Press Release

Morgans Hotel Group Sells Royalton and Morgans for $140 Million

NEW YORK, May 23, 2011 /PRNewswire via COMTEX/ --

Morgans Hotel Group Co. (NASDAQ: MHGC) ("Morgans" or the "Company") today announced that it has completed the sale of Royalton and Morgans for $140 million, or approximately $500,000 per room, to an affiliate of FelCor Lodging Trust, Incorporated. Morgans will continue to operate the hotels under 15-year management agreements with one 10-year extension option.

Morgans used a portion of the proceeds to retire its revolving credit facility. The hotels, along with the Delano hotel, were collateral for the revolving credit facility, which terminated upon the sale of the properties. Delano is currently unencumbered.

Net proceeds, after retiring the revolving credit facility and closing costs, are approximately $93 million. The Company intends to use the net proceeds for the refinancing of the debt secured by Hudson and for growth capital.

Michael Gross, Chief Executive Officer of Morgans said, "We are pleased to complete the sales of these New York hotels and we look forward to a long and beneficial partnership with FelCor as we continue to manage the hotels. With this transaction, we have now completed the sale of three assets which has allowed us to reduce our debt and provided us with financial strength to expand our brands."

On May 4, Morgans announced it had sold Mondrian Los Angeles resulting in net proceeds, after repayment of debt and closing costs, of approximately $40 million.

About Morgans Hotel Group

Morgans Hotel Group Co. (NASDAQ: MHGC) is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles, South Beach and New York, Clift in San Francisco, Ames in Boston, Sanderson and St Martins Lane in London, and hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans also owns, or has ownership interests in, several of these hotels. Morgans Hotel Group has other property development transactions in various stages of completion including a Delano in Cabo San Lucas, Mexico, a Delano in Turkey, a Mondrian in Doha, Qatar and a hotel in New York to be branded with one of MHG's existing brands. For more information please visit www.morganshotelgroup.com.

Forward-Looking and Cautionary Statements

This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs and prediction of certain future other events. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "expect," "anticipate," "estimate" "believe," "project," or other similar words or expressions. These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results or other future events to differ materially from those expressed in any forward-looking statement. Important risks and factors that could cause our actual results to differ materially from those expressed in any forward-looking statements include, but are not limited to economic, business, competitive market and regulatory conditions such as: a sustained downturn in economic and market conditions, particularly levels of spending in the business, travel and leisure industries; continued tightness in the global credit markets; general volatility of the capital markets and our ability to access the capital markets; our ability to refinance our current outstanding debt and to repay outstanding debt as such debt matures; our ability to protect the value of our name, image and brands and our intellectual property; risks related to natural disasters, such as earthquakes, volcanoes and hurricanes; hostilities, including future terrorist attacks, or fear of hostilities that affect travel; and other risk factors discussed in Morgans' Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and other documents filed by Morgans 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 Morgans 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.

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