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): May 4, 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 May 4, 2009, Morgans Hotel Group Co. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 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 May 4, 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: May 4, 2009	By:	/s/ Richard Szymanski
		Richard Szymanski
		Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated May 4, 2009

EX-99.1

Exhibit 99.1

Contacts:
Richard Szymanski
Morgans Hotel Group
212.277.4188

Kate Finn
The Abernathy MacGregor Group
212.371.5999

MORGANS HOTEL GROUP REPORTS FIRST QUARTER 2009 RESULTS

NEW YORK, NY — May 4, 2009 — Morgans Hotel Group Co. (NASDAQ: MHGC) (“MHG”) today reported financial results for the first quarter ended March 31, 2009.

Highlights

• Revenue per available room (“RevPAR”) for System-Wide Comparable Hotels decreased 36.0% in constant dollars in the first quarter from the comparable period in 2008.

• Adjusted EBITDA for the first quarter was $7.1 million, a decrease of 67% from the comparable period in 2008.

• EBITDA at System-Wide Comparable Hotels during the first quarter decreased by 63% from the comparable period in 2008, a rate of 1.6 times the related RevPAR percentage change.

• MHG achieved a 21% reduction in operating expenses at System-Wide Comparable Hotels and a 16% reduction in corporate expenses in the first quarter of 2009 from the comparable period in 2008.

• Additional restructuring initiatives were implemented in January and March 2009. Through our multi-phase contingency plans implemented in the beginning of 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 Concert Hall and added approximately 65,000 square feet of meeting space. The north tower consisting of 490 rooms is scheduled to open in the summer of 2009 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 or early 2010.

Fred Kleisner, President and CEO of Morgans Hotel Group, said: “In an increasingly difficult environment, we continued to manage our cost structure and balance sheet in a proactive and aggressive manner to preserve shareholder value. We implemented an additional $10 million in annualized cost savings in the first quarter of 2009 and ended the first quarter with over $87 million in cash on hand. We are confident that we are taking all the right steps to get us through this challenging period, while at the same time maintaining our unique brand experience so that we are well positioned for growth when the economy turns around.”

First Quarter 2009 Operating Results

RevPAR at System-Wide Comparable Hotels decreased by 39.2% (36.0% in constant dollars) in the first quarter of 2009 compared to the first quarter of 2008. Occupancy declined by 17.7% and average daily rate (“ADR”) declined by 26.2% compared to the same period in the prior year.

Interest expense reflects the adoption of a new accounting pronouncement requiring proceeds from the issuance of convertible notes to be allocated between debt and equity components resulting in a debt discount that is amortized over the life of the debt as additional interest expense. The adoption of this pronouncement resulted in $0.6 million of additional interest expense in the first quarter of 2009 and a retroactive $0.6 million increase in interest expense in the first quarter of 2008.

MHG recorded a net loss of $10.6 million in the first quarter of 2009 compared to a net loss of $7.5 million in the first quarter of 2008.

Balance Sheet and Liquidity

As of March 31, 2009, consolidated debt excluding the Clift lease obligation was $688.4 million and cash and cash equivalents were $86.6 million. As of March 31, 2009, we had borrowed $51.7 million under our revolving credit facility, which is secured by three owned hotels — Delano, Royalton and Morgans. MHG’s only near-term consolidated maturity consists of a $40 million non-recourse mortgage at Mondrian Scottsdale which is due in June 2009. We do not intend to invest significant additional capital in this hotel.

During the first quarter of 2009, MHG funded $4.2 million of equity on the Ames Boston project. As a result, MHG estimates that its total future capital commitments for development projects has been reduced to approximately $15 million. 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 expects to utilize its net operating losses of approximately $80 million to offset future income and gains on the sale of assets 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 in the fourth quarter of 2009 or early 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 20-25%, we would expect 2009 Adjusted EBITDA to be between $45-60 million. This is based on a ratio of EBITDA percentage decline to RevPAR percentage decline between 1.5 and 2.0 times, a ratio we have achieved over the past two quarters.

Conference Call

MHG will host a conference call to discuss the first 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 password is 96304495. 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 96304495. The replay will be available from May 4, 2009 through May 11, 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
	Ended Mar. 31,
Income Statement	2009			2008
(In thousands, except per share amounts)				(as adjusted)
Revenues :
Rooms	$	28,595		$	46,155
Food & beverage		19,488			26,570
Other hotel		2,745			3,473
Total hotel revenues		50,828			76,198
Management fees		3,449			4,536
Total revenues		54,277			80,734
Operating Costs and Expenses :
Rooms		10,215			13,169
Food & beverage		14,575			19,367
Other departmental		1,594			2,085
Hotel, selling, general and administrative		12,010			15,772
Property taxes, insurance and other		4,324			4,054
Total hotel operating expenses		42,718			54,447
Corporate expenses :
Stock based compensation		3,069			2,935
Other		6,231			7,402
Depreciation and amortization		7,220			6,091
Restructuring, development and disposal costs		890			537
Total operating costs and expenses		60,128			71,412
Operating income		(5,851	)		9,322
Interest expense, net		11,458			11,074
Equity in loss of unconsolidated joint ventures		543			8,045
Other non-operating expenses		570			525
Pre tax loss		(18,422	)		(10,322	)
Income tax benefit		(8,139	)		(3,940	)
Net loss		(10,283	)		(6,382	)
Net income attributable to noncontrolling interest		(303	)		(1,149	)
Net loss attributable to common stockholders	$	(10,586	)	$	(7,531	)
Weighted average shares outstanding — diluted		29,558			32,292
Loss per share available to common stockholders	$	(0.36	)	$	(0.23	)

										(In Constant Dollars,
	(In Actual Dollars)									if different)
	Three Months									Three Months
	Ended Mar. 31,						%			Ended Mar. 31,						%
Hotel Operating Statistics	2009			2008			Change			2009			2008			Change
Royalton
Occupancy		77.8	%		81.0	%		-4.0	%
ADR	$	254.03		$	368.02			-31.0	%
RevPAR	$	197.64		$	298.10			-33.7	%
Hudson
Occupancy		69.7	%		85.3	%		-18.3	%
ADR	$	170.39		$	246.54			-30.9	%
RevPAR	$	118.76		$	210.30			-43.5	%
Delano
Occupancy		65.6	%		86.7	%		-24.3	%
ADR	$	598.71		$	683.80			-12.4	%
RevPAR	$	392.75		$	592.85			-33.8	%
Clift
Occupancy		51.8	%		69.9	%		-25.9	%
ADR	$	219.50		$	266.93			-17.8	%
RevPAR	$	113.70		$	186.58			-39.1	%
Mondrian Scottsdale
Occupancy		57.8	%		61.1	%		-5.4	%
ADR	$	175.64		$	283.45			-38.0	%
RevPAR	$	101.52		$	173.19			-41.4	%
Total Owned Comparable Hotels
Occupancy		64.9	%		79.1	%		-18.0	%
ADR	$	237.71		$	319.62			-25.6	%
RevPAR	$	154.27		$	252.82			-39.0	%
St. Martins Lane
Occupancy		68.1	%		77.6	%		-12.2	%		68.1	%		77.6	%		-12.2	%
ADR	$	286.40		$	425.36			-32.7	%	$	286.40		$	309.22			-7.4	%
RevPAR	$	195.04		$	330.08			-40.9	%	$	195.04		$	239.95			-18.7	%
Sanderson
Occupancy		65.4	%		72.5	%		-9.8	%		65.4	%		72.5	%		-9.8	%
ADR	$	338.05		$	495.74			-31.8	%	$	338.05		$	360.38			-6.2	%
RevPAR	$	221.08		$	359.41			-38.5	%	$	221.08		$	261.28			-15.4	%
Shore Club
Occupancy		54.5	%		71.5	%		-23.8	%
ADR	$	393.48		$	495.24			-20.5	%
RevPAR	$	214.45		$	354.10			-39.4	%
System-wide Comparable Hotels
Occupancy		63.9	%		77.6	%		-17.7	%		63.9	%		77.6	%		-17.7	%
ADR	$	265.81		$	359.96			-26.2	%	$	265.81		$	342.07			-22.3	%
RevPAR	$	169.85		$	279.33			-39.2	%	$	169.85		$	265.45			-36.0	%
Morgans
Occupancy		73.9	%		79.9	%		-7.5	%
ADR	$	219.79		$	311.23			-29.4	%
RevPAR	$	162.42		$	248.67			-34.7	%
Mondrian LA
Occupancy		48.5	%		52.9	%		-8.3	%
ADR	$	288.91		$	345.55			-16.4	%
RevPAR	$	140.12		$	182.80			-23.3	%
Hard Rock (1)
Occupancy		89.3	%		94.0	%		-5.0	%
ADR	$	134.99		$	184.40			-26.8	%
RevPAR	$	120.55		$	173.34			-30.5	%
Mondrian South Beach
Occupancy		54.5	%		—			n/m
ADR	$	279.03			—			n/m
RevPAR	$	152.07		$	—			n/m

(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, 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.

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
	Ended March 31,
EBITDA Reconciliation	2009			2008
(In thousands)				(as adjusted)
Net loss attributable to common stockholders	$	(10,586	)	$	(7,531	)
Interest expense, net		11,458			11,074
Income tax benefit		(8,139	)		(3,940	)
Depreciation and amortization expense		7,220			6,091
Proportionate share of interest expense from unconsolidated joint ventures		6,402			8,488
Proportionate share of depreciation expense from unconsolidated joint ventures		2,038			2,945
Proportionate share of depreciation expense of noncontrolling interest in consolidated joint ventures		(90	)		(99	)
Noncontrolling interest		(354	)		(242	)
Proportionate share of loss from unconsolidated joint ventures not recorded due to negative investment balances		(5,405	)		—
EBITDA		2,544			16,786
Add: Restructuring, development and disposal costs		890			537
Add : Other non operating expense		570			525
Add : Other non operating expense (income) from unconsolidated joint ventures		(288	)		2,333
Less : EBITDA from leased hotel		276			(1,532	)
Add : Stock based compensation		3,069			2,935
Adjusted EBITDA	$	7,061		$	21,584

Room Revenue Analysis	Three Months
(In thousands, except percentages)	Ended Mar. 31,				%
	2009		2008		Change
Royalton	$	2,987	$	4,555		-34	%
Hudson		8,621		15,410		-44	%
Delano		6,858		10,469		-34	%
Clift		3,748		6,162		-39	%
Mondrian Scottsdale		1,726		3,060		-44	%
Total Owned Comparable Hotels		23,940		39,656		-40	%
Morgans		1,665		2,557		-35	%
Mondrian LA		2,990		3,942		-24	%
Total Owned Hotels	$	28,595	$	46,155		-38	%

Hotel Revenue Analysis	Three Months
(In thousands, except percentages)	Ended Mar. 31,				%
	2009		2008		Change
Royalton	$	4,447	$	6,505		-32	%
Hudson		12,026		20,341		-41	%
Delano		14,191		19,999		-29	%
Clift		6,866		10,354		-34	%
Mondrian Scottsdale		3,049		5,549		-45	%
Total Owned Comparable Hotels		40,579		62,748		-35	%
Morgans		3,841		5,381		-29	%
Mondrian LA		6,408		8,069		-21	%
Total Owned Hotels	$	50,828	$	76,198		-33	%

Hotel EBITDA Analysis	Three Months
(In thousands, except percentages)	Ended Mar. 31,					%
	2009			2008		Change
Royalton	$	(240	)	$	880		-127	%
Hudson		727			5,766		(1	)
Delano		5,377			8,477		-37	%
Clift		(276	)		1,532		-118	%
Mondrian Scottsdale		567			1,263		-55	%
Owned Comparable Hotels		6,155			17,918		-66	%
St Martins Lane		1,014			1,982		-49	%
Sanderson		540			1,000		-46	%
Shore Club		186			367		-49	%
Joint Venture Comparable Hotels		1,740			3,349		-48	%
System-Wide Comparable Hotels		7,895			21,267		-63	%
Morgans		(240	)		865		-128	%
Mondrian LA		1,514			1,817		-17	%
Hard Rock — Joint Venture		404			2,031		-80	%
Mondrian South Beach — Joint Venture		26
Total Hotels	$	9,599		$	25,980		-63	%

Adjusted EBITDA and Debt Analysis
(in thousands)

	Adjusted
	EBITDA
	Twelve Months
	Ended			Debt at
Consolidated Operations	March 31, 2009			March 31, 2009
Morgans (1)		1,863
Royalton		5,439
Delano		19,051
Revolving Credit Facility		—			51,744
Sub - total		26,353			51,744
Hudson		34,246			255,657
Mondrain LA (1)		7,708			120,500
Mondrian Scottsdale		(478	)		40,000
Other (2)		(7,572	)		220,484
Total		60,257			688,385
Less: Cash					(86,558	)
Net Debt					601,827

(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
Joint Venture	Ownership			Ended		Debt
Comparable Hotels (1)	Percentage			March 31, 2009		March 31, 2009
Sanderson and St. Martins Lane		50	%		10,845		72,472
Shore Club		7	%		693		8,422

(1) Includes information only for System-Wide Comparable Hotels other than Owned Comparable Hotels

Balance Sheet
(In thousands)

	Mar 31,		Dec 31,
	2009		2008
			(as adjusted)
Cash	$	86,558	$	49,150
Restricted cash		20,224		21,484
Property and equipment		551,843		555,645
Goodwill		73,698		73,698
Accounts receivable		15,367		14,573
Prepaid expenses and other assets		10,144		9,192
Investments in joint ventures		61,677		56,754
Other assets		81,245		74,968
Total assets	$	900,756	$	855,464
Long-term debt		688,385		635,601
Capital lease obligations — Clift		81,985		81,578
Accounts payable and accrued expenses		27,393		26,711
Other liabilities		33,014		35,655
Distributions and losses in excess of investment in unconsolidated joint ventures		14,866		14,563
Total liabilities		845,643		794,108
Total Morgans Hotel Group Co. stockholders equity		37,693		43,423
Noncontrolling interest		17,420		17,933
Total stockholders’ equity		55,113		61,356
Total liabilities and stockholders’ equity	$	900,756	$	855,464