Dream Hotel Group CEO Jay Stein drills down on the financial metrics, market trends and macro/micro opportunities that justified the transition from fierce independence to a big-brand family’s clout.
Long before COVID, corporate hotel suitors were lining up to court Dream Hotel Group. Founder Sant Singh Chatwal and CEO Jay Stein knew that, even with 12 hotels open and thriving and more than 20 hotels in the pipeline, it would be an uphill battle to stay solo. But concerns about staying true to their core concept convinced them to say “no” to those proposals—and mean it.
Two years later and post-pandemic, the hospitality industry, the brand giants and the world economy have changed dramatically. And so has the perspective of Dream’s leadership. As devastating as COVID was, there was optimism that it would be over. The challenges small hotel companies face now don’t have an expiry date.
Scale is vital for any ambitious group, whether its leadership is looking for affordable financing or wants maximum customer reach through a worldwide loyalty program. Big brands learned some painful lessons about growing boutique concepts, leaving them far more willing to let newly acquired flags protect their unique identity.
Long before COVID, suitors lined up to court Dream Hotel Group, New York City.
The result? The November 29, 2022, announcement that a Hyatt affiliate plans to acquire the Dream Hotel Group platform, including the Dream Hotels, The Chatwal Hotels and Unscripted Hotels brands. Under the deal terms, Hyatt will pay a base purchase price of $125 million on closing (expected to be done near-term), with the possibility of investing an additional $175 million over the next six years as properties come into the pipeline and open. “Stabilized management fees associated with the base purchase price of $125 million are anticipated to be approximately $12 million and, to the extent the contingent purchase price of $175 million is paid, additional stabilized management fees are anticipated to be up to approximately $27 million,” according to a statement by Hyatt.
So, what was the backstory for the deal that convinced Dream Hotel Group that Hyatt would be the perfect parent? Hotels Investment Today put that question to Stein to get the seller’s take this seminal move.
Hotel Investment Today (HIT): What factors in the market at large and for a targeted group such as Dream Hotel Group made this the right time to be acquired and why was Hyatt the right deal to maximize shareholder value and protect the essence of Dream Hotels?
Jay Stein (JS) Once we started our discussions with Hyatt, it became evident that Hyatt had the global resources for us to achieve our global growth strategies but were still nimble enough to move quickly and focus on personal connections to keep the Dream Hotel Group brands as destinations that discerning travelers really care about.
HIT: What was missing in previous offers?
JS: Hyatt was the first company that we were confident would be committed to keeping the spirit that makes our hotels, associates and cultures so special. Hyatt understands our deep lifestyle expertise, and that’s exactly what attracted Hyatt to us.
HIT: Can small hotel companies survive/thrive given the financial outlook, cost management and development trends in the current economy? What are the biggest challenges in staying independent and optimally profitable?
JS: There will always be opportunities for independent hotels to succeed and even lead market profitability when they offer a great local experience and meet the needs of the local community with their food and beverage venues. The biggest challenge remains finding the right general manager and property teams who can deliver the owner’s vision for the hotel.
HIT: What will change with the acquisition—will you play a role; what happens to the employees; where will the deals under development stand; what will be Hyatt’s growth strategy for Dream?
JS: I am delighted to join Hyatt as head of Dream Hotels when the transaction is completed to guide the integration of the Dream Hotel Group brands into the Hyatt portfolio, ensuring the unique DNA of each brand is preserved while utilizing Hyatt’s capabilities to optimize property performance. Upon closing, Hyatt will gain [600] new members of the Hyatt family, with a shared focus to care for guests. Together, we will deliver more lifestyle travel options for our guests and members, more development prospects for owners and operators around the globe, and more career opportunities for our collective colleague base.
HIT: Analysts say this is a good fit for Hyatt. How much does this stepped-up New York City presence move the needle, and what do you see ahead for that market? What target travel markets does this open that doesn’t cannibalize Hyatt’s other brands?
JS: Upon closing, this expansion will add over 1,700 rooms to Hyatt’s lifestyle portfolio and will extend Hyatt’s brand footprint in key markets, including Nashville, Hollywood, South Beach and Durham and increase Hyatt’s room count in New York City by more than 30%. We believe this will strengthen our collective offerings and reputation as a preferred lifestyle brand for high-end leisure and business travelers, now and well into the future.

“It’s easy to enter a market but driving the local community to your F&B venues is where the hard work starts, and many hotel companies shy away from this side of the business. Dream has always embraced it and our owners know that taking these risks are where the real rewards lie.”
Jay Stein
HIT: Overall, where are the growth opportunities for brands like those in the Dream portfolio?
JS: The growth opportunities are almost endless because there are so many small and mid-size cities and resort areas that need great lifestyle offerings. The opportunity to bring real lifestyle hotels to these markets has made sense forever and just now major brands are starting to realize these opportunities.
HIT: What was the key that unlocked such a robust pipeline for Dream? Is this a time when supply needs to grow across the industry or just in certain sectors?
JS: Owners wanted to work with a company that had lifestyle as a key part of their core business. It’s easy to enter a market but driving the local community to your F&B venues is where the hard work starts, and many hotel companies shy away from this side of the business. Dream has always embraced it and our owners know that taking these risks are where the real rewards lie.
Outsider’s view
While this deal may look good from the inside, what are outsiders saying?
Industry watchers such as C. Patrick Scholes, managing director, lodging and leisure equity research, Truist Securities, sees the deal as positive for both sides. Hyatt gets another proven lifestyle brand and entrée or increased presence in some key markets, while Dream Hotel Group gets Hyatt’s powerful financial connections and marketing infrastructure to maximize growth opportunities.
In today’s economic and business climate, Scholes said it’s getting harder for independents to compete. “Having global loyalty programs like World of Hyatt and having the connection Hyatt has with lenders is extremely powerful,” he said. “It's challenging for totally independent brands to go on without that.”
Then there’s the lack of leverage many independents face in trying to negotiate construction costs, labor costs, supply chain issues and higher interest rates. “Eventually, the independents are going to have to be tucked in or just get off the face of the planet because they can’t compete on these macro issues,” Scholes said.
The good news for Stein and Dream is that the independents are not going to have to sell out their brand identity to get a share of the leverage the perfect corporate parent can provide. “Big brands are making these deals easier. Dream can look at this and say, ‘We're a company that will be allied with one of the big brands but we can keep our name and personality and still fit into their system.”