OFFER OF EMPLOYMENT

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Exhibit 10.26

MORGANS HOTEL GROUP

July 25, 2005

Mr. Richard Szymanski
133 Smoke Rise Drive
Warren, NJ 07059

Dear Rich,

        I am pleased to confirm your appointment and acceptance of our offer of employment as Chief Financial Officer (CFO) for Morgans Hotel Group ("MHG"). This position will report directly to me. In this role you will work closely with Marc Gordon and other senior executives of the company. Although your start date hasn't been confirmed, it is expected to be within the next few weeks. Between now and then, it was discussed that you will provide your time to us on a reasonable and mutually agreed upon basis as directed by Ed and/or Marc.

        Your annual base salary is $350,000 ($6730.77/wkly; paid in accordance with our regular bi-monthly pay cycles with appropriate withholdings). It is customary that we conduct annual performance reviews and at that time a reevaluation of your salary is usual.

        We've agreed to grant you a guarantee cash bonus of $100,000 prorated for 2005 to be paid out in early 2006 and a minimum bonus of $100,000 for the year 2006 to be paid out in early 2007, as long as you are actively employed at the time of any payout.

        The company is currently considering the implementation of an equity-based incentive program and evaluating all bonus plans for possible redesign. To the extent that such program(s)