Dunning bought the Dusk in 1974 and reopened it to the public, after it had been closed for many years. Claims he thought it would be a way to "make some quick scratch" but laments that the work he has put into it never pays off. Apparently a big hockey fan, he watches a lot of sports television in his room. Due to certain past experiences, Dunning has a clear distaste for both police and criminals, and the trouble they bring. He remains friendly with Kyle during his stay, but if he finds reason to think him suspicious, he immediately kicks him out of the hotel, leading to many game overs.
Though he is keen on hiding it, Dunning has a very specific reason for being at Hotel Dusk, and is revealed to be one of the most important characters in the game. Growing up with aspirations to be a painter, Dunning became friends in college with a fellow artist named Robert Evans. After college he went on to pursue his dream, but had a hard time getting any of his art noticed. He eventually married and had a daughter, Jenny, but his peaceful family life was brought to a halt when his wife died in a plane crash in 1960. As he was mourning in the airport after hearing the news, he ran into his old friend Robert Evans and his daughter Mila. By some strange twist of fate, he too had lost his wife to the same plane crash.
As the two widowers began talking, an idea formed in Evans' head. He told Dunning that he believed he had a real talent for painting, and that he wanted to see him become big. Since critics had never taken notice of his work before, Evans decided that they should create a fake identity, a mysterious figure from the past, for Dunning to paint as. Together, the two men created the painter called Osterzone, and Dunning began to paint all of his artwork under the name. After college Evans had inherited an art gallery which was known for displaying rare art pieces by undiscovered artists--using his credentials there, Evans was able to pass Osterzone off as a forgotten European painter who had "died for his art". He also wrote a book in 1963 called Osterzone: the Phantom Painter, describing how he had "discovered" the paintings of this amazing artist who had died too young.
The plan worked amazingly well, and before either of them knew it, art critics were raving over the art pieces. Osterzone's paintings began to sell for exorbitant prices, and both Dunning and Evans profited. Unfortunately, all this commotion attracted the attention of a New York crime ring called Nile, who had discovered the truth behind the paintings. Evans became heavily involved in the group. Dunning meanwhile, began to grow dissatisfied with his life of hiding in the shadows and scamming people, and thus told Evans that he would no longer paint as Osterzone. Nile wouldn't stand for this however, as the scheme was making a good deal of money for them. In an attempt to persuade Dunning to paint again, Evans bought a business called Hotel Dusk, shut it down, and asked Dunning to settle there with his daughter to keep painting. When Dunning refused yet again, Nile kidnapped his daughter Jenny in retaliation.
With no other choice, Dunning returned to painting. After three years he was absolutely burnt out, though, and began to despair that he would never see his daughter again. Evans, seeing the state Dunning was in, agreed to have him paint one last piece, Angel Opening a Door. He then gave Dunning the deed to Hotel Dusk, and promised that if he waited there his daughter would be returned to him eventually. Dunning, out of options, agreed, and eventually reopened the Dusk in order to keep it running. But he never heard from Robert Evans again...
In one of the endings of the game, there is an epilogue scene where a young girl stumbles into Hotel Dusk several days after Hyde has left. Dunning stares at her with a look of surprise, and says, "Jenny?"