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Morgans Hotel Group Co. Acquires the 194-room James Hotel in Scottsdale; 
Will Re-Brand as Mondrian Scottsdale, Don Jacinto Named General Manager
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NEW YORK, NY, May 3, 2006 - Morgans Hotel Group Co. (NASDAQ: MHGC), a fully integrated hospitality company that operates boutique hotels in gateway cities under well-known brands such as Delano and Mondrian, today announced the closing of its acquisition of the 194-room Mondrian Scottsdale, formerly known as the James Hotel.  The final purchase price of $47.8 million was financed using available cash. The Company expects to enter into mortgage financing secured by this property in the near future.

The hotel will undergo renovations, which are expected to be completed by year end, to create the Company’s distinctive lodging, spa and dining experience including: Agua Bathhouse, Skybar and Jeffrey Chodorow’s critically acclaimed, Asia de Cuba. The hotel will remain open during this period.  Don Jacinto, previously the Hotel Manager at Hudson in New York since June 2002, has been promoted to General Manager of Mondrian Scottsdale.  Don has been instrumental in building and developing every aspect of Hudson’s business and customer experience.  MHG’s appointment of a key executive from one of its most respected New York properties, emphasizes Morgans’ commitment to the success of the new Mondrian Scottsdale, the first extension of the Mondrian brand.  

W. Edward Scheetz, President and Chief Executive Officer stated, “We are excited to close this transaction and are confident that over time we can dramatically enhance the profitability of the hotel. We expect to be able to generate attractive value for shareholders post-renovation by applying our intensive asset operational focus and leveraging our larger sales team and recognizable Mondrian brand.”

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.  

About Morgans Hotel Group
Morgans Hotel Group Co. (Nasdaq: MHGC) which is widely credited with establishing and developing the rapidly expanding boutique hotel sector,  owns and operates Morgans, Royalton and Hudson in New York, Delano  and The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London.  MHG has other property transactions in various stages of completion including projects in Miami Beach, Florida, and Las Vegas, Nevada, and continues to vigorously pursue its strategy of developing unique properties at various price points in international gateway cities in the United States, Europe, South America, Asia and around the world.  

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Contact:

Morgans Hotel Group Co. 
www.morganshotelgroup.com

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Also See: Morgans Hotel Group Co. Reports Net loss for the 4th Qtr 2005 of $4.1 million; Anticipates Spending $20 to $25 million for Upgrades of Hotels and the Re-branding of Mondrian Scottsdale / Hotel Operating Statistics / March 2006
Morgans Hotel Group Provides Update on Growth Plans with its Brands Delano and Mondrian / February 2006


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