Morgans Hotel Group to Launch International Expansion with New Delano in Dubai

Owner is Leading Dubai Real Estate Developer
NEW YORK--(Business Wire)--
Morgans Hotel Group Co. (NASDAQ: MHGC) ("MHG") today announced the
development of Delano Dubai with a leading real estate development
firm, marking the commencement of MHG's international expansion.
Delano Dubai will be operated by MHG under a long-term management
contract and is expected to open by 2012.

Delano Dubai will be located at the epicenter of the Dubai
Waterfront. The project is expected to consist of a three-building
complex overlooking the iconic Palm Jebel Ali, with panoramic views of
the Persian Gulf, the open spaces of the waterfront and beachfront
parks. The hotel is expected to have approximately 200 guest rooms and
100 branded residences, and will include a restaurant, bar and spa.
Adjacent to the property will be another 360 residences with hotel
services, rising 44 stories over the waterfront. Visitors and
residents of the complex will have access to a retail promenade lined
with luxury boutiques, which stretches to the beachfront. Plans also
call for a vast cabana bar built into the pier that will offer a dock
for boats and gondolas which will shuttle guests to a floating
saltwater pool, the only one of its kind in Dubai.

"At MHG, our growth strategy has been to expand our properties to
24-hour gateway cities, both in the U.S. and internationally," said
Marc Gordon, Chief Investment Officer of MHG. "We are pleased to
announce MHG's entry into the Middle East, a major milestone in the
execution of our strategy to expand our brand to the world's most
exciting destinations. MHG has extended its efforts and resources in
developing business outside of the US, and this transaction is the
first of what we hope will be multiple new hotels in other parts of
the world. Our properties are renowned by guests throughout the world
and we look forward to leveraging our reputation as we enter new
international markets."

"Dubai has become a true center of international business, style
and luxury, and we are confident that Delano Dubai will become the
ultimate beach location for the sophisticated international traveler,"
said Fred Kleisner, President and Chief Executive Officer of MHG. "As
one of the most upscale, dynamic business and leisure markets,
attracting nearly five million investors and tourists annually, Dubai
is a key target market for us, particularly given our strong presence
in the UK. With its central location, rich architecture and luxury
amenities, we are confident that Delano Dubai will become one of the
most popular hotspots in Dubai."

Upon completion, MHG is expected to operate the hotel under a
20-year management contract with two 10-year extension options. In
addition to hotel management fees, MHG will also realize fees from the
developer's sale of both the branded and unbranded residences.

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.

Morgans Hotel Group
Jennifer Foley, 212-277-4166
or
Joele Frank, Wilkinson Brimmer Katcher
Andi Salas, 212-355-4449

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