A., and in 2005, the purchase of 38% of the share
capital of Nacional Hispana de Hoteles, S.R.L. de C.V. (see Note 2.4.6).
16 DEBTS TO CREDIT INSTITUTIONS
Set out below is the composition of debts to credit institutions as at 31 December 2006 and 2005 (in thousands of euros):
Maturity date
Limit Available Drawn 2006 2007 2008 2009 2010 Rest
Mortgage loans 109,338 - 109,338 - 16,930 27,337 6,386 11,276 47,409
Fixed rate 35,907 - 35,907 - 2,983 21,378 921 4,527 6,098
Floating rate 73,431 - 73,431 - 13,947 5,959 5,465 6,749 41,311
Unsecured loans 599,184 - 599,184 - 260,326 105,837 113,898 109,242 9,881
Fixed rate 970 - 970 - 456 344 170 - -
Floating rate 598,214 - 598,214 - 259,870 105,493 113,728 109,242 9,881
Subordinated loans 40,000 - 40,000 - - - - - 40,000
Credit lines 339,158 206,778 132,380 - 67,948 32,746 11,384 20,302 -
Floating rate 339,158 206,778 132,380 - 67,948 32,746 11,384 20,302 -
Interest debt 5,731 - 5,731 - - - -
Debt formalization expenses (7,300) (1,179) (1,132) (1,132) (1,132) (2,725)
Debt situation at 31.12.06 1,087,680 206,778 879,333 - 349,756 164,788 130,536 139,688 94,565
Debt situation at 31.12.2005
(net of formalization expenses) 776,957 44,401 729,700 136,829 248,603 117,452 95,255 92,873 38,688
NH Consolidated financial statements 2006 41

Shown below is the breakdown of the mortgage loans, be they syndicated or not (in thousands of euros):
Net book value of
Bank Mortgaged asset Fixed rate Floating rate Total the mortgaged asset
Spain
La Caixa NH Ciutat de Reus - 213 213 2,279
BBVA NH Málaga - 3,245 3,245 9,540
BBVA NH Calderón - 6,283 6,283 29,120
SCH NH Calderón - 8,196 8,196 -
Caja Madrid Commercial premises Hotel NH Eurobuilding - 83 83 1,016
BBVA NH Lagasca - 14,400 14,400 17,439
Banco Popular NH Ppe. de la Paz - 7,786 7,786 9,869
SCH NH Alcalá 6,010 - 6,010 12,441
Banco Popular NH Sotogrande - 9,000 9,000 12,793
Bankinter "Las cimas 2 de Sotogrande" development - 4,391 4,391 7,078
Total Spain 6,010 53,597 59,607 101,575
Uruguay
Bco. de la República NH Columbia - 397 397 11,134
Total Uruguay - 397 397 11,134
Mexico
Caixanova Santa Fe Project - 6,232 6,232 11,875
Total Mexico - 6,232 6,232 11,875
Netherlands
NIB NH Gran Krasnapolsky 22,522 - 22,522 80,439
Friesland NH Groningen - 3,480 3,480 5,707
ABN NH Jan Tabak 289 - 289 8,341
Total Netherlands 22,811 3,480 26,291 94,487
Italy
Efibanca Donnafugata - 4,400 4,400 1,800
Unicredit Villa de San Mauro - 4,500 4,500 7,500
Banca Popolare San't Angelo Hotel Quattro Canti Project - 825 825 1,700
Total Italy - 9,725 9,725 11,000
Switzerland
Banco Cantonale NH Fribourg 7,086 - 7,086 6,991
Total Switzerland 7,086 - 7,086 6,991
Total 35,907 73,431 109,338 237,062
The line “Unsecured loans, floating rate” includes the following loans:
- A syndicated loan granted to NH Hoteles, S.A. by 25 European banks, on 23 June 2004 for 350 million euros. As at 31 December
2006 the outstanding balance of this loan amounted to 311.5 million euros.
The loan falls due on 23 June 2010 and pays annual interest at the one-month Euribor plus a margin that varies between 1.1%
and 0.60 % depending on the “Net financial debt/EBITDA” ratio. The loan is to be repaid in five instalments, the first of which
took place in July 2006 for an amount of 38.5 million euros, being the following in July 2007 for an amount of 77.9 million euros
and the last three instalments for equivalent amounts in the following anniversaries.
This loan requires that certain financial ratios be complied with. As at 31 December 2006, none of these are in a position that can
trigger acceleration of the loan’s maturity by the lenders.
- A syndicated loan through Banco Bilbao Vizcaya Argentaria granted to NH Hoteles, S.A. for a maximum of 42.07 million euros,
to be used to finance the acquisition, via a public tender offer, of shares in Promociones Eurobuilding, S.A. (company taken over
by NH Hoteles, S.A. in 2002). As at 31 December 2006, there were 26 million euros still outstanding. The interest on this loan is
charged at a rate equal to the Euribor plus a margin and the loan will be repaid gradually starting in 2001 and ending in 2011.
42
NH Consolidated financial statements 2006

- A loan granted through a “Club Deal” between the banks Banco Bilbao Vizcaya Argentaria, Caja Madrid and Barclays Bank, for
114 million euros, for the purpose of funding the capital increase in NH Italia, S.r.l. (see Note 13.1). This loan accrued interest at
a rate equal to the Euribor plus a margin and will be repaid in full in July 2007.
- An 18 million euro loan with maturity date in July 2007, the same as the loan described in the preceding paragraph. It was
granted for the purpose of financing the repayment of the mortgage loans of Nacional Hispana de Hoteles, S.r.l. de C.V. and
subsidiaries. The loan accrues interest at a rate equal to the Euribor plus a margin.
- A 40 million dollar loan granted by Caja Madrid to fund the operations currently being carried out in the Caribbean region. It
accrues interest at a rate equal to the Libor plus a margin, will begin to be repaid in May 2008 and be repaid in full by May 2010.
- A loan to the company NH Hotel Rallye, S.A. of 40 million dollars granted by Banco Bilbao Vizcaya Argentaria to fund the
Group’s foreign investments. It was granted in January 2006 and matures on November 2009. The loan accrues interest at a rate
equal to the Libor plus a margin.
In addition, the line “Subordinated loans”, includes a loan of 40 million euros that was completely drawn down at 31 December
2006. This loan accrues interest at a rate equal to the Euribor plus a margin of 1.70%, has a term of 30 years and is to be repaid
in a single payment at maturity.
Set out below are the average interest rates of financing of the Group during 2006 and 2005:
2006 2005
Mortgage loans
Fixed rate 4.80% 5.09%
Floating rate Euribor +1.10 Euribor +1.18
Unsecured loans
Fixed rate 5.19% 5.19%
Floating rate Euribor +0.88 Euribor +0.74
Floating rate subordinated loan Euribor +1.70 -
Credit lines Euribor +0.33 Euribor +0.26
NH Consolidated financial statements 2006 43

17 CREDITORS UNDER FINANCE LEASES
Shown below is the breakdown of the finance leases of the NH Hoteles Group as at 31 December 2006 and 2005:
Euros 000s
Present value of the
Nominal value of the
lease instalments
lease instalments
2006 2005 2006 2005
Amounts payable under capital leases
Facilities Inmobiliaria Sotogrande
Less than one year 14 - 16 -
Between two and five years 37 - 39 -
Furniture Hotel Príncipe de la Paz
Less than one year 197 360 200 373
Between two and five years 22 216 22 219
Facilities Hotel Almenara
Less than one year 40 39 42 42
Between two and five years 63 100 64 103
Balance falling due in less than 12 months
(included in current liabilities) 251 399 258 415
Balance falling due after more than 12 months
(included in long-term liabilities) 122 316 125 322
373 715 383 737
Less: future interest expense
Facilities Inmobiliaria Sotogrande N/A N/A (3) -
Furniture Hotel Príncipe de la Paz N/A N/A (3) (16)
Facilities Hotel Almenara N/A N/A (4) (6)
Present value of obligations under leases 373 715 373 715
During the year ended on 31 December 2006, the average effective interest rate for the debt was 4.70% (6.24% in 2005). The
interest rates were set on the date of the contract. The leases are paid on a fixed basis and no agreement has been made for the
contingent rent payments. All lease obligations are nominated in euros.
The fair value of the Group's lease obligations is close to their book value.
44
NH Consolidated financial statements 2006

18 OTHER LONG-TERM LIABILITIES
Shown below is the breakdown of “Other long-term liabilities” of the accompanying consolidated balance sheets as at 31
December 2006 and 2005 (in thousands of euros):
Euros 000s
2006 2005
Call and put options for the Jolly Hotels operation (Note 10.1) 277,405 -
Preference shares issued by subsidiaries 28,818 28,122
Capital grant 14,643 3,446
Right of beneficial use Hotel Plaza de Armas (Note 7.1) 10,465 11,960
Residencial Marlin, S.L. (Note 10.1) 9,000 9,000
Los Alcornoques de Sotogrande, S.L. (Note 10.1) 1,400 -
Financial instruments (Note 10.2.2) 1,282 4,089
Purchase minority interest Astron (*) - 15,000
Other liabilities 3,143 9,718
346,156 81,335
(*) Purchase minority interests in NH Hoteles Deutschland, GmbH and NH Hoteles Austria, GmbH
The line “Call and put options for Jolly Hotels operation” records the liability in respect 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. and which would give the Group control of 74.47% of the share
capital of Jolly Hotels, S.p.a. (see Note 10.1).
The line “Preference shares issued by subsidiary companies” records the preference shares issued by NH Participaties NV.
outstanding as at 31 December 2006 and 2005 which have, by their nature, been classified as a financial liability. These preference
shares earn interest at a fixed annual rate of 5.55% and mature on 1 January 2008.
The line “Capital grants” basically records, as at 31 December 2006, a total of 14.64 million euros for the grants received to build
the hotels and golf courses of the subsidiary Sotogrande, S.A. in the amount of 3.2 million euros (3.45 million euros as at 31
December 2005), and the capital grants received for the Donnafugata, Baglio Oneto and Parco Degli Aragonesi projects in
progress (6.2 million euros, 2.3 million euros and 2.9 million euros, respectively).
The amount recorded in the line “Residencial Marlin, S.L.” represents 50% of the participating loan granted to that company by
the minority shareholder of Sotogrande, S.A., which has a 50% holding in said company. This participating loan matures in July
2007 (see Note 10.1).
The amount recorded in the line “Los Alcornoques de Sotogrande, S.L.” is for 50% of the participating loan granted to that
company by the minority shareholder of Sotogrande, S.A., which has a 50% holding in said company. This participating loan
matures in 2009 (see Note 10.1).
In 2005 the NH Hoteles Group acquired the remaining 20% of NH Hoteles Deutschland, GmbH and NH Hoteles Austria, GmbH,
for 45 million euros. At 31 December 2006 the pending payment amount, falling due in 2007, was 15 million euros, which are
classified as short-term in the heading “Other current liabilities” (see Note 24). As at 31 December 2005, 30 million euros were
still outstanding, 15 million of which were recorded as short-term in the caption “Other current liabilities”.
NH Consolidated financial statements 2006 45

19 FINANCIAL DERIVATIVES
Shown below is the breakdown of financial derivatives on the consolidated balance sheet as at 31 December 2006 and 2005:
Euros 000s
Amount at 31.12.06 Amount at 31.12.05
Financial Financial Financial Financial
Type of derivative asset liability asset liability
Interest rate derivatives (Note 10.2) 1,189 1,486 4,089 4,983
Currency derivatives 130 423 - -
Compensation Plan based on share price (Note 10.2) 16,094 - 12,788 -
Total 17,413 1,909 16,877 4,983
Interest rate derivatives
As at 31 December 2006, the NH Hoteles Group had a number of interest rate derivative contracts which has not been qualified
as hedges.
Shown below are the main operations contracted and under way as at 31 December 2006 in relation to a serious of derivatives
that originally guaranteed a syndicated loan cancelled in 2004:
Amount
Interest rate derivatives Contracted Notional
at 31.12.2006 Rate (*) (Euros) Currency Maturity (Euros)
Interest rate swaps Fixed to floating 42,282,545 EUR 15/07/2008 27,677,486
Interest rate swaps Fixed to floating 6,166,207 EUR 15/07/2008 4,036,306
Interest rate swaps Fixed to floating 10,890,725 EUR 01/06/2007 5,989,899
Interest rate swaps Floating to fixed 52,275,481 EUR 15/07/2008 26,908,798
Interest rate swaps Floating to fixed 7,497,794 EUR 15/07/2008 3,924,206
Interest rate swaps Floating to fixed 44,243,299 EUR 15/07/2008 20,319,792
Interest rate swaps Floating to fixed 10,890,725 EUR 01/06/2007 5,445,362
Interest rate swaps Fixed to floating 38,777,952 EUR 15/07/2008 25,797,752
Interest rate collar Floating to fixed 38,591,149 EUR 15/07/2008 37,645,153
Shown below are the main operations contracted and under way as at 31 December 2005:
Amount
Interest rate derivatives Contracted Notional
at 31.12.2005 Rate (*) (Euros) Currency Maturity (Euros)
Interest rate swaps Fixed to floating 42,282,545 EUR 15/07/2008 30,752,235
Interest rate swaps Fixed to floating 6,166,207 EUR 15/07/2008 4,484,706
Interest rate swaps Fixed to floating 30,189,090 EUR 17/07/2006 22,380,440
Interest rate swaps Fixed to floating 26,801,394 EUR 17/07/2006 26,801,394
Interest rate swaps Fixed to floating 10,890,725 EUR 01/06/2007 7,078,971
Interest rate swaps Floating to fixed 52,275,481 EUR 15/07/2008 29,983,547
Interest rate swaps Floating to fixed 7,497,794 EUR 15/07/2008 4,372,206
Interest rate swaps Floating to fixed 34,874,280 EUR 17/07/2006 21,859,863
Interest rate swaps Floating to fixed 44,243,299 EUR 15/07/2008 27,847,253
Interest rate swaps Floating to fixed 26,801,394 EUR 15/07/2006 19,569,271
Interest rate swaps Floating to fixed 10,890,725 EUR 01/06/2007 6,534,435
Interest rate swaps Fixed to floating 38,777,952 EUR 15/07/2008 28,530,426
Interest rate collar Floating to fixed 38,591,149 EUR 15/07/2008 38,591,149
(*) The 3-month EURIBOR or LIBOR is used, with no margin
46
NH Consolidated financial statements 2006

- NH Hoteles, S.A. has contracted a financial derivative (collar with barriers) for 10 million euros whereby the Company at all times
receives the 1-month Euribor. This instrument has a settlement date of 18 March 2008.
With this hedge, if rates fall below 2.60% the Company would be obliged to pay 3.95%. If the rates hold at between 2.60% and
4.20%, the Company would be at the market rate. If the rates move to between 4.20% and 4.70%, the Company would pay 4.20%.
If the rates rise above 4.70%, the Company would be at the market rate.
- NH Hoteles, S.A. has contracted a derivative for 5 million euros, whereby the Company at all times receives the 1-month Euribor.
This instrument has settlement date of 16 December 2008.
With this structure the Group is covered provided the 1-month Euribor is below the barriers. Otherwise it would be hedged at
the 12-month Euribor minus 0.15%. The benchmark barriers of 1-month Euribor for this contract are shown below:
Barriers 1-month Euribor
Fixed rate payable
2.35% 3.35%
3.00% 3.50%
3.15% 3.60%
The changes in the fair value of these interest rate derivatives during 2006 amounted to 0.14 million euros (0.51 million euros in 2005).
Currency derivatives
The currency derivatives in force at 31 December 2006 have not been qualified as hedging instruments.
Of bank loans:
Currency derivatives at 31.12.2006 Nominal Contracted Currency Maturity
Currency insurance 13,300,000 USD 22/05/2009
Currency insurance 3,000,000 USD 20/05/2009
Currency insurance 5,000,000 USD 22/05/2009
Currency insurance 5,000,000 USD 22/05/2009
Of financial investments
These financial instruments were contracted to hedge the possible fluctuations in the US$/euro exchange rate with respect to the
payments relating to the investment in Desarrollos Isla Blanca, S.L. (see Note 24).
Type Currency Nominal Maturity
Currency insurance USD 6,000,000 16/01/2007
Currency insurance USD 5,000,000 12/01/2007
Put option with barrier USD 5,000,000 12/01/2007
Forward extra USD 5,000,000 12/01/2007
The changes in the fair value of these currency derivatives during 2006 amounted to 0.29 million euros.
NH Consolidated financial statements 2006 47

20 PROVISIONS FOR LIABILITIES AND CHARGES
Shown below is the breakdown of the “Provisions for liabilities and charges” as at 31 December 2006 and 2005, together with the
main movements recorded during said years (in thousands of euros):
Euros 000s
First
Balance at Application Applications Balance at
31/12/2004 IAS 32 & 39 Allocations (Reductions) Transfers 31/12/2005
Provisions for long-term liabilities and charges:
Onerous contracts 23,990 - - - (4,768) 19,222
Provisions for pensions and similar obligations 10,637 - 1,692 - - 12,329
Provision for Compensation Plan
based on share price (Note 10.2.2) 2,397 2,178 5,838 (2,397) - 8,016
Other claims 7,672 - 720 (2,461) (2,499) 3,432
44,696 2,178 8,250 (4,858) (7,267) 42,999
Provisions for current liabilities and charges:
Onerous contracts 5,101 - - (5,101) 4,768 4,768
Provision for contingencies 28,310 - - (28,310) - -
Restructuring plans 3,800 - - (3,800) - -
Other claims 3,041 - 158 (2,574) 2,499 3,124
40,252 - 158 (39,785) 7,267 7,892
Total 84,948 2,178 8,408 (44,643) - 50,891
Euros 000s
Balance at Additions Applications Balance at
31/12/2005 to scope Allocations (Reductions) Transfers 31/12/2006
Provisions for long-term liabilities and charges:
Onerous contracts 19,222 - - - (2,166) 17,056
Provisions for pensions and similar obligations 12,329 276 811 (658) - 12,758
Provision for Compensation Plan
based on share price (Nota10.2.2) 8,016 - 5,977 (200) - 13,793
Other claims 3,432 - 3,244 (3) - 6,673
42,999 276 10,032 (861) (2,166) 50,280
Provisions for current liabilities and charges:
Onerous contracts 4,768 - - (4,060) 2,166 2,874
Other claims 3,124 - - (346) - 2,778
7,892 - - (4,406) 2,166 5,652
Total 50,891 276 10,032 (5,267) - 55,932
Onerous contracts
The NH Hoteles Group has classified as onerous a series of contracts of hotels operated under leases scheduled to expire
between 2007 and 2028. The management of these hotels if being positive at gross operating profit (G.O.P.) is loss-making at
net operating profit (ebitda) and cancellation of these contracts would imply full payment of the rent for the years pending
under the lease.
Provisions for pensions and similar obligations
The account “Provision for pensions and similar obligations” includes, mainly, the provision set up by the Group to cover the
pension plans arranged with its staff, for an amount of 10,482 thousand euros (9,264 thousand euros as at 31 December 2005).
48
NH Consolidated financial statements 2006

The method used to calculate the value of the obligations relating to this pension plan was the projected credit unit method.
Set out below are the main assumptions used when calculating the actuarial liability:
2006 2005
Discount rates 4.00% 4.50%
Forecast annual rate of wage increases 2.50% 2.50%
Forecast return on the assets earmarked for the plan 3.75% 4.25%
21 TAX MATTERS
Shown below is the composition of the tax accounts receivable as at 31 December 2006 and 2005:
Euros 000s
2006 2005
Deferred tax assets
Tax credits 1,707 3,916
Tax assets on asset impairment 13,367 16,008
Staff-related advance taxes 3,273 3,501
Other deferred tax assets 16,292 12,443
Total 34,639 35,868
Short-term tax receivables
Corporation Tax 424 5,479
Value Added Tax 8,494 4,352
Withholdings and payments on account 5,896 1,466
Tax on Presumed Profits 1,378 1,356
Other receivables from tax authorities 2 874
Total 16,194 13,527
The “Deferred tax assets” caption records, mainly, the capitalisation of tax loss carryforwards, as well as the advance taxes arising
as a result of impairment in the value of certain assets.
Shown below is the movement recorded in 2006 in the caption of deferred tax assets:
Euros 000s
Opening balance 35,868
Capitalization of tax credits 163
Additions due to inclusions in scope of consolidation 242
Other additions 1,444
Cancellation of tax credits (2,931)
Application of tax losses carryforwards (147)
Closing balance 34,639
NH Consolidated financial statements 2006 49

Shown below is the composition of breakdown of the tax accounts payable as at 31 December 2006 and 2005:
Euros 000s
2006 2005
Deferred tax liabilities
Revaluations of assets 98,775 123,211
Financial derivatives 350 1,227
Total 99,125 124,438
Short-term tax payables
Corporation Tax 7,883 7,217
Value Added Tax 4,971 7,057
Personal Income Tax 5,156 5,760
Tax on Income from Capital 293 504
Social Security 5,759 4,782
Other taxes 2,487 1,467
Total 26,549 26,787
The balance of “Deferred tax liabilities” mainly records the restatement of certain assets in the Group made chiefly as part of the
changeover to IFRS.
Shown below is the movement recorded in the caption of deferred taxes during 2006:
Euros 000s
Opening balance 124,438
Application for reinvestment (3,286)
Cancellation for exclusions from scope of consolidation (3,021)
Other cancellations (19,006)
Closing balance 99,125
Corporation Tax expense
The companies that make up the NH Hoteles Group are grouped together geographically and file their tax returns in accordance
with the law in force in the relevant countries.
Corporation tax is calculated on the basis of the accounting or book profit obtained in accordance with general accepted
accounting principles accepted in each country, which is not necessarily the same as the figure for taxable income used as the
tax assessment base.
Shown is the reconciliation between book income and taxable income for purposes of the corporation tax (in thousands of euros):
Book income (after taxes and before minority interests) 61,550
Corporation tax 25,395
Book income (before taxes and minority interests) 86,945
Permanent differences (7,170)
Timing differences 4,054
Consolidation adjustments 16,516
Previous taxable income 100,345
Setoff of tax loss carryforwards (421)
Tax base 99,924
The various foreign subsidiaries calculate corporation tax expense according to the laws and tax rates prevailing in each country.
50
NH Consolidated financial statements 2006

Parent Company Consolidated Tax Group-
NH Hoteles, S.A. consolidates for tax purposes with all the companies that are tax residents in Spain in which it has held a direct
or indirect holding during the tax period of at least 75%, in accordance with the rules laid down in Chapter VII of Title VII of the
current Corporation Tax Act, as approved by Legislative Royal Decree 4/2004.
The accounts payable or receivable generated in this respect are settled by NH Hoteles, S.A., the Parent Company of the Group.
Years open to tax inspection
As at 31 December 2006, as a general rule the main taxes applying to the consolidated companies for the last four years are open
to inspection by the competent tax authorities.
For the years open to inspection there may be contingent liabilities that cannot be objectively quantified. In the opinion of Group
management, such liabilities are not significant.
Deductions applied to the Parent Company Consolidated Tax Group -
The deductions applied correspond fundamentally to the deduction for investing in export business.
When calculating corporation tax, no amount has been deducted for investing in measures aimed at reducing environmental impact.
As at 31 December 2006, the Tax Group had the following tax incentives pending of application:
Year of origin Deduction pending of application Amount
2001 Investment in export business 45,682
2001 to 2005 Others 93
45,775
Also, the Parent Company Consolidated Tax Group made use, in the past, of the “Deferral for reinvesting extraordinary
profits”. Set out below are the main features of this reinvestment (in thousands of euros):
Amounts setoff
Year Income qualifying Previous Year Amount Last year of
of origin for deferral years 2006 pending deferral
1997 9,399 6,714 1,343 1,343 2007
1998 1,625 929 232 464 2008
1999 75,145 21,840 6,547 46,758 2049
2000 3,737 1,068 534 2,136 2010
2001 4,335 619 619 3,097 2011
The reinvestment of all this income was done in diverse financial holdings, except for the one that appeared in 1999 which was
reinvested in acquiring properties.
NH Consolidated financial statements 2006 51

Set out below is a descriptive breakdown of the income for the year and for prior years qualifying for the deduction for
reinvestment of extraordinary profits, in accordance with the terms of article 42 of the current Corporation Tax Act (in
thousands of euros):
Date of Income Deduction Company generating Company that
Year transfer qualifying Applied Pending the capital gain reinvests
2002 February 25,738 4,375 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2002 February 3,282 558 - NH Pamplona, S.A. NH Hotel Rallye, S.A.
2002 April 8 - 1 Sotogrande, S.A. NH Hotel Rallye, S.A.
2002 December 1,087 185 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2003 May 3,085 617 - NH Establecimientos Hoteleros, S.A. NH Hotel Rallye, S.A.
2003 September 3,037 607 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2004 March 365 73 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2005 May 700 140 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2005 May 19 4 - NH Hoteles, S.A. NH Hotel Rallye, S.A.
2006 January 735 147 - Sotogrande, S.A. Sotogrande, S.A.
2006 December 3,480 696 - NH Hoteles, S.A. Sotogrande, S.A.
2006 December 3,100 620 - NH Hoteles, S.A. Sotogrande, S.A.
The capital gains generated in 2002 and 2003 were reinvested in the purchase of 80% of the Astron Group (today NH Hoteles
Deutschland, GmbH and NH Hoteles Austria GmbH) made in November 2002. The obligation to hold the investment for three
years finished in November 2005.
The reinvestment of 2004 and 2005 capital gains was made in the purchase of 38% of Nacional Hispana de Hoteles S.r.l. de
C.V. (a group of mexican hotel companies) made in January 2005. The obligation to hold the investment for three years will be
finished in January 2008.
The capital gains of 2006 were reinvested in the July 2006 purchase of 50% of the company Desarrollos Isla Blanca, S.L. for
19.53 million euros. The obligation to hold the investment for three years will be finished in July 2009.
Tax loss carryforwards and deductions pending
As at 31 December 2006, the Parent Company Consolidated Tax Group carried no tax loss carryforwards pending application.
In the Parent Company Consolidated Tax Group, the companies Retail Invest, S.A., Hotelera Onubense, S.A. and
Latinoamericana de Gestión Hotelera, S.A., record the following tax loss carryforwards previous to their incorporation in the
Tax Group, which may only be setoff against profits made by the same companies (in thousands of euros):
Year of origin Amount Carryforward limit
1994 160 2009
1995 3,402 2010
1996 4,009 2011
1997 11,636 2012
1998 4,316 2013
1999 55 2014
2000 5,829 2015
2001 36,094 2016
2002 40,840 2017
2003 25,330 2018
2004 7,316 2019
2005 17 2020
139,003
52
NH Consolidated financial statements 2006

22 TRADE CREDITORS
Shown below is the breakdown of this caption on the consolidated balance sheet as at 31 December 2006 and 2005 (in
thousands of euros):
Euros 000s
2006 2005
Trade creditors 194,114 141,460
Customer advances 24,829 27,934
218,943 169,394
The caption “Trade creditors” records the accounts payable as a result of the Group's normal trading activities.
The line “Customer advances” mainly records advance payments made by customers of Sotogrande, S.A. in the amount of
16.35 million euros (20.21 million euros as at 31 December 2005).
23 OTHER CURRENT LIABILITIES
Shown below is the composition of this caption as at 31 December 2006 and 2005 (in thousands of euros):
Euros 000s
2006 2005
Accrued employee compensation payable 16,522 10,772
Purchase minority interest Astron (see Note 18) 15,000 15,000
Desarrollos Isla Blanca, S.L. 15,620 -
Cap Cana, S.A. - 24,900
Sundry creditors 10,237 17,352
57,379 68,024
(*)Purchase of minority interests in NH Hoteles Deutschland, GmbH and NH Hoteles Austria, GmbH
The line “Desarrollos Isla Blanca, S.L.” records the equivalent euro value of the 20 million United States dollars pending payment
at 31 December 2006 in respect of the investment made by Sotogrande, S.A. in the company Desarrollos Isla Blanca, S.L.
The caption “Cap Cana, S.A.” records the amount payable to this company as a result of its participation in the investment
project that was undertaken by the NH Hoteles Group in the Dominican Republic during 2005. The balance of this caption was
settled in full in January 2006.
24 GUARANTEES GIVEN TO THIRD PARTIES AND CONTINGENT LIABILITIES
The Group has been granted guarantees by financial institutions totalling 8.45 million euros (9.52 million euros as at 31 December
2005) which, in general, secure the performance of certain obligations entered into by the consolidated companies in the course
of their business activities.
As at 31 December 2006, the Group had contracted insurance policies to cover against risks for damage to tangible fixed assets,
loss of profit and civil liability. The insured sums sufficiently cover said assets and risks.
NH Consolidated financial statements 2006 53

Commitments with regard to the Compensation Plan based on share price
- As at 31 December 2006 the Group, after approval by the Parent Company's General Meeting of shareholders, has granted its
employees a Compensation Plan based on the trading price of the shares, as summarised below:
Year granted Number of rights Exercise price Exercise period
2003 2,168,398 7.32 30-04-07 – 29-04-08
Shown below are the movements recorded in the number of rights granted in 2006 and 2005:
Plan 2001 Plan 2003
Granted 1 January 2005 1,700,000 2,700,000
Rights exercised (836,124) -
Rights cancelled /lapsed (500,000) (400,000)
Balance at 31 December 2005 363,876 2,300,000
Rights exercised (363,759) -
Rights cancelled /lapsed (117) (131,602)
Balance at 31 December 2006 - 2,168,398
During 2006 the exercise price of the Compensation Plan based on the share price was adjusted downward by 26 euro cents, the
amount of the dividend whose distribution against voluntary reserves was resolved by the shareholders in the General Meeting
of 5 May 2006. The exercise price for the 2001 Plan thus went from 11.17 euros to 10.81 euros per right, while the exercise price
for the Plan granted in 2003 went from 7.58 euros to 7.32 euros per right.
The Parent Company has organised the hedging for the Compensation Plan based on the share price in force arranging an equity
swap with a financial institution. The Compensation Plan does not contemplate in any case the delivery of shares. It would be
settled in cash by differences. In the exercise period the financial institution would sell the shares compensating the Parent
Company with the difference between the result of the sell and the exercise price in case of a revaluation of shares. In the event
that the share prices were to fall, there is a commitment by the Parent Company for compensating the financial institution of any
financial loss suffered (see Note 10.2.2.).
Commitments with third parties
- On 29 March 2005, NH Hotel Rallye S.A. and Losan Hoteles, S.L. signed the shareholders agreement of the company Harrington
Hall Hotel, Ltd. whereby in the event that Losan Hoteles, S.L. were to receive an offer to purchase 100% of the shares of the
company Harrington Hall Hotel, Ltd. at a price deemed to be a market price, Losan Hoteles, S.L. may demand that NH Hotel
Rallye S.A., which shall be required to accept, transfer its shares to the third-party buyer who has made the offer. NH Hotel Rallye,
S.A. shall, however, hold a right of first refusal on Losan Hoteles, S.L.'s shares in Harrington Hall Hotel, Ltd.
- On 1 December 2005 an agreement was reached with Banca Intesa, S.p.a (today Banca Intesa Sanpaolo, S.p.a.) for that company
to enter the shareholder base of NH Italia, S.r.l. The agreement grants a put option over the holding acquired, for the period from
March 2008 to March 2013. The price shall be set on the basis of fair market value, as determined by an independent investment
bank. The price shall be paid in cash or NH Hoteles, S.A. shares, as NH Hoteles, S.A. chooses.
- On 10 March 2006 between NH Hotel Rallye S.A. and Losan Hoteles, S.L. signed the shareholders agreement of the company
Losan Investment, Ltd., whereby in the event that Losan Hoteles, S.L. were to receive an offer to purchase 100% of the shares of
Losan Investment, Ltd. at a price deemed to be a market price, Losan Hoteles, S.L. would be entitled to demand that NH Hotel
Rallye S.A., which would be obliged to accept, transfer its shares to the third-party buyer who has made the offer. NH Hotel Rallye,
S.A. shall, however, hold a right of first refusal on Losan Hoteles, S.L.'s shares in Harrington Hall Hotel, Ltd.
- In the framework agreement signed on 2 August 2006 between Tourist Ferry Boat, S.r.l. (former owner of the Framon chain) and
NH Italia, S.r.l. to operate in the Italian market through a joint venture (75% NH Italia, S.r.l. and 25% Tourist Ferry Boat, S.r.l.) to
which both companies contribute assets, it was agreed to establish a sell option for the benefit of TFB and a buy option for the
benefit of NH Italia, S.r.l. over TFB’s holding. The option may be exercised as from December 2011. The price will be paid in cash
and be determined on the basis of a multiple of predetermined Ebitda.
54
NH Consolidated financial statements 2006

- On 11 November 2006 a framework agreement was signed by NH Italia, S.r.l. (NH Italia), Banca Intesa, S.p.a. (today Banca Intesa
Sanpaolo, S.p.a.) (Banca Intesa) and Joker Partecipazioni, S.r.l. (Joker) the purpose of which is to give the NH Hoteles Group
control of no less than 74.43% of the Jolly Hotels, S.p.a. (Jolly) share capital through a newly created company (Grande Jolly, S.r.l.).
In the said framework agreement, the NH Hoteles Group acquires the following commitments:
1. Issue by Grande Jolly of a tender offer for all ordinary shares owned by parties unrelated to the parties to the framework
agreement. Pursuant to this commitment, on 21 February 2007, Grande Jolly launched a takeover bid for 25.53% of the Jolly share
capital of 25 euros per share. If all of the targeted shares accept the offer, the total outlay will be 127.6 million euros.
2. Acquisition of control by Grande Jolly of a holding equal to 25.7% of the share capital of Jolly held by Joker in the period
between 1 June and 31 July 2007.
3. In relation to the remaining 24.35% of Jolly’s capital held by Joker, a call and put option contract has been signed hereunder
Joker may sell, in the period between 1 June 2007 and 31 December 2009, its Jolly shares to NH Italia and NH Italia may buy
them during the immediate following six months after 31 December 2009. At the discretion of NH Italia, the shares will be
acquired by Grande Jolly or by NH Italia. The exercise price of the put and call options is 25 euros per share, giving a total of
121.76 million euros.
4. Signing of a call and put option contract hereunder Banca Intesa may sell to Grande Jolly its 4.42% of the Jolly share capital
as from the liquidation date of the tender offer for Jolly or as from 30 September 2007 (if earlier) and until 31 October 2007, and
Grande Jolly may exercise the call option between 1 November 2007 and 30 November 2007. The exercise price of the put and
call options is 25 euros per share, giving a total of 22.17 million euros.
5. Signing of a call and put option contract hereunder Joker may sell to NH Italia the equity stake it holds in Grande Jolly, in the
period between 1 June 2007 and 31 December 2010, and NH Italia may exercise the call option during the immediate following
six months after 31 December 2010. The exercise price of the put and call options is 25 euros per share, giving a total of 87.39
million euros if the initial transfer of 25.7% is done by means of a sale-purchase and subsequent capital increase, or 133.54 million
euros if the transfer is done by means of a non-cash capital increase.
Contingent liabilities
The contingent liabilities of the NH Hoteles Group, mainly related to lawsuits and other legal issues, have no significant effect
neither on the profit and loss account nor in the net equity of the Group or are totally covered by a provision.
25 INCOME AND EXPENSES
25.1 Income
Shown below is the breakdown of the balance of these headings on the consolidated income statement for 2006 and 2005:
Euros 000s
2006 2005
Room accommodation 625,513 540,169
Catering 277,837 255,068
Reception rooms and other 51,221 38,542
Real-estate 69,372 84,368
Golf and Sports Clubs 5,250 7,510
Rentals and other services 65,328 50,886
Net turnover 1,094,521 976,543
Operating grants 141 143
Reversal of provisions for liabilities and charges 164 8,363
Other operating income 14,076 8,960
Other operating income 14,381 17,466
Net gains on disposal of assets 10,491 2,689
NH Consolidated financial statements 2006 55

Shown below is the breakdown of net turnover for different geographical markets for 2006 and 2005:
Euros 000s
2006 2005
Spain - Hotels 415,409 349,956
Spain – Real estate 69,372 84,368
The Netherlands 273,679 247,050
Germany 207,165 185,473
Austria, Hungary and Switzerland 49,682 43,538
Mexico 24,732 31,748
Latin America 38,442 20,300
Italy 16,040 14,110
1,094,521 976,543
The line “Other operating income” basically records revenues from royalties invoiced to hotels operated under management
agreements, as well as for services provided by the NH Hoteles Group to third parties.
Shown below is a breakdown of the line “Net gains on disposal of assets” as at 31 December 2006 and 2005:
Euros 000s
2006 2005
Profits originating from disposal of holdings 7,711 2,589
Net gains on disposal of tangible fixed assets 2,780 110
Net gains on disposal of assets 10,491 2,689
The “Profit originating from the disposal of holdings” in 2006 was for the capital gain recorded on sale of the companies Casino
Club de Golf, S.L. and Aymerich Golf Management, S.L. (see Note 2.4.6.a), and for 2005 it records the capital gain recorded on
sale of the hotels NH Oostende and NH Orus.
25.2 Financial income
The breakdown of the balance of this heading of the consolidated income statement is as shown below:
Euros 000s
2006 2005
Dividend income 43 55
Income from traded securities 489 2,205
Interest income 5,133 4,386
Income from derivatives 1,313 3,315
6,978 9,961
56
NH Consolidated financial statements 2006

25.3 Staff costs
Shown below is the composition of staff costs on the consolidated income statement:
Euros 000s
2006 2005
Wages, salaries and similar 267,421 233,859
Employee benefits and welfare costs 54,083 58,791
Indemnities 2,991 163
Pension plan contributions and similar 3,822 1,692
Other employee expenses 11,458 6,297
339,775 300,802
The following table shows the average number of employees in the Parent Company and the companies that have been fully
consolidated in 2006 and 2005, distributed by job categories:
2.006 2.005
General management of the Group 7 7
Managers and heads of departments 558 541
Technical staff 561 554
Sales staff 480 471
Administrative staff 660 658
Other staff 11,939 11,857
Average number of employees 14,205 14,088
The average age of the Company's workforce is approximately 34.5 years, with an average seniority in the NH Group of 6.8 years.
Worthy of note, furthermore, is that 51.8% of the employees are women.
The caption “Staff costs” includes, for 3.1 million euro in 2006, the fixed and variable remuneration linked to the performance of
the Consolidated Group of the management team of NH Hoteles. Additionally this caption includes, for 2.3 million euros in 2006,
the fixed and variable remuneration of the company Directors with executive duties in the Group.
25.4 Other operating expenses
Shown below is the composition of this heading of the consolidated income statement for 2006 and 2005:
Euros 000s
2006 2005
Leases 184,190 169,490
External services 271,057 235,601
Change in trade provisions 191 544
Allocations to provisions for liabilities and charges 3,244 878
458,682 406,513
The “External services” account records the fees for statutory auditing services performed by two audit firms of the different
companies that make up the NH Hoteles Group. The fees of the main auditor during 2006 amounted to 0.66 million euros (0.59
million euros in 2005) and the fees of all the other auditors totalled 0.53 million euros (0.65 million euros in 2005).
Furthermore, the fees for other professional services provided to the NH Hoteles Group by the main auditor amounted, in 2006,
to 0.10 million euros (0.15 million euros in 2005), and such fees of all other auditors totalled 0.24 million euros (0.30 million euros
in 2005).
NH Consolidated financial statements 2006 57

25.5 Operating leases
In the table below are shown, as at 31 December 2006 and 2005, the Group commitments acquired for future minimum lease
instalments under operating leases that cannot be cancelled and their maturities.
The present value of lease payments has been calculated using an discount rate in line with the weighted average cost of capital
of the Company and also includes the commitments which the NH Hoteles Group estimates will have to be fulfilled in the future
in respect of minimum guaranteed profits on hotels operated under management contracts.
Euros 000s
2006 2005
Less than one year 186,480 175,557
Between two and five years 637,867 483,035
More than five years 1,095,705 743,660
Total 1,920,052 1,402,252
The average life of the operating lease agreements signed by the NH Hoteles Group varies between 15 and 25 years.
25.6 Financial expenses
Shown below is the breakdown of the balance of this heading of the consolidated income statement for 2006 and 2005:
Euros 000s
2006 2005
Interest expense 35,928 29,295
Interest on debentures and bonds 7 2,641
Expenses of derivatives 1,464 2,807
Other financial expenses 2,758 445
40,157 35,188
26 INFORMATION BY SEGMENT
The information by segments is structured, first of all, on the basis of the Group’s different lines of business and, secondly, on a
geographical basis.
Main segments - business
The business lines described below have been set up based on the organisational structure of the NH Hoteles Group as it stood
at the end of 2006 and taking into account, on the one hand, the nature of the products and services offered and, on the other,
the target customer segments.
In 2006, the NH Hoteles Group focused its activities on two major lines of business, hotels and real estate, which are the basis
used by the Group to present the information about its main segment.
Secondary segments - geographical
Furthermore, the Group operates in Spain, the Benelux countries, Germany, the rest of Europe, South America and the rest of
the world.
The information by segments set out below is based on the reports drawn up by the NH Hoteles Group and is generated using
a software that divides the transactions into categories according to their line of business and geographical location.
The ordinary income of the segment records the ordinary income directly attributable to the segment plus the relevant
proportion of the general income of the group that may be distributed to it on a fair distribution basis. The ordinary income of
each segment does not include interest or dividend income or the gains on sales of investments or debt redemption or
58
NH Consolidated financial statements 2006

cancellation operations. The Group includes as ordinary income of each segment the share in profits of associated companies
and joint ventures consolidated using the equity method. Also included is the corresponding proportion of the ordinary income
of joint ventures consolidated using the proportional method.
The profit and loss of the segment is presented before any adjustment for minority interests.
The assets and liabilities of the segments are those directly connected with their operations.
There follows the information for each segment of these activities.
26.1 Information on main segments
Euros 000s
Hotel Real estate Total
2006 2005 2006 2005 2006 2005
INCOME
Sales and other operating revenues 1,034,962 909,641 69,930 84,368 1,104,892 994,009
Net gains on disposal of non-current assets - 2,689 - - - 2,689
Total revenues 1,034,962 912,330 69,930 84,368 1,104,892 996,698
PROFIT (LOSS)
Operating profit (loss) 86,796 58,226 27,454 53,724 114,250 111,950
Share in profit (loss) of associated companies 1,270 (649) - - 1,270 (649)
Financial income 5,795 9,007 1,184 954 6,979 9,961
Net exchange gains 4,605 2,152 - - 4,605 2,152
Financial expenses (39,456) (34,685) (703) (503) (40,159) (35,188)
Profit before taxes 59,010 34,051 27,935 54,175 86,945 88,226
Taxes (24,307) (824) (1,088) (16,989) (25,395) (17,813)
Net profit for the year 34,703 33,227 26,847 37,186 61,550 70,413
Minority interests (898) 179 - 7,991 (898) 8,170
Net profit attributable to the Parent Company 35,601 33,048 26,847 29,195 62,448 62,243
Euros 000s
Hotel Real estate Total
2006 2005 2006 2005 2006 2005
OTHER INFORMATION
Fixed asset additions 116.864 96,006 2,833 7,935 119,697 103,941
Depreciation and amortization (75,635) (64,247) 4,086 (3,854) (71,549) (68,101)
Net losses due to asset impairment (3,190) (799) - - (3,190) (799)
BALANCE SHEET
ASSETS
Assets by segment 2,377,397 1,792,179 247,509 257,883 2,624,906 2,050,062
Holdings in associated companies 71,247 35,856 20,186 56,872 91,433 92,728
Consolidated total assets 2,448,644 1,828,035 267,695 314,755 2,716,339 2,142,790
LIABILITIES
Equity and liabilities by segment 2,448,644 1,828,035 267,695 314,755 2,716,339 2,142,790
Consolidated total net equity and liabilities 2,448,644 1,828,035 267,695 314,755 2,716,339 2,142,790
NH Consolidated financial statements 2006 59

26.2 Information on secondary segments
The following table shows a breakdown of certain consolidated balances of the Group in accordance with the geographical
distribution of the companies that originate them:
Euros 000s
Additions to
tangible and intangible
Net Turnover Total assets fixed assets
2006 2005 2006 2005 2006 2005
Spain 484,781 434,324 746,112 694,569 49,589 52,378
Benelux 273,679 247,050 938,207 949,638 16,418 13,453
Germany 207,165 185,473 144,834 135,259 15,294 16,231
Latin America 63,174 52,048 250,542 283,960 30,314 21,044
Italy 16,040 14,110 610,995 - 6,656 -
Rest of Europe 49,682 43,538 25,648 79,364 8,056 835
Total 1,094,521 976,543 2,716,338 2,142,790 126,327 103,941
27 REMUNERATION AND OTHER DECLARATIONS OF THE BOARD OF DIRECTORS
AND SENIOR MANAGEMENT
27.1 Remuneration of the Board of Directors
The amount accrued in 2006 by the members of the Board of Directors in respect of allowances and items under the articles of
association are shown in the following table:
Euros 000s
2006 2005
Board of Directors (11 members) 434 403
Executive Committee (5 members) 150 150
Audit and Control Committee (3 members) 26 27
Nominations and Compensation Committee (3 members) 16 7
In 2006 no amount has been paid to any member of the Board of Directors for professional services (72 thousand euros in 2005).
The amounts earned in respect of allowances and other items under the articles of association by the Directors of the Parent
Company in fully and proportionally consolidated companies and companies consolidated using the equity method totalled 115
thousand euros in 2006, the same as in 2005.
27.2 Senior management remuneration
The remuneration of the members of the Management Committee as at 31 December 2006 and 2005, not including those who
are also members of the Board of Directors (whose remuneration has been set out above) is shown below:
Euros 000s
2006 2005
Cash remuneration 2,908 2,032
Non-cash compensation 167 139
3,075 2,171
60
NH Consolidated financial statements 2006

27.3 Details of participation by the Directors in similar businesses and pursuit of similar activities for their own
account or the account of others
In accordance with what is provided in article 127 ter. 4 of the Public Limited Companies Act, introduced by Act 26/2003 of 17
July 2003, which amended the Securities Market Act 24/1988 of 28 July 1988, and the consolidated text of the Public Limited
Companies Act, for the purpose of making public limited companies more transparent, given below are the companies with the
same, similar or complementary types of business to the corporate object of NH Hoteles, S.A. in which its Directors have
shareholdings, as well as any positions they may hold therein:
Holder Investee Business Number of shares Functions
Caja Ahorros de Valencia
Castellón y Alicante Hotel Alameda Valencia, S.L. Hotel 90% -
Caja Ahorros de Valencia
Castellón y Alicante Playa Hotels & Resorts, S.L. Hotel 6.87% -
Caja Ahorros de Valencia
Castellón y Alicante Prohoresa Real estate 29.93% -
Caja Ahorros de Valencia
Castellón y Alicante Iberdrola Inmobiliaria, S.A. Real estate 1% Board member
During 2006 the Directors also engaged in the following activities, for their own account or the account of others, in companies
with the same, similar or complementary types of business to the corporate object of NH Hoteles, S.A. or any of its subsidiaries:
Holder Investee Business Functions
Gabriele Burgio Sotogrande, S.A. Real estate Director
Ferrovial, S.A. Real estate Director
Nacional Hispana de Hoteles S.R.L de C.V. Hotel Director
Grupo Financiero de Intermediación
y Estudios, S.A. (Grufir, S.A.) Hotel Administrator
Krasnapolsky Hotels & Restaurants, N.V. Hotel Member of the Supervisory Board
NH Participaties, NV Hotel Chairman and Director
NH Domo Diseños y Decoración, S.L. Decoration Joint Administrator
NH Italia, S.r.l. Hotel Director
Jolly Hotels, S.p.a. Hotel Managing Director
Alfonso Merry del Val Gracie NH Participaties, N.V. Hotel Member of the Supervisory Board
Manuel Herrando
y Prat de la Riba Sotogrande, S.A. Real estate Chairman
Matias Amat Roca Sotogrande, S.A. Real estate Director representative
28 POST-BALANCE SHEET EVENTS
- On 27 November 2006 the Board of Directors of NH Hoteles, S.A. resolved to carry out a capital increase, against cash
contributions, of up to 32,743,942 euros, by means of issuing a maximum of 16,371,971 new shares with a nominal value of two
euros each, of the same class and series as the currently outstanding shares. Full subscription of the capital increase approved,
with a share premium per new share of 13.27 euros, would imply a 250 million euro increase in the company’s capital.
The preferential subscription periods for shareholders and holders of subscription rights started on 28 February 2007 and ended,
on the first found, on 14 March 2007. The result was subscription of 16,026,084 new shares, or 97.89% of the total of 16,371,971
offered in the capital increase.
As at the date these annual accounts were drawn up the capital increase has been fully subscribed and paid. The capital increase
was registered in the Companies Registry of Madrid on 23 March 2007.
- On 28 February 2007 the Parent Company has sold its holding in Parque Temático de Madrid, S.A. for 1.96 million euros.
NH Consolidated financial statements 2006 61

29 INFORMATION ABOUT ENVIRONMENTAL POLICY
The activities carried on by the Group through Sotogrande, S.A. include managing the integrated water cycle in the area covered
by the Sotogrande Estate and its surroundings. This management includes sanitation and treatment of waste water. The aim of
these two activities is to reduce the damage to the environment.
The Group’s assets associated with its sanitation and water treatment activity include two sewage treatment stations, with
capacity to meet the needs of a population of up to 20,000 inhabitants, connected to one another so that the cleaned affluent
flows into the sea through an underwater outflow. In its treatment stations, the Group has also built a tertiary treatment system
aimed at further treatment of the water so that it can be used in part to water the Real Club de Golf Sotogrande, with which a
contract has been signed to this effect. The tertiary treatment plant is now operational after having come into service in July 2003.
The introduction of this tertiary system will make for a reduction in the consumption of potable water of between 200,000 and
300,000 m3/year.
Furthermore, the Group, as part of its activity to promote and develop the Sotogrande Estate, is now focusing its attention on
developable land with approved partial plans. It therefore has no need to carry out any environmental impact studies prior to
carrying out its real estate or tourist project developments. Nonetheless, the Group's policy is aimed at respecting the
environment to the utmost and it has therefore contracted the services of an environmental consultancy to diagnose and provide
advice on environmental issues in its actions. The fees for this service are not significant.
The assets of an environmental nature described above total, net of depreciation, as at 31 December 2006, 1.63 million euros
(1.28 million euros in 2005).
The Group had no provision set aside as at year-end 2006 and 2005 for environmental contingencies or claims, nor is it aware of
the existence of liabilities in respect of such contingencies or claims.
30 EXPLANATION ADDED FOR TRANSLATION TO ENGLISH
These consolidated financial statements are presented on the basis of IFRS, as adopted by the European Union. Certain
accounting practices applied by the Company that conform with IFRS may not conform with other generally accepted
accounting principles.
62
NH Consolidated financial statements 2006

APPENDIX I: DEPENDENT COMPANIES
The accompanying tables show basic information on the Company's subsidiaries as at 31 December 2006:
Euros 000s
% of voting
rights Net value
Principal % holding controlled recorded
business of of parent by parent on parent Profit (loss)
Address of investee company company company’s for the
Investee company investee company in investee matriz books Assets Liabilities Equity year
Alfa Reserveringskantoor CV BA (**) Brussels Hotel 100% 100% 5.83 (0.37) 6.20 29.85 (35.68)
Aránzazu Donosti, S.A. (*) Guipuzcoa Hotel 100% 100% 6,373.38 32,146.57 (22,366.47) (7,163.18) (2,616.92)
Astron Kestrell Ltd (**) Plettenberg Bay Hotel 100% 100% (1,220.34) 991.29 (2,211.62) 1,266.61 (46.27)
Atardecer Caribeño Madrid Real Estate 100% 100% 48.05 47.04 - (47.48) 0.44
Central Europe Management Germany Hotel 100% 100% 25.00 - - - -
Centrumhotel Park Molenvijver N.V. (**) Genk Hotel 100% 100% 450.83 2,011.57 (1,560.74) (201.96) (248.87)
Chartwell de México, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% 5,426.69 5,827.72 (401.02) (5,640.38) 213.69
Chartwell de Nuevo Laredo, S.A. de C.V. (*) Nuevo Laredo (Mexico) Hotel 100% 100% 597.47 841.68 (244.21) (1,183.43) 585.96
Chartwell Inmobiliaria de Coatzacoalcos, S.A. de C.V. (*) Coatzacoalcos (Mexico) Hotel 100% 100% 2,498.43 3,417.62 (919.19) (1,785.88) (712.55)
Chartwell Inmobiliaria de Juárez, S.A. de C.V. (*) Juarez (Mexico) Hotel 100% 100% 5,789.71 6,314.14 (524.43) (5,708.40) (81.31)
Chartwell Inmobiliaria de Monterrey, S.A. de C.V. (*) Montrrey (Mexico) Hotel 100% 100% 5,596.00 7,077.29 (1,481.28) (5,520.98) (75.02)
City Hotel SA (*) Buenos Aires Hotel 50% 50% 7,178.78 23,433.71 (8,918.32) (13,632.74) (882.64)
Club Deportivo Sotogrande, S.A. San Roque Leisure 93.95% 93.95% 2,496.00 4,804.00 (239.00) (4,553.00) (12.00)
Cofir, S.L. Madrid Holding 100% 100% 60.10 63.93 - (66.09) 2.16
Columbia Palace Hotel S.A. (*) Montevideo Hotel 96.03% 96.03% 1,819.11 12,278.46 (12,501.39) (144.78) 367.70
Comexotel SA (**) Brussels Hotel 100% 100% 182.05 1,197.61 (1,015.57) (123.14) (58.90)
D'Assaut SA (**) Brussels Hotel 100% 100% 14,689.42 17,986.55 (3,297.13) (14,088.28) (601.14)
De Nederlandse Club Ltd. (**) Somerset West w.o. activity 100% 100% 0.00 - 0.00 (0.00) -
Desarrollo Inmobiliario Santa Fe Mexico DF Real Estate 50% 50% 5,842.60 13,241.98 (7,399.38) (6,000.45) 157.85
Donnafugata Resort S.R.L Italy Leisure 50.68% 50.68% 2,700.00 15,827.00 (10,664.00) (5,161.00) (2.00)
DFE Vastgoed B.V. Hilversum w.o. activity 100% 100% (185.37) - (185.37) 174.21 11.16
EHVB SCRL (**) Diegem Holding 100% 100% 28,411.65 37,152.70 (8,741.05) (22,720.02) (5,691.64)
Establecimientos Complementarios Hoteleros, S.A. Barcelona Hotel 100% 100% 839.26 9,401.64 (9,269.37) (756.13) 623.86
Etudes & Entreprise (**) Brussels Hotel 100% 100% 2,124.25 10,936.18 (8,811.93) (1,716.08) (408.17)
European Golf Booking Center, S.L. Madrid w.o. activity 100% 100% 87.77 171.20 (99.31) (87.64) 15.76
Expl. mij. Grand Hotel Krasnapolsky B.V. Amsterdam Hotel 100% 100% 10,301.98 60,309.15 (50,007.17) (6,018.91) (4,283.07)
Expl. Mij. Hotel Best B.V. Best Hotel 100% 100% 199.42 3,720.19 (3,520.77) 86,515.58 (86,715.00)
Expl. mij. Hotel Caransa B.V. Amsterdam w.o. activity 100% 100% 309.70 - 309.70 (309.70) -
Expl. mij. Hotel Doelen B.V. Amsterdam Hotel 100% 100% 2,469.65 5,442.57 (2,972.92) (1,639.79) (829.87)
Expl. Mij. Hotel Naarden B.V. Naarden Hotel 100% 100% 310.09 7,420.74 (7,110.64) (238.54) (71.55)
Expl. mij. Hotel Schiller B.V. Amsterdam Hotel 100% 100% 3,105.71 14,324.60 (11,218.89) (2,062.62) (1,043.09)
Exploitatiemij. Alba Mechelen N.V. (**) Mechelen Hotel 100% 100% 835.55 2,530.80 (1,695.25) (792.63) (42.93)
Exploitatiemij. Flanders Gent N.V. (**) Gent Hotel 100% 100% 3,127.38 3,877.60 (750.22) (2,915.28) (212.10)
Exploitatiemij. Max NV (**) Brussels Hotel 100% 100% 31,673.78 36,338.61 (4,664.83) (31,259.30) (414.48)
Exploitatiemij. Tropenhotel B.V. Amsterdam Hotel 100% 100% (11.90) 125.22 (137.12) 14.85 (2.96)
Explotaciones Hoteleras Condor, S.L. Barcelona Hotel 55% 55% 298.88 1,446.03 (713.98) (694.10) (37.95)
Fast Good América Madrid Restaurants 75% 75% 232.20 531.27 (301.31) (230.39) 0.42
Fast Good Península Ibérica Madrid Restaurants 100% 100% 3.05 11,908.77 (13,872.75) 132.37 1,831.61
Franquicias Lodge, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% 435.05 617.39 (182.34) (451.40) 16.35
Gran Círculo de Madrid, S.A. (*) Madrid Hotel 99% 99% 36,788.87 53,656.39 (17,414.71) (34,611.32) (1,630.35)
Grande Jolly SRL. Milano Hotel 51% 51% 8,302.67 12,003.34 (3.34) (12,000.00) -
Grupo Financiero de Intermediación y Estudios, S.A. Madrid Holding 100% 100% 360.60 572.33 (16.39) (574.54) 18.60
Grupo Hotelero Querétaro, S.A. de C.V. Mexico DF Real Estate 50% 50% 1,199.36 1,200.09 (0.73) (1,252.93) 53.56
HEM Atlanta Rotterdam B.V. Rotterdam Hotel 100% 100% 2,061.20 11,280.19 (9,218.99) (1,102.81) (958.39)
HEM Distelkade Amsterdam B.V. Amsterdam Hotel 100% 100% 17,438.67 34,810.18 (17,371.51) (16,034.34) (1,404.33)
HEM Epen Zuid Limburg B.V. Wittem Hotel 100% 100% 1,167.20 14,852.63 (13,685.43) (888.57) (278.63)
HEM Forum Maastricht B.V. Maastricht Hotel 100% 100% 582.49 13,150.75 (12,568.26) (216.66) (365.83)
HEM Jaarbeursplein Utrecht B.V. Utrecht Hotel 100% 100% 1,635.65 16,739.03 (15,103.38) (745.95) (889.70)
HEM Janskerkhof Utrecht B.V. Utrecht Hotel 100% 100% 251.42 2,563.15 (2,311.72) (99.48) (151.94)
HEM Marquette Heemskerk B.V. Heemskerk Hotel 100% 100% (626.73) 3,951.56 (4,578.29) 864.41 (237.68)
HEM Onderlangs Arnhem B.V. Arnhem Hotel 100% 100% 328.70 4,633.23 (4,304.53) (217.10) (111.60)
HEM Rokkeveen Zoetermeer B.V. Zoetermeer Hotel 100% 100% 82.11 6,525.91 (6,443.80) 23.55 (105.66)
HEM Spuistraat Amsterdam B.V. Amsterdam Hotel 100% 100% 5,511.49 14,207.40 (8,695.91) (3,666.11) (1,845.37)
HEM Stadhouderskade Amsterdam B.V. Amsterdam Hotel 100% 100% 4,905.40 24,520.86 (19,615.46) (3,376.70) (1,528.70)
HEM Van Alphenstraat Zandvoort B.V. Zandvoort Hotel 100% 100% 658.11 11,024.89 (10,366.78) (254.82) (403.29)
Highmark Geldrop B.V. Geldrop Hotel 100% 100% 706.10 5,682.97 (4,976.87) (448.39) (257.72)
Highmark Hoofddorp B.V. Hoofddorp Hotel 100% 100% 5,402.35 28,324.98 (22,922.63) (4,408.50) (993.85)
Hotel Albar Ciudad Albacete, S.L. Albacete Hotel 100% 100% 745.77 3,822.68 (2,561.66) (1,006.22) (254.80)
Hotel Betriebsgesellschaft Luzern AG Luzern Hotel 100% 100% 1,650.00 2,280.64 (689.63) (1,588.78) (2.23)
Hotel Ciutat de Mataró, S.A. Barcelona Hotel 50% 50% 1,077.58 21,197.15 (19,709.67) (1,096.24) (387.19)
Hotel de Ville BV. Amsterdam Hotel 100% 100% (348.61) 2,499.89 (2,848.50) 704.10 (355.49)
Hotel Expl.mij. Capelle a/d IJssel B.V. Capelle a/d Ijssel Hotel 100% 100% 3,349.62 6,558.53 (3,208.90) (3,233.33) (116.30)
Hotel Expl.mij. Diegem N.V. (**) Diegem Hotel 100% 100% 1,326.69 24,874.66 (23,547.97) (1,673.10) 346.41
Hotel Exploitation Meyrin SA Gn¡eneve Hotel 100% 100% 1,620.00 5,278.35 (3,112.44) (1,533.93) (631.98)
Hotel Management Fribourg, S.A. Fribourg Hotel 100% 100% 601.79 14,083.39 (9,395.10) (4,372.52) (315.77)
Hotel Palacio de Castilla, S.A. Salamanca Hotel 83% 83% 5,588.29 20,205.80 (15,933.73) (3,698.03) (574.04)
Hoteleira Brasil Ltda. (*) Brasil Hotel 100% 100% 9,427.79 11,686.91 (1,062.31) (10,620.26) (4.33)
Hotelera de la Parra, S.A. de C.V. (*) Mexico DF Hotel 100% 100% 16,932.28 33,950.03 (17,017.75) (17,112.67) 180.38
NH Consolidated financial statements 2006 63

Euros 000s
% of voting
rights Net value
Principal % holding controlled recorded
business of of parent by parent on parent Profit (loss)
Address of investee company company company’s for the
Investee company investee company in investee matriz books Assets Liabilities Equity year
Hotelera Onubense, S.A. Huelva Hotel 99.45% 99.45% 5,462.27 11,199.15 (8,133.15) (2,875.90) (190.11)
Hotelera Tlalnepantla, S.A. de C.V. Mexico DF Hotel 100% 100% (926.33) 24.32 (950.65) 962.32 (36.00)
Hoteles Express, S.L. (*) Barcelona Hotel 100% 100% 7,448.19 73,026.38 (63,798.21) (7,327.78) (1,900.39)
Hoteles y Gestión Sotogrande, S.L. San Roque Hotel 100% 100% 9,104.00 14,377.00 (13,865.00) (1,684.00) 1,172.00
Inmobiliaria y Financiera Aconcagua SA (*) Buenos Aires Hotel 50% 50% 420.88 1,967.76 (1,098.22) (578.41) (291.12)
Immobiliare 4 Canti SRL. Messina Hotel 50% 50% 915.67 2,626.84 (1,708.70) (931.80) 13.66
Inversores y Gestores Asociados, S.A. Madrid Holding 100% 100% 3,001.76 1,980.12 (1,725.45) (313.98) 59.31
Jan Tabak N.V. (**) Bussum Hotel 56% 56% 6,956.98 11,194.17 (4,237.19) (7,507.77) 550.79
Koningshof B.V. Veldhoven Hotel 100% 100% 21,705.69 69,827.92 (48,122.23) (19,873.51) (1,832.18)
Krasnapolsky Belgian Shares B.V. Hilversum Holding 100% 100% (8,521.77) 53.01 (8,574.78) 8,521.77 -
Krasnapolsky Events B.V. Amsterdam w.o. activity 100% 100% 69.12 70.15 (1.03) (71.57) 2.45
Krasnapolsky H&R Onroerend Goed B.V. Hilversum Real Estate 100% 100% 79,336.48 114,581.01 (35,244.53) (85,342.30) 6,005.82
Krasnapolsky Hotels & Restaurants N.V. (**) Hilversum Holding 100% 100% 440,571.54 359,462.67 81,108.87 (474,019.89) 33,448.36
Krasnapolsky Hotels Ltd (**) Somerset West Hotel 100% 100% 953.98 1,847.28 (893.30) (857.27) (96.71)
Krasnapolsky ICT B.V. Hilversum Otra actividad 100% 100% 15.54 15.54 - (15.54) -
Krasnapolsky International Holding B.V. Hilversum Holding 100% 100% (2,760.28) 5,209.20 (7,969.48) 3,672.94 (912.65)
Krasnapolsky Management B.V. Amsterdam w.o. activity 100% 100% (34.48) - (34.48) 86.71 (52.22)
Latina Chile SA (*) Santiago de Chile Hotel 100% 100% 12,753.18 13,096.34 (341.63) (12,126.93) (627.78)
Latina de Gestión Hotelera, S.A. (*) Buenos Aires Hotel 100% 100% 47,376.58 74,677.46 (15,796.00) (55,287.14) (3,594.33)
Latinoamericana de Gestión Hotelera, S.A. (*) Madrid Hotel 64.56% 64.56% 136,439.48 129,187.19 (19,995.85) (108,755.75) (435.59)
Leeuwenhorst Congres Center B.V. Noordwijkerhout Hotel 100% 100% 39,486.24 92,506.05 (53,019.81) (37,538.32) (1,947.92)
Lenguados Vivos, S.L. Madrid Hotel 100% 100% 3.02 288.35 (662.30) 395.90 (21.95)
Marquette Beheer B.V. Hilversum Real Estate 100% 100% 163,640.93 212,649.86 (49,008.93) (174,419.79) 10,778.86
Museum Quarter B.V. Amsterdam Hotel 100% 100% 2,029.48 13,826.78 (11,797.29) (1,566.78) (462.70)
Nacional Hispana de Hoteles, S.A. (*) México DF Hotel 100% 100% 101,744.89 112,875.70 (4,037.19) (107,442.73) (1,395.78)
NH Caribbean Management B.V. Hilversum Management 100% 100% (100.19) 11.66 (111.85) 157.58 (57.40)
NH Central Europe Gmbh & Co. KG (**) Germany Hotel 100% 100% 126,440.88 132,446.53 (62,976.55) (69,729.78) 259.80
NH Domo y Decoración ,S.L. Madrid Decoration 50% 50% 1.55 3.54 (3.23) (2.41) 2.11
NH Framon Italy Hotels Management SRL Milano Hotel 100% 100% 36,583.45 36,783.30 (4,675.47) (32,117.03) 9.21
NH Hotel Ciutat de Reus, S.A. Barcelona Hotel 90% 90% 1,118.15 14,922.54 (13,652.11) (902.09) (368.35)
NH Hotel Rallye, S.A. (*) Barcelona Hotel 100% 100% 67,600.16 520,643.39 (518,547.83) (1,518.22) (577.34)
NH Hoteles Austria GmbH (**) Vienna Hotel 80% 80% 8.64 13.86 (13.21) (1.53) 0.88
NH Hoteles Deutschand GmbH (**) Berlin Hotel 80% 80% 61.43 87.82 (74.12) (17.48) 3.79
NH Hoteles Participaties, NV (**) Hilversum Holding 100% 100% 225,553.56 535,142.00 (26,037.00) (545,022.00) 35,917.00
NH Hoteles Rumania S.R.L. Bucarest Hotel 100% 100% 222.56 - - - -
NH Hotels USA, Inc Houston (USA) Real Estate 100% 100% 181.50 284.88 (103.38) (154.02) (27.48)
NH Hungary Hotel Management Ltd. (**) Budapest Hotel 100% 100% 0.01 1,520.00 (1,319.00) (430.00) (158.00)
NH Italia S.r.l. Milano Hotel 51% 51% 151,298.29 287,698.04 (4,210.53) (287,861.19) 4,373.68
NH Lagasca, S.A. Barcelona Hotel 100% 100% 643.38 37,411.62 (33,032.39) (3,242.64) (1,136.59)
NH Laguna Palace SpA Mestre - VE Hotel 100% 100% 11,352.74 16,322.15 (5,557.57) (11,978.24) 1,213.67
NH Las Palmas, S.A. (*) Gran Canaria Hotel 73.87% 73.87% 12,275.33 28,510.59 (13,552.64) (14,170.68) (787.27)
NH Logroño, S.A. Logroño Hotel 76.47% 76.47% 598.65 13,502.00 (11,604.35) (1,575.98) (321.67)
NH Málaga, S.A. (*) Málaga Hotel 100% 100% 2,369.31 33,623.96 (28,649.53) (3,043.32) (1,931.11)
NH Management Black Sea S.R.L. Bucarest Hotel 100% 100% 29.00 880.00 (130.00) (560.00) (190.00)
NH Marin, S.A. (*) Málaga Hotel 50.00% 50.00% 1,423.74 14,378.87 (11,182.03) (2,168.78) (1,028.06)
NH Numancia, S.A. Barcelona Hotel 51% 51% 538.71 13,206.16 (12,830.31) (181.56) (194.29)
NH Pamplona, S.A. (*) Madrid Hotel 100% 100% 13,409.81 54,786.68 (41,630.94) (12,244.43) (911.31)
NH Private Equity, BV Holland Holding 100% 100% 568.11 5,300.53 (4,732.43) (119.42) (448.69)
NH Profesional Realizado y Organizado S.L. Madrid Educational 100% 100% 1.89 3.22 (1.57) (1.76) 0.11
NH Rallye Krasnapolsky Germany Holding BV Germany Hotel 100% 100% (10,180.90) 9,869.01 (2,259.47) (7,862.12) 252.58
NH Rallye Portugal Lda. Portugal Hotel 100% 100% (47.57) 1,688.61 (1,539.78) (47.58) (101.25)
NH Romania S.R.L. Rumania Hotel 100% 100% 227.56 1.00 (6.00) - 4.00
NH Santander, S.A. Santander Hotel 100% 100% 7,750.04 33,035.36 (31,003.36) (924.32) (1,107.68)
NH The Netherlands B.V. (vh GTI B.V.) Hilversum Holding 100% 100% 284,758.81 212,160.58 72,598.23 (321,890.59) 37,131.78
NH Tortona Srl Milano Hotel 70% 70% 264.29 10,431.12 (12,109.07) (400.97) 2,078.92
NH University, S.L. Barcelona Hotel 100% 100% 30.30 956.23 (902.16) (54.25) 0.18
Nuevos Espacios Hoteleros, S.L. Madrid Hotel 50% 50% 1,452.71 18,212.74 (17,804.31) (971.79) 563.36
Olofskapel Monumenten B.V. Amsterdam Real Estate 100% 100% (100.19) 11.66 (111.85) 157.58 (57.40)
Operadora Nacional Hispana, S.A. De C.V. (*) Mexico DF Real Estate 100% 100% 3,938.89 10,520.10 (6,581.21) (3,378.93) (559.96)
Palatium Amstelodamum N.V. Amsterdam Hotel 100% 100% 6,488.15 33,045.00 (26,556.85) (4,806.91) (1,681.24)
Panorama Hotel SA (*) Córdoba (Argentina) Hotel 100% 100% 6,100.88 6,186.25 (84.75) (5,788.71) (312.78)
Rest. d'Vijff vlieghen en Moeder Hendrina B.V. Amsterdam Holding 100% 100% 154.03 - 154.03 (154.03) -
Restaurant D'Vijff Vlieghen B.V. Amsterdam Restaurants 100% 100% 1,390.81 3,095.29 (1,704.48) (1,101.11) (289.70)
Retail Invest, S.A. Madrid Hotel 100% 100% 24,604.36 18,326.54 (19,418.90) 978.04 114.32
Satme SRL. Messina Hotel 100% 100% 9,500.00 20,844.50 (16,686.13) (4,387.80) 229.43
Servicios Chartwell de Nuevo Laredo, S.A. de C.V. (*) Nuevo Laredo (Mexico) Real Estate 100% 100% (19.61) 109.80 (129.41) 7.46 12.14
Servicios Corporativos Chartwell Aeropuerto, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% - - - (2.20) 2.20
Servicios Corporativos Chartwell Coatzacoalcos, S.A. de C.V. (*) Coatzacoalcos (Mexico) Real Estate 100% 100% (5.97) 38.46 (44.43) 5.90 0.07
Servicios Corporativos Chartwell Juárez, S.A. de C.V. (*) Juarez (Mexico) Real Estate 100% 100% - - - (4.93) 4.93
Servicios Corporativos Chartwell Monterrey, S.A. de C.V. (*) Montrrey (Mexico) Real Estate 100% 100% 9.44 97.60 (88.16) (14.61) 5.17
Servicios Corporativos Hoteleros, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% 366.33 1,161.32 (794.99) (409.49) 43.16
Servicios Corporativos Krystal Zona Rosa, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% (94.70) 270.96 (365.66) 91.43 3.27
Servicios de Operación Turística, S.A. de C.V. (*) Guadalajra (Mexico) Real Estate 100% 100% 150.10 426.29 (276.19) (130.48) (19.62)
Servicios é Inmuebles Turísticos, S.A. de C.V. (*) Guadalajra (Mexico) Hotel 100% 100% 66,847.99 69,847.69 (3,714.71) (64,659.01) (1,473.97)
Servicios Hoteleros Tlalnepantla, S.A. de C.V. (*) Mexico DF Real Estate 100% 100% (5.39) 3.66 (9.05) 5.39 -
Sotogrande, S.A. (*) Cádiz Real Estate 96.68% 96.68% 201,011.36 266,299.00 (54,524.00) (201,149.00) (10,626.00)
Stadskasteel Oudaen B.V. Utrecht w.o. activity 100% 100% (1,099.76) - (1,099.76) 1,099.87 (0.11)
t Goude Hooft B.V. The Hague w.o. activity 100% 100% (1,076.08) - (1,076.08) 1,076.08 -
Toralo S.A. (*) Uruguay Hotel 100% 100% 1,576.71 8,171.00 (2,340.00) (6,222.00) 391.00
VSOP VIII B.V. (**) Groningen Hotel 50% 50% 921.33 6,706.68 (5,785.35) (548.76) (372.57)
(*) Companies audited by Deloitte
(**) Companies audited by PriceWaterhouseCoopers
64
NH Consolidated financial statements 2006

APPENDIX II: JOINT VENTURES
The following table gives information on the Company's joint ventures as 31 December 2006:
Euros 000s
% of voting Net value
Principal % holding rights recorded
business of of parent controlled on parent Profit (loss)
Address of investee company by parent company’s for the
Investee commpany investee company in investee company books Assets Liabilities Equity year
Los Alcornoques de Sotogrande, S.L. San Roque Real Estate 50% 50% 250.00 15,037.00 (14,537.00) (500.00) -
Resco Sotogrande, S.L. San Roque Real Estate 50% 50% 817.00 15,744.00 (13,252.00) (2,514.00) 22.00
Residencial Marlin, S.L. (*) San Roque Real Estate 50% 50% 1,500.00 68,634.00 (66,013.00) (2,531.00) (90.00)
(*) Sociedad auditada por Deloitte
APPENDIX III: ASSOCIATED COMPANIES
The following table gives information on the Company's associated companies as 31 December 2006:
Euros 000s
Method used % voting rights Profit (loss)
to account for controlled by Net book for the
Company Address Business investment % holding NH Hoteles on books Assets Liabilities Equity year
Fonfir 1, S.L. Madrid Real Estate Equity method 50% 50% 16 200 (230) (13) 43
Jolly Hotels, SpA (*) (***) Italy Hotel Equity method 20% 20% 35,496 417,515 (354,892) (68,144) 5,522
Palacio de la Merced, S.A. Burgos Hotel Equity method 25% 25% 1,115 26,818 (21,755) (4,913) (150)
Harrington Hall Hotel, Ltd. (**) (***) London Hotel Equity method 25% 25% 1,365 73,298 (70,408) (2,463) (427)
Caribe Puerto Morelos, S.A. de C.V. (**) México D.F. Real Estate Equity method 100% 100% 29,044 28,299 - (28,299) -
Corporación Hotelera Dominicana, S.A. (**) Santo Domingo Real Estate Equity method 25% 25% 15,493 62,158 (1,517) (60,657) 16
Corporación Hotelera Oriental, S.A. (**) Santo Domingo Hotel Equity method 25% 25% 1,905 8,310 (740) (7,583) 13
Promociones Marina Morelos, S.A. de C.V. (**) Cancún Hotel Equity method 20% 20% 4,803 10,960 - (10,960) -
Losan Investment,Ltd. (**) London Hotel Equity method 30% 30% 2,192 50,028 (43,486) (6,106) (436)
(*) Records net equity for 2005 and an estimate of profit (loss) for 2006
(**) See Note 2.4.6
(***) Companies audited by Deloitte
NH Consolidated financial statements 2006 65

www.nh-hotels.com
Santa Engracia, 120
28003 • Madrid • Spain
T: +34 91 451 97 18
F: +34 91 451 97 69
Due to its commitment to Environmental Conservation,
NH Hotels has printed this Report on a paper
manufactured with 50% pure cellulose (ECF), 40% preconsumer
selected recycled fibre and 10% postconsumer
uncoloured recycled fibre.
Inks are based exclusively on vegetable oils with a
minimum content in volatile organic compounds
(VOCs).
Varnish is mainly based on natural and renewable raw
materials.