Exhibit 99.1

Morgans Hotel Group Co.
Unaudited Pro Forma Financial Information

The accompanying Unaudited Pro Forma Consolidated Financial Statements are presented to reflect that on November 23, 2011, Royalton Europe Holdings LLC (“Royalton Europe”), a subsidiary of Morgans Hotel Group Co. (the “Company”), and Walton MG London Hotels Investors V, L.L.C. (“Walton MG London”), each of which owned a 50% equity interest in the joint venture that owned the Sanderson and St Martins Lane hotels, completed the sale of their respective equity interests in the joint venture for an aggregate of £192 million (or approximately $297 million) to Capital Hills Hotels Limited, a Middle Eastern investor with other global hotel holdings, pursuant to a purchase and sale agreement entered into on October 7, 2011. A subsidiary of the Company will continue to operate the hotels under 20-year management agreements, each with one additional 10-year extension option.

The Unaudited Pro Forma Consolidated Financial Statements include adjustments to reflect the effects of the sale of the Company’s joint venture ownership interest. The Unaudited Pro Forma Consolidated Statement of Operations for the fiscal year ended December 31, 2010 and nine months ended September 30, 2011 are presented as if the sale was completed as of January 1, 2010. The Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2011 is presented as if the sale of the Company’s joint venture ownership interest was consummated at September 30, 2011. The accompanying Unaudited Pro Forma Consolidated Financial Statements should be read in conjunction with the Company’s historical consolidated financial statements and related notes thereto, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2011.

Pro forma information is intended to provide investors with information about the continuing impact of a transaction by showing how a specific transaction might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. The adjustments made to historical financial information give effect to events that are directly attributable to the sale of the Company’s joint venture interest, are factually supportable, and expected to have a continuing impact. The Unaudited Pro Forma Consolidated Financial Statements are prepared in accordance with Article 11 of Regulation S-X.

The Unaudited Pro Forma Consolidated Financial Statements set forth below are not fact and there can be no assurance that our actual results will not differ significantly from those set forth below or that the impact of the sale of the Company’s joint venture interest will not differ significantly from those presented below. Accordingly, the Unaudited Pro Forma Consolidated Financial Statements are presented for illustrative purposes only and do not purport to represent, and are not necessarily indicative of, what our actual financial position and results of operations would have been had the sale of the Company’s joint venture interest occurred on the dates indicated, nor are they indicative of our future financial position or results of operations. Readers are cautioned not to place undue reliance on such information and the Company makes no representations regarding the information set forth below or its ultimate performance compared to it.

Morgans Hotel Group Co.
Unaudited Pro Forma Consolidated Balance Sheet
(in thousands, except per share data)

						Disposition of
						Investment in
		Historical as of				London Joint				Pro Forma as of
		September 30, 2011				Venture				September 30, 2011
ASSETS
Property and equipment, net		$	283,811			$	—			$	283,811
Goodwill			54,057				—				54,057
Investments in and advances to unconsolidated joint ventures			5,063				—				5,063
Cash and cash equivalents			12,829				73,132	A			85,961
Restricted cash			7,148				—				7,148
Accounts receivable, net			8,250				868	B			9,118
Related party receivables			5,186				(868	) B			4,318
Prepaid expenses and other assets			7,202				—				7,202
Deferred tax asset, net			81,421				(2,641	) C			78,780
Other, net			15,834				—				15,834
TOTAL ASSETS		$	480,801			$	70,491			$	551,292
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Debt and capital lease obligations		$	433,267			$	—			$	433,267
Accounts payable and accrued liabilities			32,353				—				32,353
Distributions and losses in excess of investment in unconsolidated joint ventures			272				(272	) D			—
Deferred gains on assets sales			77,792				73,404	E			151,196
Other liabilities			14,291				—				14,291
Total Liabilities			557,975				73,132				631,107
Commitments and contingencies
Preferred securities, $.01 par value; liquidation preference $1,000 per share, 75,000 shares authorized and issued at September 30, 2011			53,319				—				53,319
Common stock, $.01 par value; 200,000,000 shares authorized; 36,277,495 shares issued at September 30, 2011			363				—				363
Additional paid-in capital			289,971				—				289,971
Treasury stock, at cost, 5,555,654 shares of common stock at September 30, 2011			(89,155	)			—				(89,155	)
Accumulated comprehensive loss			(3,683	)			3,647	F			(36	)
Accumulated deficit			(336,360	)			(6,288	) G			(342,648	)
Total Morgans Hotel Group Co. stockholders’ deficit			(85,545	)			(2,641	)			(88,186	)
Noncontrolling interest			8,371				—				8,371
Total deficit			(77,174	)			(2,641	)			(79,815	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	480,801			$	70,491			$	551,292

See accompanying notes to these unaudited pro forma consolidated financial statements.

Morgans Hotel Group Co.
Notes to Unaudited Pro Forma Consolidated Balance Sheet

The Unaudited Pro Forma Consolidated Balance Sheet reflects the effects of the sale of Royalton Europe Holdings LLC (“Royalton Europe”), a subsidiary of Morgans Hotel Group Co. (the “Company”), which owned a 50% equity interest in the joint venture that owns the Sanderson and St Martins Lane hotels as if this transaction had occurred on September 30, 2011. The Unaudited Pro Forma Consolidated Balance Sheet:

(A) Reflects the net cash proceeds from the sale of the Company’s equity interests in Royalton Europe. The Company and its joint venture partner, Walton MG London Hotels Investors V, L.L.C. (“Walton MG London”), completed the sale of their respective 50% equity interests in the joint venture for an aggregate of £192 million (or approximately $297 million), of which the Company recorded net cash proceeds of $73.1 million.

(B) Reflects the reclassification of current receivables due from the Sanderson and St Martins Lane hotels from related party receivables to accounts receivable as a result of the sale of the Company’s 50% ownership interest in the joint venture that owns the hotels.

(C) Reflects the elimination of deferred tax assets relating to the tax impact of the foreign currency translation adjustment and the tax impact of the Company’s share of the London joint ventures’ unrealized loss on valuation of interest rate swaps.

(D) Reflects the disposition and removal of the Company’s investment in the London joint venture. As of September 30, 2011, the Company had recorded its share of net losses, in accordance with the equity method of accounting, which were in excess of the Company’s investment balance.

(E) Reflects the gain from the sale of the Company’s equity interests in the joint venture that owned the Sanderson and St Martins Lane hotels. The Company will continue to manage the hotels pursuant to 20-year management contracts, each with one 10-year extension option. The gain will be amortized over the life of the management contracts.

(F) Reflects the disposition and removal of the Company’s investment in the London joint venture including the cumulative impact of the foreign currency translation adjustment and the Company’s share of the London joint ventures’ unrealized loss on valuation of interest rate swaps.

(G) Reflects the disposition and removal of the Company’s investment in the London joint venture including the realized cumulative impact of the foreign currency translation adjustment and the Company’s share of the London joint ventures’ realized loss on valuation of interest rate swaps.

Morgans Hotel Group Co.
Unaudited Pro Forma Consolidated Statement of Operations
(in thousands, except per share data)

		Historical for the				Disposition of								Pro Forma for
		nine months				Investment in								the nine months
		ended				London Joint				Amortization of				ended
		September 30,				Venture				Deferred Gain				September 30,
		2011				(A)				(B)				2011
Revenues:
Rooms		$	90,951			$	—			$	—			$	90,951
Food and beverage			49,216				—				—				49,216
Other hotel operating			5,020				—				—				5,020
Total hotel revenues			145,187				—				—				145,187
Management fee — related party and other income			10,112				—				—				10,112
Total revenues			155,299				—				—				155,299
Operating Costs and Expenses:
Rooms			29,122				—				—				29,122
Food and beverage			41,901				—				—				41,901
Other departmental			3,117				—				—				3,117
Hotel selling, general and administrative			33,301				—				—				33,301
Property taxes, insurance and other			12,136				—				—				12,136
Total hotel operating expenses			119,577				—				—				119,577
Corporate expenses, including stock compensation of $10.9 million			25,920				—				—				25,920
Depreciation and amortization			17,405				—				—				17,405
Restructuring, development and disposal costs			10,518				—				—				10,518
Total operating costs and expenses			173,420				—				—				173,420
Operating loss			(18,121	)			—				—				(18,121	)
Interest expense, net			27,783				—				—				27,783
Equity in loss of unconsolidated joint ventures			23,187				1,392				—				24,579
Gain on assets sales			(1,721	)			—				(2,803	)			(4,524	)
Other non-operating expenses			2,885				—				—				2,885
(Loss) income before income tax expense			(70,255	)			(1,392	)			2,803				(68,844	)
Income tax expense			523				—				—				523
Net (loss) income from continuing operations			(70,778	)			(1,392	)			2,803				(69,367	)
Income from discontinued operations, net of tax			485				—				—				485
Net (loss) income			(70,293	)			(1,392	)			2,803				(68,882	)
Net loss attributable to noncontrolling interest			2,007				44				(87	)			1,964
Net (loss) income attributable to Morgans Hotel Group Co.			(68,286	)			(1,348	)			2,716				(66,918	)
Preferred stock dividends and accretion			6,701				—				—				6,701
Net (loss) income attributable to common stockholders		$	(74,987	)		$	(1,348	)		$	2,716			$	(73,619	)
(Loss) Income per share:
Basic and diluted continuing operations			(2.41	)											(2.36	)
Basin and diluted discontinued operations			0.02												0.02
Basic and diluted attributable to common stockholders			(2.39	)											(2.35	)
Weighted average number of common shares outstanding:
Basic and diluted			31,359												31,359

See accompanying notes to these unaudited pro forma consolidated financial statements.

Morgans Hotel Group Co.
Notes to Unaudited Pro Forma Consolidated Statements of Operations

The Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2011 reflects the effects of the sale of Royalton Europe, a subsidiary of the Company, which owned a 50% equity interest in the joint venture that owns the Sanderson and St Martins Lane hotels as if this transaction had occurred on January 1, 2010. The Unaudited Pro Forma Consolidated Statement of Operations:

(A) Reflects the disposition of the Company’s investment in the joint venture that owned the Sanderson and St Martins Lane hotels. The Company accounted for the unconsolidated joint venture using the equity method of accounting. This adjustment reflects the removal of the Company’s equity in income recorded for the nine months ended September 30, 2011.

(B) Reflects the amortization of the deferred gain that will be recognized over 20-years, the life of the management contracts. For the nine months ended September 30, 2011, the income represents nine months of a full year of amortization.

Morgans Hotel Group Co.
Unaudited Pro Forma Consolidated Statement of Operations
(in thousands, except per share data)

						Disposition of
		Historical for the				Investment in								Pro Forma for
		year ended				London Joint				Amortization of				the year ended
		December 31,				Venture				Deferred Gain				December 31,
		2010				(A)				(B)				2010
Revenues:
Rooms		$	139,268			$	—			$	—			$	139,268
Food and beverage			69,451				—				—				69,451
Other hotel operating			9,313				—				—				9,313
Total hotel revenues			218,032				—				—				218,032
Management fee — related party and other income			18,338				—				—				18,338
Total revenues			236,370				—				—				236,370
Operating Costs and Expenses:
Rooms			42,620				—				—				42,620
Food and beverage			58,227				—				—				58,227
Other departmental			5,304				—				—				5,304
Hotel selling, general and administrative			48,216				—				—				48,216
Property taxes, insurance and other			16,233				—				—				16,233
Total hotel operating expenses			170,600				—				—				170,600
Corporate expenses, including stock compensation of $10.9 million			34,538				—				—				34,538
Depreciation and amortization			32,158				—				—				32,158
Restructuring, development and disposal costs			3,916				—				—				3,916
Impairment loss on receivables from unconsolidated joint venture			5,549				—				—				5,549
Total operating costs and expenses			246,761				—				—				246,761
Operating loss			(10,391	)			—				—				(10,391	)
Interest expense, net			41,346				—				—				41,346
Interest expense on property held for non-sale disposition			1,137				—				—				1,137
Equity in loss of unconsolidated joint ventures			16,203				3,470				—				19,673
Gain on sale of assets			—				—				(3,737	)			(3,737	)
Other non-operating expenses			33,076				—				—				33,076
Loss before income tax expense			(102,153	)			(3,470	)			3,737				(101,886	)
Income tax benefit			(1,335	)			—				—				(1,335	)
Net (loss) income from continuing operations			(100,818	)			(3,470	)			3,737				(100,551	)
Income from discontinued operations, net of tax			17,170				—				—				17,170
Net (loss) income			(83,648	)			(3,470	)			3,737				(83,381	)
Net loss (income) attributable to noncontrolling interest			2,239				110				(119	)			2,230
Net (loss) income attributable to Morgans Hotel Group Co.			(81,409	)			(3,360	)			3,618				(81,151	)
Preferred stock dividends and accretion			(8,554	)			—				—				(8,554	)
Net (loss) income attributable to common stockholders			(89,963	)			(3,360	)			3,618				(89,705	)
(Loss) Income per share:
Basic and diluted continuing operations			(3.50	)											(3.50	)
Basin and diluted discontinued operations			0.56												0.56
Basic and diluted attributable to common stockholders			(2.94	)											(2.94	)
Weighted average number of common shares outstanding:
Basic and diluted			30,563												30,563

See accompanying notes to these unaudited pro forma consolidated financial statements.

Morgans Hotel Group Co.
Notes to Unaudited Pro Forma Consolidated Statement of Operations

The Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2010 reflects the effects of the sale of Royalton Europe, a subsidiary of the Company, which owned a 50% equity interest in the joint venture that owns the Sanderson and St Martins Lane hotels as if this transaction had occurred on January 1, 2010. The Unaudited Pro Forma Consolidated Statement of Operations:

(A) Reflects the disposition of the Company’s investment in the joint venture that owned the Sanderson and St Martins Lane hotels. The Company accounted for the unconsolidated joint venture using the equity method of accounting. This adjustment reflects the removal of the Company’s equity in income recorded for the year ended December 31, 2010.

(B) Reflects the amortization of the deferred book value gain that will be recognized over 20-years, the life of the management contracts. For the year ended December 31, 2010, the income represents a full year of amortization.