To the Shareholders and Board of Directors

KPMG Hungária Kft.
Váci út 99. H-1139 Budapest Hungary	Phone: (36-1)2707100 Telefax: (36-1)2707101	e-mail: info@kpmg.hu internet: www.kpmg.hu

Report of Independent Auditors

To the Shareholders of Danubius Hotel and Spa Rt.

We have audited the accompanying consolidated balance sheets of Danubius Hotel and Spa Rt. and its subsidiaries ("the group") as at December 31, 2000 and 1999, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the two years then ended. These consolidated financial statements are the responsibility of the directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

The consolidated statements of income, changes in shareholders' equity and cash flows for the year ended December 31, 1998 were audited by other auditors whose report there on dated March 12, 1999 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with International Standards on Auditing as promulgated by the International Federation of Accountants and generally accepted auditing standards in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2000 and 1999, and the results of its operations and its cash flows for each year in the two-year period then ended in accordance with International Accounting standards as promulgated by the International Accounting standards committee.

Budapest, March 20, 2001

KPMG Hungária Kft.
Victor Keveházi Partner