Report on six months ended June 30, 2016 for NH Hotel Group, S.A.

Report on six months ended June 30, 2016 for NH Hotel Group, S.A. 1

Table of Contents Summary consolidated financial statements...1 Information regarding forward-looking statements...8 Presentation of financial and other information...8 Other data...11 Recent developments...14 Risk factors...16 Management s discussion and analysis of financial condition and results of operations..46 Changes to accounting policies and new accounting standards...76 Description of certain financing arrangements...78 Certain definitions...88 2

Summary consolidated financial statements This report is the report required under the indenture governing the senior secured notes (the Notes ), dated as of November 8, 2013 (the Indenture ) for the year six months ended June 30, 2016. Please see Certain definitions for other defined terms used herein. Summary consolidated statement of profit or loss and other comprehensive income For the year ended December 31, For the six months ended June 30, 2013 2014 2015 2015 2016 (1) (unaudited) ( in millions) Net turnover... 1,260.5 1,247.0 1,376.6 655.1 701.6 Other operating income... 1.8 3.3 1.2 3.3 2.9 Net gain (loss) on disposal of non-current assets... 2.1 (1.0) (0.8) 3.1 41.5 Procurements... (72.9) (67.3) (67.6) (32.1) (31.6) Personnel expenses... (396.1) (373.8) (398.1) (200.5) (211.6) Depreciation allowance... (106.4) (98.5) (106.2) (46.1) (54.5) Net losses from asset impairment... 31.4 12.8 30.9 (4.1) (0.3) Variation in the provision for onerous agreements... 6.6 14.7 19.0 11.1 3.0 Other operating expenses... (721.1) (720.0) (787.1) (377.2) (396.0) Profit (loss) from entities valued through the equity method... (8.1) (1.3) (0.7) (0.1) 0.1 Financial income... 4.2 7.4 5.2 2.1 1.9 Change in fair value of financial instruments... 9.6 2.0 4.7 1.8 (0.1) Financial expenses... (77.5) (68.7) (73.6) (34.1) (33.3) Net exchange rate differences... (7.8) 2.1 5.6 (0.2) Gain (loss) on disposal of financial investments... 40.9 17.3 4.8 4.7 3.6 Pre-tax profit (loss) from continuing operations... (32.8) (26.3) 10.3 (7.4) 27.1 Corporate tax... (5.5) (15.6) (13.1) (5.2) (14.5) Profit (loss) from continuing operations... (38.3) (41.9) (2.8) (12.6) 12.6 Profit (loss) for the year from discontinued operations net of tax... 31.5 6.1 (2.6) (1.0) Profit (loss) for the financial year... (38.3) (10.4) 3.3 (15.2) 11.6 Non-controlling interests... 1.5 (0.9) 2.4 2.2 1.9 Profit (loss) attributable to shareholders of the Issuer... (39.8) (9.6) 0.9 (17.4) 9.7 (1) The consolidated statements as of June 2016 were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34. 1

Summary consolidated statement of financial position As of December 31, As of June 30, 2013 2014 2015 2015 2016 (1) (unaudited) ( in millions) Assets Tangible fixed assets... 1,715.0 1,606.4 1,724.2 1,667.4 1,713.0 Intangible assets... 169.8 172.8 238.1 256.0 242.0 Non-current investments... 196.7 183.4 177.4 183.0 163.9 Other non-current assets... 199.3 168.9 182.1 174.8 164.3 Total non-current assets... 2,280.8 2,131.5 2,321.8 2,281.2 2,283.2 Non-current assets classified as held for sale... 95.2 45.0 92.0 42.8 Inventories... 79.6 8.2 9.5 8.8 9.8 Receivables... 180.1 205.8 242.4 258.0 243.9 Cash and cash equivalents... 133.9 200.1 77.7 56.4 86.1 Other current assets... 13.0 20.2 14.5 23.7 18.7 Total current assets... 406.5 529.5 389.1 438.9 401.3 Total assets... 2,687.4 2,661.0 2,710.9 2,720.1 2,684.5 Shareholders equity and liabilities Shareholders equity... 1,158.0 1,136.7 1,126.1 1,130.0 1,133.9 Debentures and other marketable securities... 458.3 464.0 471.9 467.8 476.0 Debts with credit institutions... 321.3 268.9 336.2 306.1 302.4 Non-current provisions... 66.7 56.9 48.7 47.8 52.9 Deferred tax liabilities... 201.2 179.7 196.7 189.6 182.4 Other non-current liabilities... 37.6 91.3 101.5 107.8 104.6 Total non-current liabilities... 1,085.1 1,060.8 1,155.0 1,119.1 1,118.3 Liabilities associated with non-current assets classified as held for sale... 56.1 56.8 Debentures and other marketable securities... 3.7 3.5 3.6 3.6 3.5 Debts with credit institutions... 96.0 70.9 75.3 62.5 81.2 Trade creditors and other accounts payable... 239.8 231.5 251.1 256.1 234.7 Current provisions... 26.3 14.8 5.3 12.7 12.4 Other current liabilities... 78.5 86.7 94.5 79.3 100.5 Total current liabilities... 444.3 463.5 429.8 471.0 432.3 Total shareholders equity and liabilities... 2,687.4 2,661.0 2,710.9 2,720.1 2,684.5 (1) The consolidated statements as of June 2016 were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34. 2

Summary consolidated statement of cash flows For the year ended December 31, As of June 30, 2013 2014 2015 2015 2016 (1) (unaudited) ( in millions) Total net cash flow from operating activities... 46.3 32.1 90.3 8.8 93.2 Total net cash flow from investment activities... 90.6 (38.3) (216.9) (134.5) (29.0) Financial income... 3.8 7.3 4.8 2.2 1.4 Investments... (57.2) (114.5) (254.1) (160.1) (87.9) Group companies, joint ventures and associated companies... (0.3) (4.1) Tangible and intangible assets and real-estate investments... (39.6) (109.9) (176.1) (81.4) (83.8) Non-current assets classified as held for sale... (4.3) Non-current financial investments... (17.6) (0.4) (77.7) (78.7) Disposals... 144.1 69.0 32.4 23.4 57.5 Total net cash flow from financing activities... (42.6) (103.8) (6.8) (31.8) (55.5) Gross increase/reduction of cash or equivalent assets... 94.3 (109.9) (133.4) (157.5) 8.7 Effect of change in exchange rates on cash and equivalent assets... 1.2 0.3 3.1 5.3 (0.3) Effect of changes in scope of consolidation... 176.4 7.9 8.4 Net increase/reduction of cash or equivalent assets... 93.1 66.2 (122.4) (143.7) 8.4 Cash or equivalent assets at beginning of the year... 40.8 133.9 200.1 200.1 77.7 Cash or equivalent assets at the end of the year... 133.9 200.1 77.7 56.4 86.1 (1) The consolidated statements as of June 2016 were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34. Other financial and pro forma data (unaudited) (1) We define EBITDA as profit (loss) attributable to shareholders of the Issuer plus non-controlling interests plus Profit (loss) for the year from discontinued operations net of tax minus corporation tax, gain (loss) on disposal of financial investments, net exchange rate differences, financial expenses, change in fair value of financial instruments, financial income, profit (loss) from entities valued through the equity method, variation in the provision for onerous agreements, net losses from asset impairment, depreciation allowance and inventory impairments. EBITDA is a non-ifrs measure. The following is a calculation of EBITDA. 3

For the year ended December 31, For the six months ended June 30, 2013 2014 2015 2015 2016 (b) (unaudited) ( in millions) Profit (loss) attributable to shareholders of the Issuer... (39.8) (9.6) 0.9 (17.4) 9.7 Non-controlling interests... 1.5 (0.9) 2.4 2.2 1.9 Profit (loss) for the financial year... (38.3) (10.4) 3.3 (15.2) 11.6 Profit (loss) for the year from discontinued operations net of tax... 31.5 6.1 (2.6) (1.0) Profit (loss) from continuing operations... (38.3) (41.9) (2.8) (12.6) 12.6 Corporation tax... (5.5) (15.6) (13.1) (5.2) (14.5) EBT... (32.8) (26.3) 10.3 (7.4) 27.1 Profit (loss) from entities valued through the equity method... (8.1) (1.3) (0.7) (0.1) 0.1 Financial income... 4.2 7.4 5.2 2.1 1.9 Change in fair value of financial instruments... 9.6 2.0 4.7 1.8 (0.1) Net exchange rate differences... (7.8) 2.1 5.6 (0.2) Financial expenses... (77.5) (68.8) (73.7) (34.1) (33.3) Gain (loss) on disposal of financial investments... 40.9 17.3 4.8 4.7 3.6 EBIT... 5.9 17.1 68.0 12.6 55.1 Variation in the provision for onerous agreements... 6.6 14.7 19.0 (46.1) (54.5) Net losses from asset impairment... 31.4 12.8 30.9 (4.1) (0.3) Depreciation allowance... (106.4) (98.5) (106.2) 11.1 3.0 Inventory impairments (a)... (6.2) EBITDA... 80.6 88.1 124.3 51.7 106.9 (a) (b) Procurements consist of purchases and inventory impairments. Inventory impairments represent a variation on the valuation of our real estate inventories based upon expert appraisal opinions. The consolidated statements as of June 2016 were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34. Segment information The following tables set forth certain financial and operating information of our geographical segments (which excludes revenues between segments) for the periods indicated. For the purposes of the geographical breakdown of our financial performance, which is based upon our consolidated financial statements, and the geographical breakdown of our key operating performance indicators, including RevPAR, Occupancy and ADR below, we define our geographical segments as follows: (1) Spain, which includes Spain and Andorra; (2) Italy; (3) Germany; (4) Benelux, which includes Belgium, the Netherlands and Luxembourg; (5) Rest of Europe, which includes Austria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Switzerland, France, Portugal, South Africa and the United Kingdom; and (6) Latin America, which includes Mexico, the Dominican Republic, Venezuela, Argentina, Chile, Colombia, Uruguay and the United States. See Other data Other operating measures. Operating information (unaudited) We have included other operating information in this report, some of which we refer to as key performance indicators, including RevPAR, Occupancy, Room Nights and ADR. In addition, each of Occupancy, ADR and RevPAR, both actual and on a Like-for-like Basis, for the year ended December 31, 2013 are calculated by giving effect to the reclassification of profit and loss balances related to discontinued operations for 2013 in accordance with IFRS 5 as it was applied to our 2014 results. We believe that it is useful to include this operating information as we use it for internal performance analysis, and the presentation by our business divisions of these measures facilitates comparability with other companies in our industry, although our measures may not be comparable with similar measurements presented by other companies. Such operating 4

information should not be considered in isolation or construed as a substitute for measures in accordance with IFRS. For a description of certain of our key performance indicators, see Management s discussion and analysis of financial condition and results of operations Key factors affecting our financial condition and results of operations Occupancy, Average Daily Rate (ADR) and Revenue per Available Room (RevPAR). Revenue per Available Room (RevPAR) RevPAR is the product of the Average Daily Rate for a specified period multiplied by the Occupancy for that period. The following table sets forth a geographic breakdown of RevPAR for the periods indicated. For the year ended December 31, For the six months ended June 30, 2013 2014 2015* 2015 2016 ( ) Spain... 41.4 44.2 52.1 49.8 57.8 Italy... 57.5 62.2 74.7 70.3 71.4 Germany... 52.2 53.9 54.5 53.3 58.3 Benelux... 58.3 57.9 62.2 60.2 61.7 Rest of Europe... 60.9 62.1 65.9 65.3 67.7 Latin America... 46.8 48.1 52.7 46.7 46.9 Group... 51.3 53.4 59.3 56.4 60.1 *Excluding H. Royal Occupancy Occupancy is the quotient of the total number of Room Nights sold during a specified period divided by the total number of rooms available for each day during that period. The following table sets forth a geographic breakdown of Occupancy for the periods indicated. For the year ended December 31, For the six months ended June 30, 2013 2014 2015* 2015 2016 (%) Spain... 62.2 63.6 67.7 65.7 69.4 Italy... 63.2 65.2 66.9 63.7 65.4 Germany... 70.1 71.6 69.0 68.0 68.6 Benelux... 66.9 67.4 68.2 66.1 63.3 Rest of Europe... 74.8 74.7 70.8 68.8 71.7 Latin America... 67.3 70.3 67.1 62.5 61.1 Group... 66.3 67.7 68.1 65.8 66.7 *Excluding H. Royal Average Daily Rate (ADR) Average Daily Rate is the quotient of total room revenues for a specified period divided by total Room Nights sold during that period. The following table sets forth a geographic breakdown of ADR for the periods indicated. 5

For the For the year ended December 31, six months ended June 30, 2013 2014 2015* 2015 2016 ( ) Spain... 66.6 69.5 77.0 75.8 83.3 Italy... 91.0 95.4 111.7 110.3 109.3 Germany... 74.4 75.3 79.1 78.5 84.9 Benelux... 87.3 86.0 91.2 91.1 97.4 Rest of Europe... 81.5 83.2 93.0 94.9 94.5 Latin America... 69.6 68.5 78.5 74.8 76.7 Group... 77.4 78.9 87.1 85.7 90.2 *Excluding H. Royal Geographical Information The following table sets forth a geographic breakdown of our net turnover for the periods indicated. For the year ended December 31, For the six months ended June 30, 2013 2014 2015 2015 2016 ( in millions) Net turnover Spain... 308.1 295.3 325.5 154.6 179.3 Italy... 223.5 227.1 267.0 123.1 131.6 Germany... 283.0 288.3 288.3 142.2 152.1 Benelux... 266.8 256.6 263.7 126.2 126.6 Rest of Europe... 92.1 92.6 93.5 45.6 47.4 Latin America... 86.9 87.1 138.6 63.4 64.6 Total... 1,260.5 1,247.0 1,376.6 655.1 701.6 6

Summary financial and other information The following summary consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows as of and for the years ended December 31, 2013, 2014 and 2015, except for the footnotes included below each table and except as otherwise indicated, have been derived from the audited consolidated financial statements for such periods of the Group, which were audited by Deloitte, S.L. and have been prepared in accordance with IFRS, as of and for the six months ended June 30, 2016 have been derived from the condensed interim consolidated financial statements of the Group that were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34, and for the six months ended June 30, 2015 have been derived from the condensed interim consolidated financial statements of the Group for such period.. This summary financial information is not necessarily representative of our results of operations for any future period or our financial condition at any future date. IFRS 5 was applied in the preparation of the audited consolidated financial statements as of and for the year ended December 31, 2014 due to the identification of all Sotogrande assets (including those that were eventually sold and those that were retained by the Group) as non-strategic assets undergoing divestment. As a result, such assets and liabilities were reclassified as held for sale and appear separately under the line items Profit (loss) for the year from discontinued operations net of tax in the consolidated statement of profit or loss and other comprehensive income and Non-current assets classified as held for sale and Liabilities associated with non-current assets classified as held for sale in the consolidated statement of financial position for the year ended December 31, 2014. The audited consolidated financial statements as of and for the years ended December 31, 2012 and 2013 do not give effect to such reclassification. We sold Sotogrande in November 2014, excluding certain international assets that were retained, which continue to be held for sale. See Management s discussion and analysis of financial condition and results of operations Changes to accounting policies and new accounting standards. The following summary unaudited pro forma financial information has been derived by applying pro forma adjustments to the Group s historical consolidated financial statements included elsewhere in this report. The unaudited pro forma adjustments and the unaudited pro forma financial information set forth below are based upon available information and certain assumptions and estimates that we believe are reasonable and may differ from actual amounts. The summary pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions occurred on the dates presented or to project our results of operations or financial position for any future period or our financial condition at any future date. This Summary financial and other information contains certain non-ifrs financial measures including Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness and changes in working capital. These non-ifrs financial measures are not measurements of performance or liquidity under IFRS. Investors should not place any undue reliance on these non-ifrs measures and should not consider these measures as: (a) an alternative to operating income or net income as determined in accordance with generally accepted accounting principles, or as measures of operating performance; (b) an alternative to cash flows from operating, investing or financing activities, as determined in accordance with generally accepted accounting principles, or as a measure of our ability to meet cash needs; or (c) an alternative to any other measures of performance under generally accepted accounting principles. These measures are not indicative of our historical operating results, nor are they meant to be predictive of future results. These measures are used by our management to monitor the underlying performance of the business and the operations. Since all companies do not calculate these measures in an identical manner, our presentation may not be consistent with similar measures used by other companies. Therefore, investors should not place undue reliance on this data. This Summary financial and other information should be read in conjunction with, and is qualified in its entirety by reference to, our financial statements and the accompanying notes included elsewhere in this report, and should also be read together with the information set forth in Summary, Presentation of financial and other information, Use of non-ifrs financial measures, Other data, Business and Management s discussion and analysis of financial condition and results of operations. For more information on the basis of preparation of this financial information, see Presentation of financial and other information and the notes to the financial statements included elsewhere in this report. 7

Information regarding forward-looking statements Certain statements in this report are not historical facts and are forward-looking within the meaning of Section 27A of the U.S. Securities Act and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the U.S. Exchange Act ). This document contains certain forward-looking statements in various sections, including, without limitation, under the headings Summary, Risk factors, Management s discussion and analysis of financial condition and results of operations and Business, and in other sections where this report includes statements about our intentions, beliefs or current expectations regarding our future financial results, plans, liquidity, prospects, growth, strategy and profitability, as well as the general economic conditions of the industry and countries in which we operate. We may from time to time make written or oral forward-looking statements in other communications. Forward- looking statements include statements concerning our plans, objectives, goals, strategies, future events, future sales or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and dispositions, our competitive strengths and weaknesses, our business strategy and the trends we anticipate in the industries and the economic, political and legal environment in which we operate and other information that is not historical information. Words such as believe, anticipate, estimate, expect, intend, predict, project, could, may, will, plan and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements will not be achieved. These risks, uncertainties and other factors include, among other things, those listed under Risk factors, as well as those included elsewhere in this report. You should be aware that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include: levels of spending in the business, travel and leisure industries, as well as consumer confidence; a further economic downturn in Europe; competitive forces in the markets where we operate; our ability to enter into new management agreements; the risk that our management agreement will not generate positive financial results; risks resulting from significant investments in owned and leased real estate, such as the risk of increases in interest rates and the need for capital improvements and expenditures; risk associated with potential acquisitions and actual and potential dispositions; our ability to exit underperforming leases and management agreements; risks associated with third-party valuations; risks associated with our relationship with Hesperia; risk related to controversies between shareholders that may result in litigation; liabilities or capital requirements associated with acquiring interests in hotel joint ventures with third parties; risks related to the development, redevelopment or renovation of properties that we own or lease; the development of new hotels and the expansion of existing hotels; 8

the ability or willingness of third-party hotel proprietors to make investments necessary to maintain or improve properties we manage; early termination of our management contracts; our relationships with third-party hotel proprietors; contractual or other disagreements with third-party hotel proprietors; our ability and the ability of third-party hotel proprietors to repay or refinance mortgages secured by hotels that we operate; general volatility of the capital markets and our ability to access the capital markets, that can impact on the success of the refinancing of the Group; our ability to meet certain financial ratios; relatively fixed costs associated with hotel operations; the seasonal and cyclical nature of the hospitality business; hostilities, including terrorist attacks, or fear of hostilities that affect travel and other catastrophic events; our ability to establish and maintain distribution arrangements; a shift in hotel bookings from traditional to online channels; the introduction of new brand concepts and our ability to develop new brands, generate customer demand and incorporate innovation; our ability to successfully implement new initiatives; our ability to attract, retain, train, manage and engage our employees; relationships with our employees and labor unions and changes in labor law; our dependence on key personnel; fluctuations in currency exchange rates; extensive regulatory, including licensing, land use and environmental, requirements; risks relating to a change of control of NH Hotel Group, S.A.; insufficient insurance; changes in tax laws; failure to protect our trademarks and intellectual property; third-party claims of intellectual property infringement; unfavorable outcomes of legal proceedings; 9

interruptions or failures of our information technology systems resulting from unanticipated problems or natural disasters, such as power loss, telecommunication failures, computer viruses, hurricanes or floods; failure to maintain the integrity of internal or customer data; failure to incorporate new developments in technology; and risks relating to the Notes and our structure. Impact on financial leverage due to IFRS 16. This list of important factors is not exhaustive. You should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which we operate. Such forward-looking statements speak only as of the date on which they are made. Accordingly, we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario. Presentation of financial and other information This report includes audited consolidated financial statements of the Group as of and for the years ended December 31, 2013, 2014 and 2015 and the six months ended June 30, 2015 and 2016. The consolidated financial statements of the Group have been prepared in accordance with IFRS and audited by Deloitte, S.L. The consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position and consolidated statement of cash flows as of and for the years ended December 31, 2013, 2014 and 2015, except as otherwise indicated, have been derived from the audited consolidated financial statements for such periods of the Group, which were audited by Deloitte, S.L, and have been prepared in accordance with IFRS, and as of and for the six months ended June 30, 2016 have been derived from the condensed interim consolidated financial statements of the Group that were prepared subject to a limited review by the external auditors, Deloitte, S.L., who issued a report on date July 28, 2016, and have been prepared in accordance with IFRS and IAS 34, and for the six months ended June 30, 2015 have been derived from the condensed interim consolidated financial statements of the Group for such period. The financial information in this report is not necessarily representative of our results of operations for any future period or our financial condition at any future date. IFRS 5 was applied in the preparation of the audited consolidated financial statements as of and for the year ended December 31, 2014 due to the identification of all Sotogrande assets (including those that were eventually sold and those that were retained by the Group) as non-strategic assets undergoing divestment. As a result, such assets and liabilities were reclassified as held for sale and appear separately under the line items Profit (loss) for the year from discontinued operations net of tax in the consolidated statement of profit or loss and other comprehensive income and Non-current assets classified as held for sale and Liabilities associated with non-current assets classified as held for sale in the consolidated statement of financial position for the year ended December 31, 2014. The audited consolidated financial statements as of and for the years ended December 31, 2012 and 2013 do not give effect to such reclassification. We sold Sotogrande in November 2014, excluding certain international assets that were retained, which continue to be held for sale. See Management s discussion and analysis of financial condition and results of operations Changes to accounting policies and new accounting standards. The unaudited pro forma financial information contained in this report has been derived by applying pro forma adjustments to the Group s historical consolidated financial statements included elsewhere in this report. The unaudited pro forma adjustments and the unaudited pro forma financial information set forth in this report are based upon available information and certain assumptions and estimates that we believe are reasonable and may differ from actual amounts. The pro forma financial information is for informational purposes only and does not purport to present what our results would actually have been had these transactions occurred on the dates presented or to project our results of operations or financial position for any future period or our financial condition at any future date. 10

Certain numerical figures set out in this report, including financial data presented in millions or in thousands, have been subject to rounding adjustments and, as a result, the totals of the data in the report may vary slightly from the actual arithmetic totals of such information. Use of non-ifrs financial measures Certain parts of this report contain non-ifrs measures and ratios, including Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness and changes in working capital. We define Adjusted EBITDA as EBITDA adjusted for the effect of certain non-recurring or extraordinary items, including gains or losses from disposals of assets, the variation in the provisions for liabilities and charges from losses and unrecovered receivables and advisory and consultancy expenses, non-recurring staff costs, adjustments for the prior year effect of a change in accounting policy, non-recurring lease costs and other non-recurring items. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net turnover. We define EBITDA as profit (loss) attributable to shareholders of the Issuer plus non controlling interests plus profit (loss) for the year from discontinued operations net of tax minus corporation tax, gain (loss) on disposal of financial investments, net exchange rate differences, financial expenses, change in fair value of financial instruments, financial income, profit (loss) from entities valued through the equity method, variation in the provision for onerous agreements, net losses from asset impairment, depreciation allowance and inventory impairments. We define EBITDA margin as EBITDA divided by net turnover. We define EBITDAR as EBITDA before rent expense. We define EBITDAR margin as EBITDAR divided by net turnover. We define Pro Forma Adjusted EBITDA as Adjusted EBITDA for the year ended December 31, 2015 further adjusted to give pro forma effect to the disposal of hotels, the acquisition of hotels, the refurbishment of strategic assets, the execution and termination of management and lease agreements and the renegotiation of hotel leases as if these events had occurred on January 1, 2015, and to adjust for the costs incurred with respect to our shared service centers in the transition period during which our administrative function had not yet been fully centralized. See Summary Summary financial and other information. We define net indebtedness as indebtedness minus cash and cash equivalents. We define net secured indebtedness as secured indebtedness minus cash and cash equivalents. We define RevPAR as the product of the Average Daily Rate for a specific period multiplied by the Occupancy for that period. We define Occupancy as the quotient of the total number of Room Nights sold during a specific period divided by the total number of rooms available for each day during such specific period. We define Average Daily Rate as the quotient of total room revenues for a specified period divided by total Room Nights sold during that period. We define Like-for-Like Basis with respect to Occupancy, ADR or RevPAR as the Occupancy, ADR or RevPAR, as applicable, with respect to only those hotels that were fully operational for the full twenty-four month period ended December 31, 2014. This excludes any hotels that were opened or closed or hotels that were fully or partly closed for refurbishment during this period. In addition, each of Occupancy, ADR and RevPAR, both actual and on a Like-for-like Basis, for the year ended December 31, 2013 are calculated by giving effect to the reclassification of profit and loss balances related to discontinued operations for 2013 in accordance with IFRS 5 as it was applied to our 2014 results. 11

We define changes in working capital as the sum of the movements in inventories, trade and other receivables, other current assets, trade creditors and other current liabilities and charges as derived from the cash flow statements. Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness, changes in working capital, ADR, Occupancy and RevPAR, on an actual and on a Like-for-like Basis are non-ifrs measures. We use these non-ifrs measures as internal measures of performance to benchmark and compare performance, both between our own operations and as against other companies. We use these non-ifrs measures, together with measures of performance under IFRS, to compare the relative performance of operations in planning, budgeting and reviewing the performance of various businesses. We believe these non-ifrs measures are useful and commonly used measures of financial performance in addition to operating profit and other profitability measures, cash flow provided by operating activities and other cash flow measures and other measures of financial position under IFRS because they facilitate operating performance, cash flow and financial position comparisons from period to period, time to time and company to company. By eliminating potential differences between periods or companies caused by factors such as depreciation and amortization methods, financing and capital structures and taxation positions or regimes, we believe these non-ifrs measures can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. For these reasons, we believe these non-ifrs measures and similar measures are regularly used by the investment community as a means of comparing companies in our industry. Different companies and analysts may calculate Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness, ADR, Occupancy and RevPAR, on an actual and on a Like-for-like Basis, and changes in working capital differently, so making comparisons among companies on this basis should be done very carefully. Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness ADR, Occupancy and RevPAR, on an actual Like-for-like Basis changes in working capital are not measures of performance under IFRS and should not be considered in isolation or construed as a substitute for net operating profit or as an indicator of our cash flow from operations, investing activities or financing activities or as an indicator of financial position in accordance with IFRS. For the calculation of Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness, ADR, Occupancy and RevPAR, on an actual and on a Like-for-like Basis, and changes in working capital, see Summary Summary financial and other information. Other data In addition to Adjusted EBITDA, Adjusted EBITDA margin, EBITDA, EBITDA margin, EBITDAR, EBITDAR margin, Pro Forma Adjusted EBITDA, net indebtedness, net secured indebtedness and changes in working capital, we have included other operating information in this report, some of which we refer to as key performance indicators, including RevPAR, Occupancy, Room Nights and Average Daily Rate, both on an actual and on a Like-for-like Basis. We believe that it is useful to include this operating information as we use it for internal performance analysis, and the presentation by our business divisions of these measures facilitates comparability with other companies in our industry, although our measures may not be comparable with similar measurements presented by other companies. Such operating information should not be considered in isolation or construed as a substitute for measures in accordance with IFRS. For a description of certain of our key performance indicators, see Management s discussion and analysis of financial condition and results of operations Key Factors affecting our financial condition and results of operations Occupancy, Average Daily Rate (ADR) and Revenue per Available Room (RevPAR). We define our geographical segments for purposes of reporting our financial information and our operating data as follows: (1) Spain, which includes Spain and Andorra; (2) Italy; (3) Germany; (4) Benelux, which includes Belgium, the Netherlands and Luxembourg; (5) Rest of Europe, which includes Austria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Switzerland, France, Portugal, South Africa and the United Kingdom; and (6) Latin America, which includes Mexico, the Dominican Republic, Venezuela, Argentina, Chile, Colombia, Ecuador, Uruguay and the United States. However, the business units under which we currently operate our hotel business are aligned differently. For purposes of our operating structure, Spain, Portugal and Andorra comprise our Spain business unit; Italy is a separate business unit; Belgium, the Netherlands, Luxembourg, France, South Africa and the United Kingdom comprise our Benelux business unit, though the operations of our United States hotels, whose rooms are considered part of the Central Europe business unit, are partly managed by the Benelux business unit; Germany, Austria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Switzerland and the United States comprise our Central and Eastern Europe and USA business unit; and Mexico, the 12

Dominican Republic, Venezuela, Argentina, Chile, Colombia, Ecuador and Uruguay comprise our Americas business unit. Although we do not currently have plans to change our operating structure, we may do so in the future. Market and industry data In this report, we rely on and refer to information regarding our business and the markets in which we operate and compete. Such market and industry data and certain industry forward-looking statements are derived from various industry and other independent sources, where available. The information in this report that has been sourced from third parties has been accurately reproduced and, as far as we are aware and able to ascertain from the information published by such third parties, no facts have been omitted that would render the reproduced information inaccurate or misleading. Notwithstanding the foregoing, such third-party information has not been independently verified, and neither we nor the Initial Purchasers make any representation or warranty as to the accuracy or completeness of such information set forth in this report. In addition, certain information in this report for which no source is given, regarding our market position relative to our competitors in the hotel industry, is not based upon published statistical data or information obtained from independent third parties. Such information and statements reflect our best estimates based upon information obtained from trade and business organizations and associations and other contacts within the industries in which we compete, as well as information published by our competitors. To the extent that no source is given for information contained in this report, or such information is identified as being our belief, that information is based upon the following: (i) in respect of market share, information obtained from trade and business organizations and associations and other contacts within the industries in which we compete and internal analysis of our sales data, and unless otherwise stated, market share is based upon number of rooms in operation; (ii) in respect of industry trends, our senior management team s general business experience, as well as their experience in our industry and the local markets in which we operate; and (iii) in respect of the performance of our operations, our internal analysis of our audited and unaudited financial and other information. As some of the foregoing information was compiled or provided by our management or advisors and is not publicly available, such information accordingly may not be considered to be as independent as that provided by other third-party sources. Trademarks and trade names We own or have rights to certain trademarks or trade names that we use in conjunction with the operation of our businesses. Each trademark, trade name or service mark of any other company appearing in this report belongs to its holder. 13

Recent developments Disposals After 30 June 2016, the Group has sold assets with a book value of 15.9 million euros, which gave rise to a capital gain of 3 million euros. Trading Update Based on our preliminary results, consolidated RevPAR for the seven months ended July 31, 2016 is 60.4, representing an increase of 6.2%, compared to 56.9 for the seven months ended July 31, 2015. Occupancy has reached 67.5% and ADR 89.5 for the seven months ended July 31, 2017, compared to 66.8% and 85.3 for the seven months ended July 31, 2016. The increase in RevPAR is driven by an increase of approximately 4.9% in ADR and an increase of approximately 1.4% in occupancy, which means that out of the RevPAR growth, 80% has been driven through ADR. The foregoing information is based on estimates and our internal accounts. We caution that the foregoing information has not been audited or reviewed by our independent auditors. The foregoing information should not be regarded as a representation or forecast by us or any other person regarding our results for the period and is not necessarily indicative of the results that may be expected for any other period or for the full year. Rating On July 27th, Moody's Ratings assigned a first-time corporate family rating of B2 to NH Hotel Group S.A's (NH), with stable outlook. This rating reflects the company's established European platform expected to benefit from the implementation of its comprehensive turnaround plan, improved liquidity and asset-lighter focus. On August 1 st, Standard & Poor s upgraded NH Hotel Group S.A's To 'B' on improved operating performance and adequate liquidity with stable outlook. Reasons for the upgrade are stronger operating and financial performance than initially expected, benefitting from reposition capital expenditures. S&P s expects stronger metrics for financial year-end 2016 and consider that liquidity has improved following asset sales. S&P s also raised their issue rating on NH s senior secured debt to 'BB-' from 'B+'. The stable outlook reflects their view that NH will continue to focus on improving its operating performance, while controlling its working-capital, liquidity, capital-expenditure, and cost management. The Issuer The Issuer is a public limited company (sociedad anónima) incorporated under the laws of Spain and listed on the Madrid, Bilbao, Valencia and Barcelona Stock Exchanges (Bolsas de Valores de Madrid, Bilbao, Valencia y Barcelona) with an authorized share capital of 700,543,576, consisting of 350,271,788 shares as of June 30, 2016. All shares have been issued and are fully paid up. The Issuer is registered in the Commercial Registry of Madrid at volume 576 general 176 of section 3 of the companies registry, page 61, sheet M-61 443. The registered office of the Issuer is located at Calle Santa Engracia 120, 28003 Madrid, Spain and its telephone number at that address is (+34) 91 451 97 18. 14

Currency presentation and exchange rate information In this report: $, dollar or U.S. dollar refers to the lawful currency of the United States; and or euro refers to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time. The following tables set forth, for the periods indicated, the period end, period average, high and low Bloomberg Composite Rates expressed in U.S. dollars per 1.00. The Bloomberg Composite Rate is a best market calculation, in which, at any point in time, the bid rate is equal to the highest bid rate of all contributing bank indications and the ask rate is set to the lowest ask rate offered by these banks. The Bloomberg Composite Rate is a mid-value rate between the applied highest bid rate and the lowest ask rate. U.S. dollar per 1.00 Year ended December 31, Period end Average (1) High Low 2010... 1.3387 1.3210 1.4513 1.1923 2011... 1.2959 1.3982 1.4830 1.2907 2012... 1.3192 1.2909 1.3458 1.2061 2013... 1.3743 1.3300 1.3804 1.2780 2014... 1.2098 1.3207 1.3932 1.2098 2015... 1.0862 1.1042 1.1714 1.0521 1H 2016 (2)... 1.1106 1.1167 1.1616 1.0711 (1) The average rate for a year means the average of the Bloomberg Composite Rates on the last day of each month during such year. (2) The average rate for a quarter means the average of the Bloomberg Composite Rates on each business day during such semester. The above rates differ from the actual rates used in the preparation of the consolidated financial statements and other financial information appearing in this report. Our inclusion of the exchange rates is not meant to suggest that the euro amounts actually represent U.S. dollar amounts or that these amounts could have been converted into U.S. dollars at any particular rate, if at all. 15

Risk factors Risks relating to our business and industry The hotel industry may be materially affected by general economic conditions and other factors outside our control, and declines or disruptions in the hotel industry could adversely affect our business, results of operations, financial condition or prospects. Consumer demand for our products and services is closely linked to the performance of the general economy and is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions, changes in travel patterns, lower consumer confidence or adverse political conditions can lower the revenues and profitability of our owned and leased properties and the amount of management fee revenues we are able to generate from our managed properties. Declines in hotel profitability during an economic downturn directly affect the incentive portion of our management fee revenues, which is based upon hotel profit measures. In addition, to the extent that we have provided a guarantee under a management agreement to meet certain profitability measures and those measures are not met, during a specified period, typically two or three consecutive years, we have the option to compensate the hotel proprietor for the shortfall or, if we elect not to pay the hotel proprietor, the hotel proprietor may terminate the agreement, in which case we have no further obligations to the hotel proprietor. The economic downturn in some of our key markets such as Spain and Italy over the past three years led to a decline in demand for hospitality products and services, lower occupancy levels and reduced room rates, all of which have lowered our net turnover and negatively affected our profitability. We cannot predict whether we will be able to increase ADR and Occupancy and therefore RevPAR at the same rate at which they have declined during the downturn. An extended period of economic weakness would likely have a further adverse effect on our results of operations, financial condition and prospects. Furthermore, global economic conditions, particularly in Europe, have significantly affected consumer confidence and behavior and, as a result, historical performance information may be less effective as a means of predicting future demand and operating results. A majority of our revenue is generated from operations in Europe, and a further economic downturn in Europe could intensify the risks faced by the hotel industry, which could negatively affect our business, results of operations, financial condition or prospects. The credit crisis in Europe caused widespread concern about the ability of several European governments to repay their debt. Conditions in Europe have resulted in increased volatility in global capital markets, as well as lower consumer confidence, which could continue for the foreseeable future. Our operations are principally located in Europe, and in particular in Spain, Italy and Benelux, which for the six months ended June 30, 2016 collectively accounted for 62.4% of our net turnover. Accordingly, our financial performance is particularly affected by economic and financial conditions in Europe, and our results of operations may be further adversely affected if the difficult macroeconomic circumstances in Spain, Italy, Belgium, the Netherlands and Luxembourg or other European countries in which we operate cause a sustained or significant fall in the demand for hotels. In these circumstances, many of the risks faced by the hotel industry and our business could intensify, which could negatively affect our business and net turnover and our access to, and cost of, capital. We operate in a highly competitive industry, and our business, results of operations, financial condition, prospects and market share could be adversely affected if we are unable to compete effectively. The hotel industry is highly competitive. We face a variety of competitive challenges in attracting new guests and maintaining customer loyalty among our existing customer base, including: anticipating and responding to the needs of our customers; differentiating the quality of our hotel services and products with respect to our competitors; developing and maintaining a strong brand image and a reputation for consistent quality and service across our hotels; 16