Morgans Hotel Group Announces a New Management Contract for Hotel Las Palapas in Playa del Carmen, Riviera Maya, Mexico

Morgans Hotel Group Co. (NASDAQ: MHGC) (“Morgans”) today announced a management agreement for the Hotel Las Palapas, located in the vibrant Playa del Carmen resort area, which is owned by affiliates of Walton Street Capital (“Walton”). Morgans and Walton are already joint venture partners in the ownership of two other hotels - the Sanderson and St Martins Lane hotels in London.

Hotel Las Palapas is a 75-key beachfront hotel located in the heart of Playa del Carmen, Riviera Maya, Mexico. The hotel, with its magnificent beach of white sand, is centrally located on the 5th Avenue of Playa del Carmen, famous for its numerous restaurants, bars and small shops. Walton plans to convert the site into a Morgans branded hotel when economic conditions improve.

“We are pleased to be working with Walton Street Capital on another international hotel. The beachfront Hotel Las Palapas in the popular resort destination of Playa del Carmen has great potential,” said Marc Gordon, President of Morgans Hotel Group. “This deal will allow Morgans to generate income immediately while Walton puts together the development to convert the project into a Morgans hotel.”

Morgans will assume management of the property as of December 15th, 2009.

Morgans has a five-year management agreement with one five-year renewal option.

About Walton Street Capital | Walton Street Capital, L.L.C. was founded in 1994 and is a private real estate investment firm operating in the U.S. and abroad. Since its inception, Walton Street has received equity commitments in excess of $5.7 billion from public and corporate pension funds, foreign institutions, endowments and foundations, trusts and high net worth individuals. Walton Street has invested in over $10 billion of gross assets in approximately 170 separate transactions in U.S. and international real estate, including the development and acquisition of office, hotel, retail, industrial, multi-family, for-sale residential, senior and student housing, and golf assets through individual, portfolio and company-level transactions.

About Morgans Hotel Group | Morgans Hotel Group Co. (NASDAQ: MHGC) operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles, Scottsdale and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York, Palm Springs, California, Isla Verde, Puerto Rico and Dubai, UAE. For more information please visit .

Forward-Looking and Cautionary Statements
Statements contained in this press release which are not historical facts are forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by the use of words such as "expects," "plans," "estimates," "projects," "intends," "believes," "guidance," and similar expressions that do not relate to historical matters. These forward-looking statements are subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated, due to a number of factors which include, but are not limited to, downturns in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; risks related to natural disasters, such as earthquakes and hurricanes; risks associated with the acquisition, development and integration of properties; the seasonal nature of the hospitality business; changes in the tastes of our customers; increases in real property tax rates; increases in interest rates and operating costs; the impact of any material litigation; the loss of key members of our senior management; general volatility of the capital markets and our ability to access the capital markets; and changes in the competitive environment in our industry and the markets where we invest, and other risk factors discussed in MHG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and other documents filed by MHG with the Securities and Exchange Commission from time to time. All forward-looking statements in this press release are made as of the date hereof, based upon information known to management as of the date hereof, and MHG assumes no obligations to update or revise any of its forward-looking statements even if experience or future changes show that indicated results or events will not be realized.