24.- INGRESOS Y GASTOS

24.1 Income

The breakdown of these headings in the consolidated comprehensive profit and loss statement for 2017 and 2016 is as follows:

	Thousands of Euros
	2017	2016
Hotel occupancy	1.094.430	1.014.173
Catering	320.431	312.561
Meeting rooms and others	80.772	75.066
Rentals and other services	50.453	46.103
Revenues	1.546.086	1.447.903
Operating subsidies	36	1
Other operating income	11.065	7.686
Other operating income	11.101	7.687
Net gain (loss) on disposal of assets	30.148	41.526

“Rentals and Other Services” includes the income from fees invoiced to hotels operated on a management basis and the services provided by the NH Group to third parties.

The breakdown of net turnover by geographical markets in 2017 and 2016 was as follows:

	Thousands of Euros
	2017	2016
Spain	399.600	361.747
Germany	309.318	307.668
Benelux	319.475	276.102
Italy	275.534	266.412
Rest of Europe	99.250	99.086
Latin America	142.909	136.888
	1.546.086	1.447.903

24.2 Financial income and changes in the fair value of financial instruments

The breakdown of the amount of financial income is:

	Thousands of Euros
	2017	2016
Dividend income	34	884
Income from marketable securities	210	142
Interest income	1.819	1.738
Other financial income	932	546
	2.995	3.310

The breakdown of the amount of changes in the fair value of financial instruments is as follows:

	Thousands of Euos
	2017	2016
Foreign exchange derivative financial instruments (Note 4.6.3)	(7)	435
Total change in fair value of financial instruments	(7)	435

24.3 Staff expenses

This item in the consolidated comprehensive profit and loss statement is broken down as follows:

	Thousands of Euros
	2017	2016
Wages, salaries and similar	316.421	307.123
Social security contributions	76.454	75.202
Indemnifications	12.632	13.432
Contributions to pension plans and similar	9.029	8.581
Other social expenses	12.604	11.551
Total	427.140	415.889

The average number of people employed by the Parent Company and the companies consolidated through full consolidation in 2017 and 2016 broken down by professional categories was as follows:

	2017	2016
Group's general management	8	7
Managers and heads of department	1.390	1.489
Technical staff	940	965
Sales representatives	750	794
Administrative staff	254	224
Rest of workforce	7.805	7.599
	11.147	11.078

The breakdown of the workforce at 31 December 2017 and 2016, by gender and professional category, is as follows:

	31.12.2017		31.12.2016
	Males	Females	Males	Females
Group's general management	6	2	6	1
Managers and heads of department	781	599	867	621
Technical staff	510	400	534	430
Sales representatives	193	524	245	540
Administrative staff	93	153	102	131
Rest of workforce	4.141	3.680	3.897	3.653
	5.724	5.358	5.651	5.376

The average number of people with disabilities equivalent to or greater than 33%, directly employed by the Parent Company and fully consolidated companies in Spain in 2017 and 2016, broken down by professional categories, is as follows:

	2017	2016
Managers and heads of department	5	5
Technical staff	8	14
Sales representatives	3	-
Administrative staff	3	5
Rest of workforce	70	91
	89	115

The average age of the Group’s workforce is approximately 38 and average seniority in the Group is 8.5 years.

24.4 Other operating expenses

The detail of “Other Operating Expenses” of the consolidated statement of comprehensive income for 2017 and 2016 is as follows:

	Thousands of Euros
	2017	2016
Lease rentals	301.720	287.951
External services	517.507	507.223
Total	819.227	795.174

Shown below is a breakdown of the items included in “external services”:

	Thousands of Euros
	2017	2016
Outsourcing of services	111.945	111.261
Commissions and bonuses for customers	83.592	80.445
Supplies	47.080	45.542
Maintenance and cleaning	42.536	40.913
Laundry and related costs	37.376	36.141
Costs associated with information technologies	31.526	32.396
Marketing and merchandising	24.615	26.154
Other external services	138.837	134.371
Total	517.507	507.223

In 2017, the Group experienced a higher level of activity in its hotel business, which led to an increase in some operational expenses directly related to the level of activity, such as the outsourcing of certain services, maintenance and cleaning of the hotels and laundry service, among others. Also, the increase recorded in revenue per available room explains the increase in associated agency commission expenses. However, savings were achieved in other items such as marketing and merchandising, among others.

During 2017 and 2016, the fees for account auditing and other services provided by the auditor of the Group’s consolidated annual accounts, Deloitte, S.L., and the fees for services invoiced by the entities related to it by control, shared ownership or management, were as follows:

	Thousands of Euros
	2017	2016
Auditing services	481	478
Other verification services	258	426
Total auditing and related services	739	904
Tax consulting services	195	598
Other services	471	202
Total other services	666	800
Total professional services	1.405	1.704

Additionally, entities associated with the Deloitte international network have invoiced the Group for the following services:

	Thousands of Euros
	2017	2016
Auditing services	1.147	1.149
Other verification services	19	24
Total auditing and related services	1.166	1.173
Tax consulting services	56	115
Other services	-	6
Total other services	56	121
Total	1.222	1.294

During 2017, other auditing firms apart from Deloitte, S.L. or entities associated with this company by control, shared ownership or management, have provided account auditing services to the companies making up the Group, for fees totalling 83 thousand euros (130 thousand euros in 2016). The fees accrued in 2017 by these firms for tax advice services were 125 thousand euros (221 thousand euros in 2016) and for other services, 443 thousand euros (372 thousand euros in 2016).

24.5 Operating leases

At 31 December 2017 and 2016, the Group had made undertakings concerning future minimal rental payments by virtue of non-cancellable operating lease agreements, which expire as set out in the table below.

The current value of the rental payments has been calculated by applying a post-tax discount rate in keeping with the cost of capital of each of the countries and includes the commitments which the Group estimates will have to be met in the future to guarantee a fixed income or minimum return from hotels operated under a management agreement.

	Present Value
Thousands of Euros	2017	2016
Less than one year	261.801	259.112
Between two and five years	876.540	867.428
More than five years	1.211.109	1.151.05
Total	2.349.450	2.277.596

The term of the operating lease agreements signed by the Group ranges from 5 to 40 years. Agreements likewise include several methods to determine the rent to be paid. Basically, the methods for determining rentals can be summarised as fixed rentals indexed to a consumer price index; fixed rentals complemented by a variable part, indexed to the property’s operating profits; or completely variable rentals, determined by business performance during the year. In some cases, variable rentals are set with a minimum profitability threshold for the owners of the property under operation.

ElThe breakdown by business unit of the current value of the rental instalments at 31 December 2017 is as follows (thousands of euros):

	Less than one year	Between two and five years	More than five years	Total
Spain*	77.667	236.935	211.494	526.096
Germany and Central Europe	95.184	320.977	490.948	907.109
Italy	39.868	146.395	129.928	316.245
Benelux	46.659	166.699	374.756	588.114
Latin America	2.423	5.534	3.929	11.886
Total	261.801	876.540	1.211.109	2.349.450

*Spain includes Portugal and France

The breakdown by business unit of the current value of the rental instalments at 31 December 2016 is as follows (thousands of euros):

	Less than one year	Between two and five years	More than five years	Total
Spain	68.901	207.625	140.106	416.632
Germany and Centre Europe	99.513	326.638	390.595	816.746
Italy	40.286	138.940	135.279	314.505
Benelux	46.217	185.801	480.494	712.512
Latin America	4.195	8.424	4.582	17.201
Total	259.112	867.428	1.151.056	2.277.596

24.6 Finance costs

The detailed balance of this chapter of the consolidated statement of comprehensive income for 2017 and 2016 is as follows:

	Thousands of Euros
	2017	2016
Expenses for interest	44.220	45.892
Financial expenses for means of payment	16.317	14.472
Financial effect relating to restatement of provisions and other financial liabilities	1.381	2.775
Amortisation of debt arrangement expenses	13.402	7.833
Other financial expenses	1.427	1.332
Total financial expenses	76.747	72.304

“Financial effect relating to restatement of provisions and other financial liabilities” includes in the year 2017 the result of the restatement of the provision for the lease agreements of hotels classified as onerous as well as the part of the consideration for the acquisition of 97.47% of the share capital of Hoteles Royal, S.A. which was paid in March 2017.

In 2016, the Parent Company amortised in advance the arrangement expenses corresponding to those lines of financing that were settled with the funds from the issuance of guaranteed senior bonds which were placed on 23 September 2016.

The increase in arrangement expenses in 2017 compared to 2016 is mainly due to the expenses incurred in the issuance of the 2023 maturity bond and the premiums paid for the repurchase and voluntary early cancellation of the 250 million euros bond maturing in 2019 which took place in the months of April and November 2017 (see Note 15).