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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Post-recession hotel development has provided some new opportunities as big brands rethink their strategies (no ownership, just management), owners consider the value of independence, and everyone looks for a way to build a cheaper room.
The luxurious, overhead Kohler shower spray is the first feature that Greg Hnedak shows a visitor to one of the mock hotel rooms in the Downtown headquarters of his new company, DreamCatcher Hotels.
“One hundred twenty nozzles of water with this overhead rain shower and another on the wall,” he said. “People love this feature.”
He points out the rimless, glass shower door usually found in five-star hotels.
Hnedak, a well-known Memphis architect who had a large hand in Downtown’s transformation into a residential and entertainment center, is changing careers.
Thirty-four years after becoming a founding partner of Hnedak Bobo Group, he has cashed out his shares in the firm on Front Street to become a full-time developer of hotels.
Just like in architecture, he’s painstakingly aware that it is the details that matter. During a recent interview in his Downtown office, Hnedak picks up a bottle of the European-made Temple Spa shampoo, touches the granite vanity top, and points out the taller-than-normal toilet seat.
Just outside the bathroom, he motions to the Keurig single-cup coffee brewer and the 42-inch Panasonic TV.
He gestures to the soft LED up-lighting over the bed headboard. “You can shut all the lights off if you’re watching the ballgame while your spouse is sleeping and still have the ambience of lighting without having the glare in somebody’s eyes,” he said.
But Hnedak gushes most of all about the bed, the quality of which ranks second in importance only to room rates as the factors guests consider in choosing where to stay.
“We believe (it’s) the finest in the industry,” he said of the DreamCatcher Bed, custom-made by Simmons Beautyrest. “By the same company that made the Heavenly Bed for Starwood, that changed the whole industry,” Hnedak says.
And he’s the same architect who was key in creating for Memphis the Main Street Trolley system, an entire Downtown block known as Peabody Place and the Westin Hotel with its top floor famously scaled to accommodate the tall NBA players who play across the street at FedExForum.
Now Hnedak has a new pursuit. His DreamCatcher Hotels does not build the typical hotel, and not in the typical way.
In the proud Memphis tradition started by Holiday Inn’s Kemmons Wilson 60 years ago, Hnedak endeavors to pioneer new ways of doing things in the hospitality world.
The Great Recession was a seminal influence on the company he founded 14 months ago while still a partner with Hnedak Bobo. Until May, DreamCatcher was a division of the architecture firm.
With the new normal of tighter lending, Hnedak drew upon his years of experience to design and build hotels at a three-star cost. Think Hampton Inn.
But whose rooms feel like a four- or five-star space. Think The Peabody.
DreamCatcher distinguishes itself a second way, by delivering a turnkey product for the hotel owner. When the project is done, DreamCatcher has placed inside everything from three months’ worth of coffee and shampoos to the Rubbermaid cleaning carts to the Down Lite pillows.
The developer is strategic both in the way it cuts costs and splurges on luxuries.
The goal is to deliver a hotel at $110,000 to $130,000 per key, which Hnedak said compares to $140,000 to $175,000 for traditional development of comparable hotels.
“Greg’s done a lot of design for 200-, 400-, 600-room casino hotels,” says Chuck Pinkowski, whose Pinkowski & Co. is a consulting firm for the hospitality industry.
“So he’s had a lot of practice knowing what works and doesn’t. He’s always been focused on high quality. I’ve got to believe what DreamCatcher is offering is a high-quality product that’s been refined to the level of where the product delivered is at the four- or five-star level,” Pinkowski says. “But because of the efficiencies he’s been able to work into the design and construction, the cost will be less.”
Those efficiencies include:
Reducing space. DreamCatcher leans toward the three-star category of “upscale, limited service.” For example, Hnedak recommends his clients not place conference rooms or restaurants in hotels. Yet the rooms remain at or larger than the industry average.
DreamCatcher evolved from a long history of hotel construction by Hnedak Bobo Group. The architectural firm helped design Holiday Inn’s taller hotel prototypes, worked with Promus Companies to innovate its Homewood Suites extended-stay brand, and designed two resorts for Gaylord Entertainment Co.’s Opryland Hospitality Group in Florida and Texas that cost in the hundreds of millions of dollars.
Hnedak Bobo gained a lot of other projects by daring to go where others feared to tread: Casino construction for Native American tribes that enjoy sovereign immunity.
The first and, so far, only hotel DreamCatcher has completed was for the Coushatta Casino Resort in southwest Louisiana. The Memphis firm will start construction for two more Indian tribes by year’s end.
Interest in DreamCatcher’s concept is now growing outside the tribal nations, especially since the January/February issue of Hotel Business Design magazine published a cover story on Hnedak and his new company.
Over his cover photo, the headline states: “Sweet Dreams: Greg Hnedak brings his ‘total package’ vision to life with the DreamCatcher brand.”
No matter how many hotels Hnedak ends up building, you won’t see “DreamCatcher Hotels” signs and logos on a hotel any more than you’d see the Boeing logo on a passenger airline.
DreamCatcher is comparable to the airline manufacturer in that it builds hotels for others to put their brands on. It receives its money from development fees. There are no franchise fees, which average 12 percent of revenues, Hnedak said.
The split with Hnedak Bobo was amicable and there’s still a relationship. DreamCatcher leases space within the architecture firm’s offices on South Front, and also pays the firm for back-office services like human resources and accounting. Some shareholders in Hnedak Bobo also own a piece of DreamCatcher.
DreamCatcher has just three full-time employees. It’ll soon hire a marketing person and project manager for immediate needs, but “the end plan is to grow a bigger company,” Hnedak says.