Morgans Hotel Group Reports 2nd Qtr 2008 Net Loss of $730 thousand Compared to a Net Income of $841 thousand in the Prior Year; Revenues Decreased to $81.3 million from $82.7 million in the Prior Year / August 2008

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Morgans Hotel Group Reports 2nd Qtr 2008 Net Loss of $730 thousand
Compared to a Net Income of $841 thousand in the Prior Year
.
Revenues Decreased to $81.3 million from $82.7 million in the Prior Year
.

NEW YORK - Aug. 6, 2008--Morgans Hotel Group Co. (NASDAQ: MHGC) ("MHG") today reported financial results for the second quarter ended June 30, 2008.

Highlights

    -- Revenue per available room ("RevPAR") for Owned Comparable
        Hotels(1) increased by 4.4% over the comparable period in
        2007, well in excess of the domestic industry average growth
        for the quarter of 1.2%.
    -- RevPAR for System-Wide Comparable Hotels(2) increased by 2.8%
        (3.0% in constant dollars) over the comparable period in 2007.
    -- EBITDA margins at System-Wide Comparable Hotels increased by
        200 basis points over the comparable period in 2007. MHG
        achieved a 1% reduction in operating expenses due to the
        implementation of contingency plans put into effect in the
        first quarter of 2008 in anticipation of an economic slowdown.
    -- Adjusted EBITDA(3) at System-Wide Comparable Hotels increased
        by 14% over the comparable period in 2007, a growth rate of
        5.0 times the related RevPAR growth rate.
    -- Room revenues from international guests at System-Wide
        Comparable Hotels in the U.S. increased to 35.6% of room
        revenues as compared to 28.3% in the comparable period in
        2007.
    -- MHG authorized a $30 million stock repurchase program on July
        1, 2008, and has repurchased 1.1 million shares of Company
        stock for $12.2 million to date under the program.
    -- MHG's liquidity, as measured by cash and cash equivalents and
        availability under its revolving credit facility, was
        approximately $206 million at June 30, 2008.
    -- The renovations at Mondrian LA and Morgans will be completed
        in September and MHG is unveiling the redesigned properties on
        September 4 and September 10, respectively.
    -- Mondrian South Beach is currently on schedule to open prior to
        the Art Basel festival on December 4, in time for the
        2008/2009 winter season.
    -- The construction of Mondrian SoHo and Ames Boston and the
        expansion of Hard Rock are all currently on schedule to open
        in the latter half of 2009.

(1) "Owned Comparable Hotels" includes all wholly owned hotels operated by MHG except for hotels under renovation during the period or the relevant comparison period for the prior year and development projects. Owned Comparable Hotels for the second quarter of 2008 excludes Mondrian LA and Morgans, which were under renovation in the second quarter of 2008, and Royalton, which was under renovation in the second quarter of 2007.

(2) "System-Wide Comparable Hotels" includes all hotels operated by MHG except for hotels under renovation during the period or the relevant comparison period for the prior year and development projects. System-Wide Comparable Hotels for the second quarter of 2008 excludes Mondrian LA and Morgans, which were under renovation in the second quarter of 2008 and Royalton, which was under renovation in the second quarter of 2007, and the Hard Rock Hotel & Casino in Las Vegas ("Hard Rock"), which was added in February 2007 and under renovation/expansion in 2008.

(3) Adjusted earnings before interest, taxes, depreciation and amortization, as further described below.

"Our unique focus on key gateway markets and irreplaceable locations within those markets helped us drive RevPAR growth in excess of U.S. industry averages," said Fred Kleisner, President and Chief Executive Officer of MHG. "We saw RevPAR at Owned Comparable Hotels increase 4.4% over the comparable period last year, driven primarily by room revenue from international business and leisure travel, which rose by 26%. We proactively managed our expenses and improved operating margins at System-Wide Comparable Hotels by 200 basis points, and we've achieved these savings without sacrificing quality. We've maintained our market share in our competitive sets and registered increases in guest engagement scores. We will continue to carefully examine our costs while maintaining our high quality service.

"In addition, we are actively transforming our projects currently under construction into EBITDA-producing assets. The newly renovated Mondrian LA and Morgans are both scheduled to re-launch in early September 2008, which will complete all major renovations at our owned hotels. Our Mondrian South Beach project is scheduled to open in time for the Art Basel festival on December 4, and Mondrian SoHo, Ames Boston and the expansion at Hard Rock are all underway and expected to contribute to our EBITDA in 2009. With great hotels in some of the top performing markets, careful attention to costs and financial flexibility, we believe we are well positioned in this economic cycle."

Second Quarter Operating Results

RevPAR for MHG's System-Wide Comparable Hotels was $274.79, an increase of 2.8% (3.0% in constant dollars) for the second quarter of 2008 over the comparable period in 2007. RevPAR at Owned Comparable Hotels increased by 4.4% to $255.43.

EBITDA margins at System-Wide Comparable Hotels improved by 200 basis points as compared to the comparable period in 2007. MHG achieved this increase through a 1% reduction in comparable operating costs at these hotels due to the implementation of cost saving initiatives related to labor, marketing and other hotel level expenses.

Adjusted EBITDA from System-Wide Comparable Hotels increased by 14% from the comparable period in 2007 as a result of cost saving initiatives. Due to an estimated $4.0 million of EBITDA displacement at Mondrian LA, Morgans and Hard Rock, which were under renovation and classified as non-comparable hotels in the second quarter of 2008, Adjusted EBITDA decreased by 9.6% to $27.8 million.

During the quarter, MHG's percentage ownership interest at Hard Rock, based on cash contributions, was reduced from 33% to 27.4%, resulting in a weighted average of 29.8% for the quarter and a lower proportionate share of both Adjusted Debt and Adjusted EBITDA. Had the ownership percentage remained at 33.3%, Adjusted EBITDA for the second quarter of 2008 would have been approximately $500,000 higher than reported.

MHG's concentration in key international gateway cities such as New York, Miami and San Francisco drove RevPAR growth in excess of the U.S. industry average growth for the quarter. An increase in business from international guests offset declines in domestic travel. For the second quarter of 2008, international visitors represented 35.6% of room revenues at System-Wide Comparable Hotels in the U.S. as compared to 28.3% in comparable period in 2007.

MHG recorded a net loss of $0.7 million for the second quarter of 2008, compared to net income of $0.8 million in the comparable period in 2007, primarily due to non-cash stock compensation expense, depreciation and amortization.

Balance Sheet and Financing

As of June 30, 2008, consolidated debt was $729.8 million including $80.8 million of lease obligations related to Clift. MHG's cash and cash equivalents balance at June 30, 2008 was $72.9 million. As of June 30, 2008, there were no borrowings outstanding under MHG's revolving credit facility, which is secured by three owned hotels - Delano, Royalton and Morgans. All of MHG's long-term debt at June 30, 2008 was at fixed rates, either directly or as a result of hedging arrangements.

As of June 30, 2008, MHG's liquidity, measured by cash and cash equivalents and availability under its revolving credit facility, was $206 million. MHG believes that its joint venture with Boyd Gaming will be unable to secure financing at favorable rates and conditions by the September 15, 2008 deadline. As a result, MHG also expects to receive a return of its $30 million deposit related to the Echelon Project during the third quarter of 2008 and expects to be released from an incremental $45 million of future funding obligations. As of June 30, 2008, MHG estimates that its total future obligations in 2008 and 2009 for development projects currently consist of approximately $25 million for hotel renovation and expansion projects, and $20 to $30 million for joint venture projects.

On July 1, 2008, MHG's Board of Directors approved a $30 million stock repurchase plan. To date, MHG has repurchased 1.1 million shares of its common stock at an average price of $11.05 for a total of $12.2 million. As of August 5, 2008, there were approximately 31.1 million shares of MHG outstanding and approximately 1.0 million operating company units outstanding, which may be redeemed for common stock.

Development Activity

The following outlines MHG's development and renovation projects currently under construction and the expected completion dates of the projects.

                                        2008         2009
                                    ------------ ------------
Mondrian Los Angeles Renovations         x
Morgans Renovations           x
Mondrian South Beach          x
Hard Rock Expansion                                x
Mondrian SoHo                                         x
Ames Boston                                           x

MHG is also in the process of converting the first phase of approximately 20 single room occupancy ("SRO") units at Hudson into additional hotel rooms which it expects to complete in the first half of 2009. MHG intends to pursue the conversion of the remaining 80 SRO units into hotel rooms over the next several years.

Echelon Project

As MHG previously announced on July 1, 2008, the deadline to obtain construction financing for the Echelon Project with Boyd Gaming was extended to September 15, 2008. Given Boyd's announcement that it was delaying the entire project and the difficulties in the credit markets, MHG believes that the joint venture will be unable to secure financing at favorable rates and conditions by September 15, 2008. MHG does not intend to further extend the joint venture agreement on its current terms but expects to evaluate future proposals relating to the project with Boyd. (see balance sheet and financing section)

Other Development Activity

The following projects are in various stages of design and assessment.

The Gale (expansion of Delano in South Beach)

Hudson unused space - Rooms & Banquets

Mondrian Chicago

Mondrian Palm Springs

Given the current state of the credit markets, obtaining adequate project financing may be challenging for some of MHG's projects, which could result in changes in the scope of projects, delays or cancellations.

2008 Outlook

MHG is reaffirming its Adjusted EBITDA outlook for 2008. The Adjusted EBITDA outlook remains unchanged except for an adjustment to reflect an expected 20% ownership interest in the Hard Rock joint venture for the remainder of the year (original guidance of $110 to $115 million assumed a 33.3% interest) resulting in a lower proportionate share of debt and Adjusted EBITDA.

System-Wide Comparable Hotel RevPAR Growth: 3% to 5%
Adjusted EBITDA: $106 million to $111 million

The above amounts anticipate approximately $12.0 to $15.0 million in EBITDA displacement due to the renovations at Mondrian LA, Morgans and Hard Rock. Due to these renovations, MHG believes that the 2008 Adjusted EBITDA level is not indicative of the normalized "run rate" Adjusted EBITDA of the portfolio. With the completion of the Mondrian LA and Morgans renovations, expected in September 2008, EBITDA displacement is expected to decrease beginning in the fourth quarter of 2008.

Including amounts spent to date, MHG expects to spend a total of approximately $25.0 to $35.0 million to fund investments in unconsolidated joint ventures and approximately $45.0 to $50.0 million on renovations of existing hotels and expansion opportunities at owned assets, based on current estimates. MHG plans to fund the remainder of these expenditures from its existing cash and cash equivalents.

The outlook is based upon MHG's expectations for the U.S. economy, hotel supply growth and demand levels in the luxury lodging sector and, in particular, in MHG's markets. While trends in most of MHG's markets remain positive, the uncertainty in the U.S. economy and the transient nature of MHG's business make it difficult to forecast 2008 results with a high degree of accuracy. In addition, MHG is undertaking a number of renovation construction projects which may not be completed in the projected timeframe or may result in higher revenue displacement than currently estimated by MHG.

Income Statement (In Thousands, except per share     Three Months       Six Months
amounts)                          Ended Jun. 30,    Ended Jun. 30,
                                    2008    2007     2008      2007
                                  -------- ------- --------- ---------

Revenues :
Rooms                             $46,866 $47,265 $ 93,021 $ 92,528
Food & beverage                    26,553   26,793   53,123    52,350
Other hotel                         3,350    3,597    6,823     7,243
                                  -------- ------- --------- ---------
   Total hotel revenues            76,769   77,655 152,967   152,121
Management fees                     4,552    5,015    9,088     8,971
                                  -------- ------- --------- ---------
   Total revenues                  81,321   82,670 162,055   161,092

Operating costs and expenses :
Rooms                              11,896   12,356   25,065    24,983
Food & beverage                    18,355   17,250   37,722    34,792
Other departmental                  1,924    1,943    4,009     3,970
Hotel, selling, general and
administrative                    14,600   14,745   30,372    30,103
Property taxes, insurance and
other                              3,728    4,259    7,782     9,956
                                  -------- ------- --------- ---------
   Total hotel operating expenses 50,503   50,553 104,950   103,804
Corporate expenses :
   Stock based compensation         4,414    3,079    7,349     5,401
   Other                            7,895    6,481   15,297    13,214
Depreciation and amortization       6,018    4,877   12,109     9,684
                                  -------- ------- --------- ---------
   Total operating costs and
    expenses                       68,830   64,990 139,705   132,103
   Operating income                12,491   17,680   22,350    28,989

Interest expense, net              10,326   11,215   20,831    21,814
Equity in loss of unconsolidated
joint ventures                       864    2,282    8,909     6,936
Minority interest in joint
ventures                           1,208    1,020    2,599     2,122
Other non-operating loss (income)   1,406    1,606    2,468    (4,117)
                                  -------- ------- --------- ---------

   Pre tax (loss) income           (1,313)   1,557 (12,457)    2,234
   Income taxes (benefit) expense    (572)     689   (4,512)      917
                                  -------- ------- --------- ---------
   Net (loss) income before
    minority interest                (741)     868   (7,945)    1,317

Minority interest (11) 27 (236) 40

Net (loss) income $ (730) $ 841 $ (7,709) $ 1,277

Weighted average shares
outstanding - diluted 32,191 32,689 32,276 32,956

(Loss) income per share $ (0.02) $ 0.03 $ (0.24) $ 0.04

Hotel Operating                                 ( In Constant Dollars,
Statistics               ( In Actual Dollars)       if different)
                          Three Months           Three Months
                         Ended Jun. 30,    %    Ended Jun. 30,    %
                          2008    2007   Change 2008    2007   Change
                         ------- ------- ------ ------- ------- ------
Hudson
   Occupancy               92.4%   92.7% -0.3%
   ADR                   $299.00 $287.69   3.9%
   RevPAR                $276.28 $266.54   3.7%

Delano
   Occupancy               84.7%   79.4%   6.7%
   ADR                   $502.71 $492.51   2.1%
   RevPAR                $425.80 $391.05   8.9%

Clift
   Occupancy               77.0%   74.5%   3.4%
   ADR                   $258.42 $251.01   3.0%
   RevPAR                $198.98 $187.00   6.4%

Mondrian Scottsdale
   Occupancy               61.0%   60.9%   0.2%
   ADR                   $168.89 $189.71 -11.0%
   RevPAR                $103.02 $115.53 -10.8%

Total Owned - Comparable
   Occupancy               83.9%   82.8%   1.3%
   ADR                   $304.44 $295.61   3.0%
   RevPAR                $255.43 $244.77   4.4%

St Martins Lane
   Occupancy               76.8%   76.8%   0.0%   76.8%   76.8%   0.0%
   ADR                   $466.77 $459.91   1.5% $467.48 $457.19   2.3%
   RevPAR                $358.48 $353.21   1.5% $359.02 $351.12   2.3%

Sanderson
   Occupancy               78.4%   76.6%   2.3%   78.4%   76.6%   2.3%
   ADR                   $520.96 $538.32 -3.2% $521.74 $535.61 -2.6%
   RevPAR                $408.43 $412.35 -1.0% $409.04 $410.28 -0.3%

Shore Club
   Occupancy               66.5%   64.9%   2.5%
   ADR                   $377.70 $389.12 -2.9%
   RevPAR                $251.17 $252.54 -0.5%

System-wide - Comparable
   Occupancy               80.5%   79.4%   1.4%   80.5%   79.4%   1.4%
   ADR                   $341.35 $336.65   1.4% $341.47 $336.27   1.5%
   RevPAR                $274.79 $267.30   2.8% $274.88 $267.00   3.0%

Morgans
   Occupancy               73.5%   88.0% -16.5%
   ADR                   $351.46 $329.84   6.6%
   RevPAR                $258.32 $290.26 -11.0%

Royalton
   Occupancy               88.9%   85.1%   4.5%
   ADR                   $404.02 $360.25 12.1%
   RevPAR                $359.17 $306.57 17.2%

Mondrian LA
   Occupancy               45.8%   87.8% -47.8%
   ADR                   $359.23 $314.32 14.3%
   RevPAR                $164.53 $275.97 -40.4%

Hard Rock (1) (2)
   Occupancy               94.3%   94.4% -0.1%
   ADR                   $217.34 $229.89 -5.5%
   RevPAR                $204.95 $217.02 -5.6%

Hotel Operating                                 (In Constant Dollars,
Statistics               (In Actual Dollars)        if different)
                           Six Months             Six Months
                         Ended Jun. 30,    %    Ended Jun. 30,    %
                          2008    2007   Change 2008    2007   Change
                         ------- ------- ------ ------- ------- ------
Hudson
   Occupancy               88.9%   90.0% -1.2%
   ADR                   $274.08 $258.96   5.8%
   RevPAR                $243.66 $233.06   4.5%

Delano
   Occupancy               85.7%   81.9%   4.6%
   ADR                   $594.32 $601.53 -1.2%
   RevPAR                $509.33 $492.65   3.4%

Clift
   Occupancy               73.4%   69.3%   5.9%
   ADR                   $262.47 $255.22   2.8%
   RevPAR                $192.65 $176.87   8.9%

Mondrian Scottsdale
   Occupancy               61.1%   62.7% -2.6%
   ADR                   $226.26 $218.06   3.8%
   RevPAR                $138.24 $136.72   1.1%

Total Owned -
Comparable
   Occupancy               81.4%   80.8%   0.7%
   ADR                   $309.19 $297.78   3.8%
   RevPAR                $251.68 $240.61   4.6%

St Martins Lane
   Occupancy               77.2%   76.9%   0.4%   77.2%   76.9%   0.4%
   ADR                   $445.98 $442.44   0.8% $445.98 $443.63   0.5%
   RevPAR                $344.30 $340.24   1.2% $344.30 $341.15   0.9%

Sanderson
   Occupancy               75.5%   75.3%   0.3%   75.5%   75.3%   0.3%
   ADR                   $508.88 $513.03 -0.8% $508.88 $514.41 -1.1%
   RevPAR                $384.20 $386.31 -0.5% $384.20 $387.35 -0.8%

Shore Club
   Occupancy               69.0%   68.8%   0.3%
   ADR                   $438.57 $474.47 -7.6%
   RevPAR                $302.61 $326.44 -7.3%

System-wide -
Comparable
   Occupancy               78.9%   78.4%   0.6%   78.9%   78.4%   0.6%
   ADR                   $350.16 $346.40   1.1% $350.16 $346.60   1.0%
   RevPAR                $276.28 $271.58   1.7% $276.28 $271.73   1.7%

Morgans

   Occupancy               77.5%   86.3% -10.2%
   ADR                   $325.77 $304.43   7.0%
   RevPAR                $252.47 $262.72 -3.9%

Royalton
   Occupancy               84.9%   86.9% -2.3%
   ADR                   $386.86 $328.92 17.6%
   RevPAR                $328.44 $285.83 14.9%

Mondrian LA
   Occupancy               49.3%   84.9% -41.9%
   ADR                   $351.90 $319.79 10.0%
   RevPAR                $173.49 $271.50 -36.1%

Hard Rock (1) (2)
   Occupancy               94.2%   91.2%   3.3%
   ADR                   $200.94 $220.69 -8.9%
   RevPAR                $189.29 $201.27 -6.0%

(1) For comparison purposes, includes January 2007 when MHG did not
operate the hotel.

(2) As is customary for companies in the gaming industry, Hard Rock
presents average occupancy rate and average daily rate including
rooms provided on a complimentary basis. Like most operators of
hotels in the non-gaming lodging industry, MHG does not follow this
practice at its other hotels, where average occupancy rate and
average daily rate are presented net of rooms provided on a
complimentary basis.

Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

We believe that earnings before interest, income taxes, depreciation and amortization (EBITDA) is a useful financial metric to assess our operating performance before the impact of investing and financing transactions and income taxes. It also facilitates comparison between us and our competitors. Given the significant investments that we have made in the past in property, plant and equipment, depreciation and amortization expense comprises a meaningful portion of our cost structure. We believe that EBITDA will provide investors with a useful tool for assessing the comparability between periods because it eliminates depreciation and amortization expense attributable to capital expenditures.

We disclose Adjusted EBITDA because we believe it provides a meaningful comparison to our EBITDA as it excludes other non-operating (income) expenses that do not relate to the on-going performance of our assets and excludes the operating performance of assets in which we do not have a fee simple ownership interest. It also excludes stock-based compensation expense.

The use of EBITDA and Adjusted EBITDA has certain limitations. Our presentation of EBITDA and Adjusted EBITDA may be different from the presentation used by other companies and therefore comparability may be limited. Depreciation expense for various long-term assets, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of EBITDA or Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, EBITDA and Adjusted EBITDA do not reflect capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation, interest and income tax expense, capital expenditures and other items both in our reconciliations to our GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance. The term EBITDA is not defined under accounting principles generally accepted in the United States, or U.S. GAAP, and EBITDA is not a measure of net income, operating income, operating performance or liquidity presented in accordance with U.S. GAAP. In addition, EBITDA is impacted by reorganization of businesses and other restructuring-related charges. When assessing our operating performance, you should not consider this data in isolation, or as a substitute for our net income, operating income or any other operating performance measure that is calculated in accordance with U.S. GAAP. In addition, our EBITDA may not be comparable to EBITDA or similarly titled measures utilized by other companies since such other companies may not calculate EBITDA in the same manner as we do.

Adjusted Debt

We disclose Adjusted Debt because we believe it provides a more meaningful comparison to our Adjusted EBITDA and is a useful tool to assess the value of MHG. Adjusted Debt is defined as long-term debt and capital lease obligations under U.S. GAAP less the lease obligation related to Clift.

A reconciliation of net income (loss), the most directly comparable U.S. GAAP measures, to EBITDA and Adjusted EBITDA for each of the respective periods indicated is as follows:

EBITDA Reconciliation
(In Thousands)                       Three Months       Six Months
                                    Ended Jun. 30,    Ended Jun. 30,
                                     2008     2007     2008     2007
                                   -------- -------- -------- --------

Net (loss) income                  $ (730) $   841 $(7,709) $ 1,277
Interest expense, net               10,326   11,215   20,831   21,814
Income tax (benefit) expense          (572)     689   (4,512)     917
Depreciation and amortization
expense                             6,018    4,877   12,109    9,684
Proportionate share of interest
expense from unconsolidated joint
ventures                            3,825    6,802   12,313   13,310
Proportionate share of
depreciation expense from
unconsolidated joint ventures       3,188    2,182    6,133    4,307
Proportionate share of
depreciation expense of
consolidated joint ventures           (86)    (114)    (185)    (216)
Minority interest                      (11)      26     (236)      40
                                   -------- -------- -------- --------

EBITDA 21,958 26,518 38,744 51,133

Add : Other non operating expense
(income)                            1,406    1,606    2,468   (4,117)
Add : Other non operating expense
from unconsolidated joint
ventures                            1,900    1,177    4,233    2,430
Less : Clift                        (1,922) (1,684) (3,454) (2,888)
Add : Stock based compensation       4,414    3,079    7,349    5,401
                                   -------- -------- -------- --------

Adjusted EBITDA $27,756 $30,696 $49,340 $51,959

Room Revenue Analysis   Three Months             Six Months
(In Thousands, except
percentages)          Ended Jun. 30,    %     Ended Jun. 30,     %
                        2008    2007   Change   2008     2007   Change
                       ------- ------- ------ -------- -------- ------

Hudson                 $20,287 $19,540     4% $ 35,697 $ 33,957     5%
Delano                   7,516   6,942     8%   17,985   17,396     3%
Clift                    6,574   6,178     6%   12,736   11,621    10%
Mondrian Scottsdale      1,817   2,040   -11%    4,877    4,799     2%
                       ------- ------- ------ -------- -------- ------
    Total Owned -
     Comparable         36,194 34,700     4%   71,295   67,773     5%

Morgans                  1,635   2,986   -45%    4,192    5,373   -22%
Royalton                 5,490   3,625    51%   10,045    7,733    30%
Mondrian LA              3,547   5,953   -40%    7,489   11,649   -36%
                       ------- -------        -------- --------

Total Owned $46,866 $47,264 -1% $ 93,021 $ 92,528 1%

Hotel Revenue Analysis Three Months             Six Months
(In Thousands, except
percentages)          Ended Jun. 30,    %     Ended Jun. 30,     %
                        2008    2007   Change   2008     2007   Change
                       ------- ------- ------ -------- -------- ------

Hudson                 $26,433 $26,348     0% $ 46,774 $ 45,462     3%
Delano                  16,074 13,850    16%   36,073   32,803    10%
Clift                   10,702 10,050     6%   21,056   19,949     6%
Mondrian Scottsdale      4,015   4,500   -11%    9,564    9,175     4%
                       ------- ------- ------ -------- -------- ------
    Total Owned -
     Comparable         57,224 54,748     5% 113,467 107,389     6%

Morgans                  4,249   5,977   -29%    9,630   11,155   -14%
Royalton                 7,228   4,654    55%   13,733   10,286    34%
Mondrian LA              8,069 12,277   -34%   16,138   23,291   -31%
                       ------- -------        -------- --------

Total Owned $76,770 $77,656 -1% $152,968 $152,121 1%

Hotel EBITDA Analysis     Three Months            Six Months
(In Thousands, except
percentages)            Ended Jun. 30,    %    Ended Jun. 30,    %
                          2008    2007   Change 2008    2007   Change
                         ------- ------- ------ ------- ------- ------

Hudson                   $12,573 $11,738     7% $18,339 $17,395     5%
Delano                     5,799   4,647    25% 14,276 12,768    12%
Clift                      1,922   1,684    14%   3,454   2,888    20%
Mondrian Scottsdale          262     332   -21%   1,525   (155)
                         ------- ------- ------ ------- -------
    Owned Comparable
     Hotels               20,556 18,401    12% 37,594 32,896    14%

St Martins Lane            2,144   1,962     9%   4,126   3,974     4%
Sanderson                  1,397     878    59%   2,397   1,748    37%
Shore Club                   236     150    57%     603     553     9%
                         ------- ------- ------ ------- ------- ------
    Joint Venture
     Comparable Hotels     3,777   2,990    26%   7,126   6,275    14%

Total Comparable
Hotels 24,333 21,391 14% 44,720 39,171 14%

Morgans                      861   1,584   -46%   1,726   2,365   -27%
Royalton                   1,970   1,547    27%   2,850   2,582    10%
Mondrian LA                1,920   4,938   -61%   3,737   8,637   -57%
Hard Rock - Joint
Venture                   3,927   4,886   -20%   5,958   6,835   -13%
                         ------- ------- ------ ------- ------- ------

Total Hotels $33,011 $34,346 -4% $58,991 $59,590 -1%

Balance Sheet
(In Thousands)
                                                     Jun. 30, Dec. 31,
                                                       2008     2007
                                                     -------- --------

Cash                                                 $ 72,919 $122,712
Restricted cash                                        23,166   28,604
Property and equipment                                557,069 535,609
Goodwill                                               73,698   73,698
Accounts receivable                                    15,057   13,755
Prepaid expenses and other assets                      11,235   11,369
Investments in joint ventures                         116,738 110,208
Other assets                                           51,391   47,168
                                                     -------- --------
    Total assets                                      921,273 943,123

Long-term debt                                        648,931 649,107
Capital lease obligations - Clift                      80,835   80,092
Accounts payable and accrued expenses                  32,047   36,126
Other liabilities                                      27,899   27,979
Deferred income taxes
                                                     -------- --------
    Total liabilities                                 789,712 793,304
Minority interests                                     19,137   19,833
Stockholders' equity                                  112,424 129,986
                                                     -------- --------
    Total liabilities and equity                     $921,273 $943,123
                                                     ======== ========

Adjusted Debt

(In Thousands)

A reconciliation of long-term debt and capital lease obligations, the most directly comparable U.S. GAAP measure, to Adjusted Debt is indicated as follows:

Adjusted Debt
(In Thousands)
                                              Jun. 30,
                                                2008
                                              ---------

Adjusted Debt - Consolidated
---------------------------------------------
Long term debt and capital lease obligations $729,766
Less: Clift Capitalized Lease (80,835)
---------

Adjusted Debt - Consolidated 648,931

Other Data
(In Thousands)

Proportionate Share of Debt - Joint Ventures
---------------------------------------------

London                                        $103,723
Shore Club                                       8,525
Mondrian South Beach                            59,121
                                                         Proportionate
                                                          share has
                                                          been reduced
                                                          to 27.4%
Hard Rock                                      238,646    from 33.3%
Mondrian SoHo                                   18,518
                                              ---------

Proportionate share of debt - joint ventures 428,533

Investments in Non-EBITDA Producing Assets
(1)
---------------------------------------------

The Gale                                      $ 18,757
Mondrian South Beach - represents equity
investment of $23.0 million and
proportionate share of debt of $59.1 million   82,081
Hard Rock - proportionate share of excess
land, intellectual property rights and
expansion costs                               114,951
Deposit of $30 million and initial investment
in Echelon                                     45,422
Mondrian SoHo - equity investment of $4.8
million and proportionate                      23,316
share of debt of $18.5 million
Ames Boston - equity investment                  5,579
Mondrian Chicago - equity investment             2,292
Other deposits                                     868
                                              ---------

Investments in Non-EBITDA Producing Assets $293,266

(1) The equity investments listed in the table represent the cash
invested in the joint ventures. The following is the balance for U.S.
GAAP reporting purposes shown in the financial statements, which
includes equity in income or losses of unconsolidated joint ventures:

                                               Amount
                                              ---------
          Mondrian South Beach                  16,447
          Hard Rock                             26,582
          Echelon                               44,061
          Mondrian SoHo                          5,051
          Ames Boston                            5,634
          Mondrian Chicago                       2,471

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 The Shore Club in Miami, Mondrian in Los Angeles and Scottsdale, Clift in San Francisco, and Sanderson and St Martins Lane in London. MHG and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. MHG has other property transactions in various stages of completion, including projects in Miami Beach, Florida; Chicago, Illinois; SoHo, New York; Las Vegas, Nevada; Palm Springs, California; and Boston, Massachusetts. For more information please visit www.morganshotelgroup.com.

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, 2007, 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.

Contact:

Morgans Hotel Group
Richard Szymanski, 212-277-4188

.
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Also See:	Morgans Hotel Group Partners with Oxford Lodging Advisory, the John Hardy Group and The Oasi Group to Build a 200 room Mondrian Hotel in Downtown Palm Springs, California / January 2008
	Ed Scheetz, President and Chief Executive Officer of Morgans Hotel Group Resigns; Fred J. Kleisner Named Interim President and CEO / September 2007