8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 10, 2009

Morgans Hotel Group Co.
(Exact name of registrant as specified in its charter)

Delaware	001-33738	16-1736884
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

475 Tenth Avenue New York, NY	10018
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 277-4100

Not applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On August 10, 2009, Morgans Hotel Group Co. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2009. A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 2.02.

The information contained in this current report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The exhibit contained in this current report on Form 8-K shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Exhibit Number	Description
99.1	Press Release dated August 10, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.  

	MORGANS HOTEL GROUP CO.
Date: August 10, 2009	By:	/s/ Richard Szymanski
		Richard Szymanski
		Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated August 10, 2009

EX-99.1

Exhibit 99.1

Contacts:
Richard Szymanski
Morgans Hotel Group Co.
212.277.4188

Kate Finn
The Abernathy MacGregor Group
212.371.5999

MORGANS HOTEL GROUP REPORTS SECOND QUARTER 2009 RESULTS
— Announces Successful Amendment of Credit Facility —

NEW YORK, NY — August 10, 2009 — Morgans Hotel Group Co. (NASDAQ: MHGC) (“MHG”) today reported financial results for the second quarter ended June 30, 2009.

• Revenue per available room (“RevPAR”) for System-Wide Comparable Hotels decreased 36.8% in constant dollars in the second quarter from the comparable period in 2008. Adjusted EBITDA for the second quarter was $11.3 million, a decrease of 59% from the comparable period in 2008.

• On August 5th, MHG announced the successful amendment of its revolving credit facility. This includes, among other things, the elimination of the leverage test, a reduction of the debt service coverage ratio to 0.90x from 1.75x, and an adjustment to the borrowing base test that is expected to allow MHG to access substantial liquidity for the life of the credit facility.

• As a result of the cost reduction plans, EBITDA at System-Wide Comparable Hotels during the second quarter declined at a rate of 1.8 times the related RevPAR percentage change, beating industry norms.

• MHG achieved a 19.8% reduction in operating expenses at System-Wide Comparable Hotels and a 37% reduction in corporate expenses in the second quarter of 2009 from the comparable period in 2008. Through our multi-phase contingency plans implemented beginning in early 2008, we estimate that we have reduced hotel operating expenses and corporate expenses by approximately $20 million and $10 million, respectively, on an annualized basis.

• With the completion of the redesigned Mondrian Los Angeles and Morgans properties in September 2008, MHG has no significant deferred capital expenditure requirements at its owned hotels.

• In April, Hard Rock opened a new and expanded Joint Music Venue and added approximately 65,000 square feet of meeting and convention space. The new north tower, consisting of 490 rooms, opened in July and the casino expansion and south tower, consisting of 374 rooms, are projected to open in late 2009 or early 2010.

• Boston Ames and Mondrian SoHo are currently targeted to open in the fourth quarter of 2009 and the middle of 2010, respectively.

Fred Kleisner, President and CEO of Morgans Hotel Group, said: “While the economic and operating environment remains difficult, we are beginning to see trends stabilize. We saw some returns in occupancy in the second quarter and modest, but nevertheless meaningful, pockets of promise across the business. As we move forward through this pressured economic and industry environment we remain focused on maintaining cost controls, strengthening our financial position and preserving, and ultimately growing, shareholder value. The amendment to our credit facility we reached with our lenders is a very positive step for the Company and signifies our strong lender support and their confidence in us and our business. We are confident that we are taking all the right steps to get us through this challenging period while at the same time positioning the company for long-term growth.”

Second Quarter 2009 Operating Results

RevPAR at System-Wide Comparable Hotels decreased by 39.5% (36.8% in constant dollars) in the second quarter of 2009 compared to the second quarter of 2008. Occupancy declined by 12.5% and average daily rate (“ADR”) declined by 30.9% (27.9% in constant dollars) compared to the same period in the prior year.

MHG recorded a net loss of $10.1 million in the second quarter of 2009 compared to a net loss of $1.1 million in the second quarter of 2008.

Balance Sheet and Liquidity

As of June 30, 2009, consolidated debt excluding the Clift lease obligation was $776.5 million and cash and cash equivalents were $165.2 million, which includes approximately $139.3 million MHG had borrowed under its revolving credit facility.

On August 5, 2009, MHG announced that it had successfully completed an amendment to its existing line of credit. Among other things the amendment:

• Eliminates the corporate leverage test;

• Reduces the corporate fixed charge coverage test to 0.90x from 1.75x;

• Amends the borrowing base tests so that, among other changes, a minimum of 35% of appraised value on the New York properties securing the facilities will be available; and

• Cleans up a variety of other provisions at the subsidiary level that could have triggered technical defaults.

The facility’s size was reduced from $220 million to $125 million and the full $125 million is currently available to be borrowed. The Company believes that, without the amendment, it would have had limited availability, if any, under the facility for the remainder of its term. Upon closing, the Company reduced its outstanding borrowings under the facility to $23.9 million and has approximately $11.1 million of outstanding letters of credit associated with the facility. The facility is secured by three of the Company’s hotels: Delano, Royalton and Morgans. The interest rate is LIBOR plus 3.75% with a LIBOR floor of 1.0% and the maturity is October 5, 2011.

The facility is led by Wells Fargo/Wachovia. Other lenders in the facility include Citibank, Aareal, Bank of America, Allied Irish, KBC Bank and Midfirst.

In June 2009, the $40 million non-recourse mortgage and mezzanine loans at Mondrian Scottsdale matured and were not repaid. MHG is continuing to operate Mondrian Scottsdale and accruing interest. MHG is discussing various options with the lenders. MHG does not intend to commit significant monies toward the repayment of the loans or the funding of operating deficits.

The Mondrian South Beach joint venture’s non-recourse mortgage and mezzanine loans matured on August 1, 2009 and were not repaid by the joint venture. MHG is continuing to operate Mondrian South Beach. The joint venture is in discussion with the lender to extend the maturity.

MHG estimates that its total future capital commitments for development projects for the remainder of 2009 will be approximately $13 million, primarily to fund the outstanding letters of credit at Hard Rock. With the re-launch of Mondrian Los Angeles and Morgans in September 2008, all major renovation projects have been completed and there are no significant deferred capital expenditure requirements at our owned hotels.

Additionally, MHG intends to utilize its net operating losses of approximately $100 million to offset future income, including potential gains on the sale of assets or interest therein as part of its long-term strategy to reduce its ownership interests in hotels.

Development Activity

MHG’s projects currently under construction are the Hard Rock expansion, the Boston Ames and the Mondrian SoHo, all of which are expected to be completed between the fourth quarter of 2009 and the middle of 2010.

2009 Outlook

The global economic downturn has had a significant adverse impact on demand, particularly since the middle of September 2008. Given the continuing uncertainty about the depth and duration of the economic crisis, we are not comfortable defining a specific RevPAR target or range for the year. However, we can provide a framework for Adjusted EBITDA given certain RevPAR declines. For example, if RevPAR for the year were to decline on average 25-30%, we would expect 2009 Adjusted EBITDA to be between $40-50 million. This is based on a ratio of EBITDA percentage decline to RevPAR percentage decline between 1.5 and 2.0 times, which is consistent with the ratio we have achieved over the past three quarters.

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 Corporate Info, 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 (888) 802-8577 or (973) 935-8754; for international callers, the conference ID is 23399960. 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 conference ID is 23399960. The replay will be available from August 10, 2009 through August 17, 2009.

Definitions

“Owned Comparable Hotels” includes all wholly-owned hotels operated by MHG except for hotels under renovation during the current or the prior year and development projects. Owned Comparable Hotels for 2009 excludes Mondrian Los Angeles and Morgans, which were under renovation in 2008.

“System-Wide Comparable Hotels” includes all hotels operated by MHG except for hotels under renovation during the current or the prior year and development projects. System-Wide Comparable Hotels for 2009 excludes Mondrian Los Angeles and Morgans, which were under renovation in 2008, the Hard Rock Hotel & Casino in Las Vegas (“Hard Rock”), which has been under renovation and expansion since 2008, and Mondrian South Beach, which opened in December 2008.

“Adjusted EBITDA” is adjusted earnings before interest, taxes, depreciation and amortization as further defined below.

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 Shore Club in Miami, Mondrian in Los Angeles, Mondrian in Scottsdale and Mondrian in South Beach, 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 SoHo, New York; Las Vegas, Nevada; Palm Springs, California; Boston, Massachusetts; and Dubai, UAE. 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, 2008, 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.

	Three Months						Six Months
Income Statement	Ended June 30,						Ended June 30,
(In Thousands, except per share amounts)	2009			2008			2009			2008
				(as adjusted)						(as adjusted)
Revenues :
Rooms	$	30,885		$	46,867		$	59,480		$	93,021
Food & beverage		19,381			26,554			38,869			53,123
Other hotel		2,258			3,350			5,004			6,823
Total hotel revenues		52,524			76,771			103,353			152,967
Management fees		3,863			4,552			7,312			9,088
Total revenues		56,387			81,323			110,665			162,055
Operating Costs and Expenses :
Rooms		10,328			11,896			20,542			25,065
Food & beverage		14,539			18,355			29,114			37,722
Other departmental		1,566			1,924			3,160			4,009
Hotel, selling, general and administrative		12,095			14,599			24,105			30,372
Property taxes, insurance and other		4,185			3,729			8,510			7,782
Total hotel operating expenses		42,713			50,503			85,431			104,950
Corporate expenses :
Stock based compensation		2,505			4,415			5,574			7,349
Other		4,983			7,895			11,214			15,298
Depreciation and amortization		8,411			6,018			15,631			12,109
Restructuring, development and disposal costs		653			630			1,544			1,167
Total operating costs and expenses		59,265			69,461			119,394			140,873
Operating (loss) income		(2,878	)		11,862			(8,729	)		21,182
Interest expense, net		12,044			10,895			23,501			21,969
Equity in loss of unconsolidated joint ventures		1,895			865			2,438			8,910
Other non-operating expense		496			776			1,065			1,301
Pre tax loss		(17,313	)		(674	)		(35,733	)		(10,998	)
Income tax benefit		(7,371	)		(800	)		(15,508	)		(4,968	)
Net (loss) income		(9,942	)		126			(20,225	)		(6,030	)
Net income attributable to noncontrolling interest		(115	)		(1,187	)		(418	)		(2,342	)
Net loss attributable to common stockholders	$	(10,057	)	$	(1,061	)	$	(20,643	)	$	(8,372	)
Weighted average shares outstanding — diluted		29,745			32,191			29,742			32,276
Loss per share attributable to common stockholders	$	(0.34	)	$	(0.03	)	$	(0.69	)	$	(0.26	)

	(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 June 30,						%			Ended June 30,						%			Ended June 30,									Ended Jun. 30,
Hotel Operating Statistics	2009			2008			Change			2009			2008			Change			2009			2008			Change			2009			2008			Change
Royalton
Occupancy		89.4	%		88.9	%		0.6	%											83.6	%		84.9	%		-1.5	%
ADR	$	247.57		$	404.02			-38.7	%										$	250.56		$	386.86			-35.2	%
RevPAR	$	221.33		$	359.17			-38.4	%										$	209.47		$	328.44			-36.2	%
Hudson
Occupancy		86.7	%		92.4	%		-6.2	%											78.2	%		88.9	%		-12.0	%
ADR	$	183.98		$	299.49			-38.6	%										$	177.97		$	274.08			-35.1	%
RevPAR	$	159.51		$	276.73			-42.4	%										$	139.17		$	243.66			-42.9	%
Delano
Occupancy		64.5	%		84.7	%		-23.8	%											64.7	%		85.7	%		-24.5	%
ADR	$	455.98		$	502.71			-9.3	%										$	529.91		$	594.32			-10.8	%
RevPAR	$	294.11		$	425.80			-30.9	%										$	342.85		$	509.33			-32.7	%
Clift
Occupancy		65.4	%		77.0	%		-15.1	%											58.6	%		73.4	%		-20.2	%
ADR	$	183.21		$	258.42			-29.1	%										$	199.14		$	262.47			-24.1	%
RevPAR	$	119.82		$	198.98			-39.8	%										$	116.70		$	192.65			-39.4	%
Mondrian Scottsdale
Occupancy		38.1	%		61.0	%		-37.5	%											47.9	%		61.1	%		-21.6	%
ADR	$	114.12		$	168.89			-32.4	%										$	151.04		$	226.26			-33.2	%
RevPAR	$	43.48		$	103.02			-57.8	%										$	72.35		$	138.24			-47.7	%
Total Owned — Comparable
Occupancy		74.5	%		84.4	%		-11.7	%											69.7	%		81.8	%		-14.8	%
ADR	$	213.98		$	314.65			-32.0	%										$	224.96		$	317.05			-29.0	%
RevPAR	$	159.42		$	265.56			-40.0	%										$	156.80		$	259.35			-39.5	%
St. Martins Lane
Occupancy		70.1	%		76.8	%		-8.7	%		70.1	%		76.8	%		-8.7	%		69.1	%		77.2	%		-10.5	%		69.1	%		77.2	%		-10.5	%
ADR	$	311.81		$	466.77			-33.2	%	$	300.79		$	353.45			-14.9	%	$	299.14		$	445.98			-32.9	%	$	299.14		$	337.20			-11.3	%
RevPAR	$	218.58		$	358.48			-39.0	%	$	210.85		$	271.45			-22.3	%	$	206.71		$	344.30			-40.0	%	$	206.71		$	260.32			-20.6	%
Sanderson
Occupancy		66.9	%		78.4	%		-14.7	%		66.9	%		78.4	%		-14.7	%		66.1	%		75.5	%		-12.5	%		66.1	%		75.5	%		-12.5	%
ADR	$	392.46		$	520.96			-24.7	%	$	378.59		$	394.48			-4.0	%	$	365.06		$	508.88			-28.3	%	$	365.06		$	384.76			-5.1	%
RevPAR	$	262.56		$	408.43			-35.7	%	$	253.28		$	309.27			-18.1	%	$	241.30		$	384.20			-37.2	%	$	241.30		$	290.49			-16.9	%
Shore Club
Occupancy		54.0	%		66.5	%		-18.8	%											54.3	%		69.0	%		-21.3	%
ADR	$	280.45		$	377.70			-25.7	%										$	336.88		$	438.57			-23.2	%
RevPAR	$	151.44		$	251.17			-39.7	%										$	182.93		$	302.61			-39.6	%
System-wide — Comparable
Occupancy		71.0	%		81.1	%		-12.5	%		71.0	%		81.1	%		-12.5	%		67.5	%		79.3	%		-14.9	%		67.5	%		79.3	%		-14.9	%
ADR	$	239.33		$	346.19			-30.9	%	$	237.58		$	329.34			-27.9	%	$	251.73		$	352.93			-28.7	%	$	251.73		$	336.46			-25.2	%
RevPAR	$	169.92		$	280.76			-39.5	%	$	168.68		$	267.09			-36.8	%	$	169.92		$	279.87			-39.3	%	$	169.92		$	266.81			-36.3	%
Morgans
Occupancy		89.1	%		73.5	%		21.2	%											81.5	%		77.5	%		5.2	%
ADR	$	222.51		$	351.46			-36.7	%										$	221.28		$	325.77			-32.1	%
RevPAR	$	198.26		$	258.32			-23.3	%										$	180.34		$	252.47			-28.6	%
Mondrian LA
Occupancy		68.7	%		45.8	%		50.0	%											58.7	%		49.3	%		19.1	%
ADR	$	255.98		$	359.23			-28.7	%										$	269.53		$	351.90			-23.4	%
RevPAR	$	175.86		$	164.53			6.9	%										$	158.21		$	173.49			-8.8	%
Hard Rock (1)
Occupancy		92.3	%		94.3	%		-2.1	%											90.8	%		94.2	%		-3.6	%
ADR	$	165.14		$	217.34			-24.0	%										$	150.41		$	200.94			-25.1	%
RevPAR	$	152.42		$	204.95			-25.6	%										$	136.57		$	189.29			-27.8	%
Mondrian South Beach
Occupancy		41.0	%		0.0	%		100.0	%											47.5	%		0.0	%		100.0	%
ADR	$	219.70		$	—			100.0	%										$	252.38		$	—			100.0	%
RevPAR	$	90.08		$	—			100.0	%										$	119.78		$	—			100.0	%

(1) As customary in the gaming industry, we present average occupancy and average daily rate for the Hard Rock including rooms provided on a complimentary basis which is not the practice in the lodging industry

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 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.

The Company’s management has historically adjusted EBITDA (Adjusted EBITDA) when evaluating the operating performance for the total Company as well as for individual properties or groups of properties because we believe the Company’s core business model is that of an owner and operator of hotels, and the inclusion or exclusion of certain recurring and non-recurring items is necessary to provide the most accurate measure of on-going core operating results and to evaluate comparative results period over period. As such, Adjusted EBITDA 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. We exclude the following items from EBITDA to arrive at Adjusted EBITDA:

• Other non-operating expenses (income), such as executive terminations not related to restructuring initiatives discussed below, costs of financings and litigation and settlement costs and other items that relate to the financing and investing activities of our assets and not to the on-going operating performance of our assets, both consolidated and unconsolidated;

• Restructuring, development and disposal costs: these charges primarily relate to losses on asset disposals as part of major renovation projects and the write-off of abandoned development projects resulting primarily from events generally outside management’s control such as the tightening of the credit markets. We reasonably believe that a substantial portion of these items will not recur in future years and that these charges do not relate to the ongoing operating performance of our assets as measured by Adjusted EBITDA.

• Impairment loss: we reasonably believe that this item will not recur in future years and that these non-cash charges do not relate to the ongoing operating performance of our assets as measured by Adjusted EBITDA.

• The EBITDA related to leased hotels to more accurately reflect the operating performance of assets in which we have a fee simple ownership interest; and

• The stock-based compensation expense recognized, as this is not necessarily an indication of the operating performance of our assets.

We believe Adjusted EBITDA provides management and our investors with a more accurate financial metric by which to evaluate our performance as it eliminates the impact of costs incurred related to investing and financing transactions. Internally, the Company’s management utilizes Adjusted EBITDA to measure the performance of our core on-going hotel operations and is used extensively during our annual budgeting process. Management also uses Adjusted EBITDA as a measure in determining the value of acquisitions, expansion opportunities, and dispositions and borrowing capacity. Adjusted EBITDA is a key metric which management evaluates prior to execution of any strategic investing or financing opportunity.

The Company has historically reported Adjusted EBITDA to its investors and believes that this continued inclusion of Adjusted EBITDA provides consistency in its financial reporting and enables investors to perform more meaningful comparisons of past, present and future operating results and to evaluate the results of its core on-going operations.

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.

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:

	Three Months						Six Months
EBITDA Reconciliation	Ended June 30,						Ended June 30,
(In Thousands)	2009			2008			2009			2008
Net loss	$	(10,057	)	$	(1,061	)	$	(20,643	)	$	(8,372	)
Interest expense, net		12,044			10,895			23,501			21,969
Income tax benefit		(7,371	)		(800	)		(15,508	)		(4,968	)
Depreciation and amortization expense		8,411			6,018			15,631			12,109
Proportionate share of interest expense from unconsolidated joint ventures		6,205			3,824			12,607			12,312
Proportionate share of depreciation expense from unconsolidated joint ventures		1,966			3,188			4,004			6,133
Proportionate share of depreciation expense of minority interests in consolidated joint ventures		(75	)		(86	)		(166	)		(186	)
Net income attributable to noncontrolling interest		(314	)		(22	)		(668	)		(257	)
Proportionate share of loss from unconsolidated joint ventures not recorded due to negative investment balances		(4,252	)		—			(9,658	)		—
EBITDA		6,557			21,956			9,100			38,740
Add : Other non operating expense		496			776			1,065			1,301
Add : Other non operating expense from unconcolidated joint ventures		848			1,899			560			4,233
Add: Restructuring, development and disposal costs		653			630			1,544			1,167
Less : EBITDA from Clift, a leased hotel		260			(1,922	)		536			(3,454	)
Add : Stock based compensation		2,505			4,415			5,574			7,349
Adjusted EBITDA	$	11,319		$	27,754		$	18,379		$	49,336

	Three Months							Six Months
Room Revenue Analysis	Ended June 30,				%			Ended June 30,				%
(In Thousands, except percentages)	2009		2008		Change			2009		2008		Change
Royalton	$	3,383	$	5,490		-38	%	$	6,370	$	10,045		-37	%
Hudson		11,715		20,288		-42	%		20,336		35,697		-43	%
Delano		5,190		7,516		-31	%		12,048		17,985		-33	%
Clift		4,000		6,574		-39	%		7,748		12,736		-39	%
Mondrian Scottsdale		747		1,817		-59	%		2,473		4,877		-49	%
Total Owned — Comparable		25,035		41,685		-40	%		48,975		81,340		-40	%
Morgans		2,058		1,635		26	%		3,723		4,192		-11	%
Mondrian LA		3,792		3,547		7	%		6,782		7,489		-9	%
Total Owned	$	30,885	$	46,867		-34	%	$	59,480	$	93,021		-36	%

	Three Months							Six Months
Hotel Revenue Analysis	Ended June 30,				%			Ended June 30,				%
(In Thousands, except percentages)	2009		2008		Change			2009		2008		Change
Royalton	$	4,690	$	7,228		-35	%	$	9,137	$	13,733		-33	%
Hudson		15,894		26,434		-40	%		27,921		46,773		-40	%
Delano		10,854		16,074		-32	%		25,045		36,073		-31	%
Clift		6,854		10,702		-36	%		13,720		21,056		-35	%
Mondrian Scottsdale		1,835		4,015		-54	%		4,884		9,564		-49	%
Total Owned — Comparable		40,127		64,453		-38	%		80,707		127,199		-37	%
Morgans		3,973		4,249		-6	%		7,814		9,630		-19	%
Mondrian LA		8,424		8,069		4	%		14,832		16,138		-8	%
Total Owned	$	52,524	$	76,771		-32	%	$	103,353	$	152,967		-32	%

	Three Months								Six Months
Hotel EBITDA Analysis	Ended June 30,					%			Ended June 30,					%
(In Thousands, except percentages)	2009			2008		Change			2009			2008		Change
Royalton	$	297		$	1,970		-85	%	$	57		$	2,850		-98	%
Hudson		3,604			12,573		-71	%		4,331			18,339		-76	%
Delano		3,243			5,799		-44	%		8,620			14,276		-40	%
Clift		(260	)		1,922		-114	%		(536	)		3,454		-116	%
Mondrian Scottsdale		(473	)		262		-281	%		94			1,525		-94	%
Owned Comparable Hotels		6,411			22,526		-72	%		12,566			40,444		-69	%
St Martins Lane		1,050			2,144		-51	%		2,064			4,126		-50	%
Sanderson		663			1,397		-53	%		1,203			2,397		-50	%
Shore Club		76			236		-68	%		262			603		-57	%
Joint Venture Comparable Hotels		1,789			3,777		-53	%		3,529			7,126		-50	%
Total Comparable Hotels		8,200			26,303		-69	%		16,095			47,570		-66	%
Morgans — Owned		(40	)		861		-105	%		(280	)		1,726		-116	%
Mondrian LA — Owned		2,973			1,920		55	%		4,487			3,737		20	%
Hard Rock — Joint Venture		1,423			3,927		-64	%		1,827			5,958		-69	%
Mondrian South Beach — Joint Venture		(356	)		0					(330	)		0
Total Hotels	$	12,200		$	33,011		-63	%	$	21,799		$	58,991		-63	%

	Adjusted
	EBITDA
Adjusted EBITDA and Debt Analysis	Twelve Months
(In Thousands)	Ended			Debt at
Consolidated Operations	June 30, 2009			June 30, 2009
Morgans (1)		962
Royalton		3,766
Delano		16,495
Revolving Credit Facility		—			139,289
Sub — total		21,223			139,289
Hudson		25,277			255,660
Mondrian LA (1)		8,761			120,500
Mondrian Scottsdale		(1,213	)		40,000
Other (2)		(5,349	)		221,053
Total		48,699			776,502
Less: Cash					(165,209	)
Net Debt					611,293

(1)	Hotel was under renovation in the past twelve months and had rooms out of service.
(2)	Includes outstanding debt on convertible notes, trust preferred securities, the Gale promissory note and excludes capital lease obligations at the Clift.

				Proportionate
				Share of
				Adjusted EBITDA		Proportionate
				Twelve Months		Share of
System-Wide Comparable	Ownership			Ended		Debt
Joint Venture Hotels (1)	Percentage			June 30, 2009		June 30, 2009
Sanderson and St. Martins Lane		50	%		9,017		83,756
Shore Club		7	%		533		8,388

(1) Includes information only for System-Wide Comparable Hotels.

Balance Sheet	June 30,		Dec 31,
(In Thousands)	2009		2008
			(as adjusted)
Cash	$	165,209	$	49,150
Restricted cash		16,628		21,484
Property and equipment, net		546,879		555,645
Goodwill		73,698		73,698
Accounts receivable, net		17,640		14,573
Prepaid expenses and other assets		11,218		9,192
Investments in joint ventures		59,582		56,754
Other assets		87,976		74,968
Total assets		978,830		855,464
Long-term debt		776,502		635,601
Capital lease obligations — Clift		82,392		81,578
Accounts payable and accrued expenses		26,622		26,711
Other liabilities		29,494		35,655
Distributions and losses in excess of investment in unconsolidated joint ventures		16,190		14,563
Total liabilities		931,200		794,108
Noncontrolling interest		17,014		17,933
Stockholders’ equity		30,616		43,423
Total liabilities and equity (deficit)	$	978,830	$	855,464