Morgans Hotel (MHGC) 8-K Morgans Hotel Group Reports Second Quarter 2008 Results

Exhibit 99.1

Contacts:
Richard Szymanski
Morgans Hotel Group
212.277.4188

Andi Salas
Joele Frank, Wilkinson Brimmer Katcher
212.355.4449

MORGANS HOTEL GROUP REPORTS SECOND QUARTER 2008 RESULTS

- RevPAR Growth in Excess of U.S. Average -
- - Significant Margin Improvement -
- - 2008 EBITDA Outlook Reaffirmed -

NEW YORK, NY — August 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 Hotels¹ 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 Hotels² 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 EBITDA³ 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.

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.

• 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.

“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.

2

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.

3

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.

4

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.

5

Conference Call

MHG will host a conference call to discuss the second quarter financial results today at 5:00 PM Eastern time.

The call will be webcast live over the Internet at www.morganshotelgroup.com under the About Us, Investor Overview section. Participants should follow the instructions provided on the website for the download and installation of audio applications necessary to join the webcast.

The call can also be accessed live over the phone by dialing 800-683-1525 or 973-872-3197 for international callers; the password is 56731870. A replay of the call will be available two hours after the call and can be accessed by dialing 800-642-1687 or 706-645-9291 for international callers; the password is 56731870. The replay will be available from August 6, 2008 through August 13, 2008.

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.

6

Income Statement	Three Months					Six Months
(In Thousands, except per share 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

7

Hotel Operating Statistics	(In Actual Dollars)									(In Constant Dollars, if different)									(In Actual Dollars)									(In Constant Dollars, if different)
	Three Months									Three Months									Six Months									Six Months
	Ended Jun. 30,						%			Ended Jun. 30,						%			Ended Jun. 30,						%			Ended Jun. 30,						%
	2008			2007			Change			2008			2007			Change			2008			2007			Change			2008			2007			Change
Hudson
Occupancy		92.4	%		92.7	%		-0.3	%											88.9	%		90.0	%		-1.2	%
ADR	$	299.00		$	287.69			3.9	%										$	274.08		$	258.96			5.8	%
RevPAR	$	276.28		$	266.54			3.7	%										$	243.66		$	233.06			4.5	%
Delano
Occupancy		84.7	%		79.4	%		6.7	%											85.7	%		81.9	%		4.6	%
ADR	$	502.71		$	492.51			2.1	%										$	594.32		$	601.53			-1.2	%
RevPAR	$	425.80		$	391.05			8.9	%										$	509.33		$	492.65			3.4	%
Clift
Occupancy		77.0	%		74.5	%		3.4	%											73.4	%		69.3	%		5.9	%
ADR	$	258.42		$	251.01			3.0	%										$	262.47		$	255.22			2.8	%
RevPAR	$	198.98		$	187.00			6.4	%										$	192.65		$	176.87			8.9	%
Mondrian Scottsdale
Occupancy		61.0	%		60.9	%		0.2	%											61.1	%		62.7	%		-2.6	%
ADR	$	168.89		$	189.71			-11.0	%										$	226.26		$	218.06			3.8	%
RevPAR	$	103.02		$	115.53			-10.8	%										$	138.24		$	136.72			1.1	%
Total Owned — Comparable
Occupancy		83.9	%		82.8	%		1.3	%											81.4	%		80.8	%		0.7	%
ADR	$	304.44		$	295.61			3.0	%										$	309.19		$	297.78			3.8	%
RevPAR	$	255.43		$	244.77			4.4	%										$	251.68		$	240.61			4.6	%
St Martins Lane
Occupancy		76.8	%		76.8	%		0.0	%		76.8	%		76.8	%		0.0	%		77.2	%		76.9	%		0.4	%		77.2	%		76.9	%		0.4	%
ADR	$	466.77		$	459.91			1.5	%	$	467.48		$	457.19			2.3	%	$	445.98		$	442.44			0.8	%	$	445.98		$	443.63			0.5	%
RevPAR	$	358.48		$	353.21			1.5	%	$	359.02		$	351.12			2.3	%	$	344.30		$	340.24			1.2	%	$	344.30		$	341.15			0.9	%
Sanderson
Occupancy		78.4	%		76.6	%		2.3	%		78.4	%		76.6	%		2.3	%		75.5	%		75.3	%		0.3	%		75.5	%		75.3	%		0.3	%
ADR	$	520.96		$	538.32			-3.2	%	$	521.74		$	535.61			-2.6	%	$	508.88		$	513.03			-0.8	%	$	508.88		$	514.41			-1.1	%
RevPAR	$	408.43		$	412.35			-1.0	%	$	409.04		$	410.28			-0.3	%	$	384.20		$	386.31			-0.5	%	$	384.20		$	387.35			-0.8	%
Shore Club
Occupancy		66.5	%		64.9	%		2.5	%											69.0	%		68.8	%		0.3	%
ADR	$	377.70		$	389.12			-2.9	%										$	438.57		$	474.47			-7.6	%
RevPAR	$	251.17		$	252.54			-0.5	%										$	302.61		$	326.44			-7.3	%
System-wide — Comparable
Occupancy		80.5	%		79.4	%		1.4	%		80.5	%		79.4	%		1.4	%		78.9	%		78.4	%		0.6	%		78.9	%		78.4	%		0.6	%
ADR	$	341.35		$	336.65			1.4	%	$	341.47		$	336.27			1.5	%	$	350.16		$	346.40			1.1	%	$	350.16		$	346.60			1.0	%
RevPAR	$	274.79		$	267.30			2.8	%	$	274.88		$	267.00			3.0	%	$	276.28		$	271.58			1.7	%	$	276.28		$	271.73			1.7	%
Morgans
Occupancy		73.5	%		88.0	%		-16.5	%											77.5	%		86.3	%		-10.2	%
ADR	$	351.46		$	329.84			6.6	%										$	325.77		$	304.43			7.0	%
RevPAR	$	258.32		$	290.26			-11.0	%										$	252.47		$	262.72			-3.9	%
Royalton
Occupancy		88.9	%		85.1	%		4.5	%											84.9	%		86.9	%		-2.3	%
ADR	$	404.02		$	360.25			12.1	%										$	386.86		$	328.92			17.6	%
RevPAR	$	359.17		$	306.57			17.2	%										$	328.44		$	285.83			14.9	%
Mondrian LA
Occupancy		45.8	%		87.8	%		-47.8	%											49.3	%		84.9	%		-41.9	%
ADR	$	359.23		$	314.32			14.3	%										$	351.90		$	319.79			10.0	%
RevPAR	$	164.53		$	275.97			-40.4	%										$	173.49		$	271.50			-36.1	%
Hard Rock (1) (2)
Occupancy		94.3	%		94.4	%		-0.1	%											94.2	%		91.2	%		3.3	%
ADR	$	217.34		$	229.89			-5.5	%										$	200.94		$	220.69			-8.9	%
RevPAR	$	204.95		$	217.02			-5.6	%										$	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.

8

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.

9

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

10

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	%

11

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	%

12

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

13

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
Hard Rock		238,646	Proportionate share has been reduced to 27.4% 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 share of debt of $18.5 million		23,316
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

14