MADRID — HNA Group ("HNA") today issued the following letter to NH Hotel Group (“NH Hotel”) (BME:NHH) shareholders:

Dear Fellow Shareholder,

Hesperia and Oceanwood, combined holders of at least 21% of the outstanding share capital of NH Hotel, have seized full control of the NH Hotel Board of Directors and management team, and are acting in concert to advance their own interests against those of NH Hotel’s minority public shareholders. Accordingly, HNA believes Hesperia and Oceanwood have formed a cabal and should be required to launch a tender offer to acquire all NH Hotel shares at the price mandated by relevant regulations.

The New “CEO” Structure

Hours after the majority of NH Hotel’s shareholders voted in favor of the reappointment of CEO Federico Gonzalez at the General Shareholders Meeting, the new Board of Directors removed Mr. Gonzalez from his post. This precipitous action was led by Hesperia’s Jose Antonio Castro and Oceanwood’s Alfredo Fernandez, and taken against the will of the four Independent directors and the votes of NH Hotel shareholders.

The Hesperia-Oceanwood Cabal has replaced Mr. Gonzalez, a hospitality industry veteran, with a highly unusual management structure. Instead of formally appointing a qualified CEO to lead the management team, the newly constituted NH Hotel Board has named three division heads – NH Hotel’s Chief Financial Officer Beatriz Puente, Chief Operating Officer Ramón Aragonés, and Chief Commercial Officer Rufino Pérez – as “Co-CEOs”.

While Ms. Puente, Mr. Aragonés, and Mr. Pérez may be skilled and competent professionals in their own right, they are entirely beholden to Hesperia and Oceanwood. Rather than reporting to the full Board, the “Co-CEOs” serve an executive committee (the Delegated Commission) which is chaired by Mr. Castro and co-chaired by Mr. Fernandez and controlled by Hesperia and Oceanwood directors. This organizational structure makes one thing clear: Mr. Castro is now de facto CEO of NH Hotel.

The Hesperia Contract

As part of Hesperia’s contract negotiations, Mr. Castro has demanded conditions that would be significantly disadvantageous to NH Hotel and its shareholders. These conditions had previously been rejected by the prior Board on the basis that they include a lower discount rate than the standard across all other NH Hotel contracts as well as the ability for Hesperia to avoid future potential termination payments. Both of these provisions expose NH Hotel to a potential cash loss of up to €30 million at a time when the Company had been taking responsible actions to increase free cash flow. Now, with control of both the Board and the Delegated Commission, the Hesperia-Oceanwood Cabal is in a position to steer the terms of the renegotiation for Mr. Castro’s own benefit, regardless of whether they are in the best interests of all other shareholders and the Company.

The prior NH Hotel Board negotiated in good faith with Mr. Castro for nearly a year, including deadline extensions, in order to arrive at a mutually agreeable outcome. Now, with the deadline for finalizing the new agreement fast approaching on 31 July, the Hesperia-Oceanwood Cabal has apparently abdicated its responsibility to resolve this issue and may choose to extend the deadline to October.

As a result, Mr. Castro will be given a free option period during which NH Hotel shareholders will, in effect, subsidize his outdated hotels which are suffering financially and require significant investment. During the pendency of the contract renegotiation, which is the outcome of an underlying conflict of interest, Mr. Castro retains maximum flexibility to sell the contract to a competitor on terms that advance that are economically advantageous to Mr. Castro alone.

HNA will be monitoring the negotiations closely, should Hesperia and Oceanwood decide to continue such negotiations, to ensure 1) that the Board does not enter into a contract with Hesperia that is disadvantageous for NH Hotel; 2) if the contract is not renewed, that the Board will hold Hesperia to the termination obligations of its contract; and 3) if the deadline is once again extended that the Board will make every effort to reach a timely conclusion in order to minimize risk to NH Hotel shareholders.

HNA also expects the Hesperia and Oceanwood-led Board to move quickly to identify and appoint a single, qualified CEO to lead NH Hotel and its management team in developing and executing a new strategic plan that goes beyond financial engineering for the sake of a near-term share price re-rating. Absent such good governance, HNA will press the relevant regulatory bodies to compel the Hesperia-Oceanwood Cabal to equalize its minority economic interests with the control it holds over the Board and Company by tendering for all outstanding NH Hotel shares.

Sincerely,

Charles Bromwell Mobus, Jr. Former Co-Chairman and Chairman of the Board NH Hotel Group