Morgans Hotel Group and DLJ Merchant Banking Partners, which recently acquired the Hard Rock, are planning a $1 billion expansion of the boutique resort, reports the New York Times. The expansion would more than double the size of the hotel and casino.

Morgans CEO Ed Scheetz has already foreshadowed major development at the resort. The Times says the expansion includes the addition of about 950 rooms, including an all-suite 15-story tower; about 60,000 square feet of meeting and convention space; and about 35,000 square feet of new casino space.

That last item will add to the contract that Golden Gaming has if it’s still the licensee when the remodeling is done. The arrangement between Morgans, Golden Gaming and the Gaming Control Board has its own issues, but it’s quite likely that Morgans will have its license and be taking the lion’s share of the gaming revenue by the time the extra casino space is built.

Given the problems of overpayment and tight money in the casino, this may be the only way that the Hard Rock can be made to pencil out. But it’s got the real smell of "in-for-a-penny, in-for-a-pound, doesn’t it? And even more so when you know that most of the money is from DLJ. 

As one friend (sort of) remarked to me on Friday, the real winner has to be Peter Morton who took the money and ran while the running was good. If Morgans’ gambit is to succeed, the company will still have to overcome the basic problem that the Hard Rock demographic has not shown itself to be huge spenders and certainly aren’t dropping big rolls in the casino. On the other hand, this could be upgrading the Hard Rock to a real destination like the Palms.