Host Hotels & Resorts Inc.HST

Morningstar Rating

Stock Research and Analysis

by Jason Ren

One of the largest public hotel owners in the country, Host Hotels owns around 112 luxury and upscale properties in areas with high barriers to entry, such as urban centers, airports, and resort areas. We believe this superior portfolio and a solid Read more

Bulls Say

Host is one of the least leveraged of the hotel REITs.

Through its joint ventures, Host is one of the few public hotel REITs that can claim international exposure. Moreover, its joint ventures' debts are nonrecourse to Host, providing the firm an escape hatch should revenue falter significantly abroad.

Host's properties are generally in areas with high barriers to entry. This should shield Host from some of the pricing declines associated with the new supply of hotel rooms nearing completion in 2009.

A scant amount of debt matures before 2011, and the company has been hoarding cash. Host's liquidity should be ample through the downturn. Read more

Bears Say

The public backlash against displays of wealth has persuaded business patrons to cut down on trips to Host's high-end properties.

Hotel pricing can be sticky, and average nightly rates may take years to recover to historical averages upon an economic rebound.

High-end hotels entail high fixed costs. Although Host has made progress in cutting expenses, net operating income margins will nonetheless contract steeply through the downturn.

If long-term interest rates rise, in addition to already increased credit spreads, Host's cost of capital would increase, pressuring asset values and reducing cash flow.

Scrip will probably make up 90% of Host's year-end dividend payout. This carries a potentially negative tax implication for investors. Read more

Strategy

Host endeavors to own upscale and luxury hotels in urban, airport, and resort regions with high barriers to entry. Revenue is skewed toward business travelers because 66% of Host's rooms are in airport Read more

Management

We are maintaining our B Stewardship Grade. W. Edward Walter has helmed Host as its CEO since the end of 2007. We think Walter and his management team have operated prudently thus far through the recession, selling off ill-fitting investments and keeping Read more

Profile

Host Hotels was formed in 1992, following Marriott's division into separate property and management companies. Host's upscale or luxury hotels are located mostly in urban, Read more

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