Morgans Hotel Group Co. (NASDAQ: MHGC) (“MHG”) today announced that it has not been able to reach an acceptable agreement with its lenders on a restructuring of the loans on its hotel in Scottsdale that would be in the best long-term interests of its shareholders. As a result and consistent with previous indications from management, MHG is prepared for the lenders to exercise their remedies with respect to the hotel.

In June 2009, MHG discontinued subsidizing the $40 million non-recourse mortgage and mezzanine loans secured by its interests in the hotel in Scottsdale. The loans matured on June 1. For the twelve months ending September 30, 2009, the hotel had an EBITDA loss of approximately $1.4 million and had interest expense of $1.8 million, which includes approximately $0.5 million of unpaid interest which MHG has accrued since June 1.

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, Playa del Carmen, Mexico 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.

Jennifer Foley
Public Relations Director
212.277.4166
Morgans