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$14 billion hotelier
Host Hotels and Resorts (
HST) isn't your typical REIT. For starters, the firm's fortunes are inseparably tied to the travel industry, a fact that negates some of the pure income generation power than other REITs sport. But investors shouldn't ignore Host Hotels just because of that -- the market likes HST right now.
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Host Hotels owns 118 hotel properties all over the world. For the most part, Host's hotels are mainly skewed toward the luxury and upscale segments, positioning that's paid off in recent years as higher-priced travel spending rebounds faster than price-sensitive bookings have. Host is a hotel owner and operator, but it's not a hotel brand company. Instead, its properties are franchises of other high-end global hotel brands. That diversification gives Host a big backstop that other hoteliers don't have.
Obviously, the cyclical nature of the hotel business can be a drag on Host's earnings. Since hotels are booked on a daily basis (rather than the 20 year leases you might find at a commercial REIT), income generation suffers some. Even so, Host has had its fair share of operational victories lately, and net margins have been pushed up past 8% in the most recent quarter.
With a 2.55% dividend yield right now, Host provides good income exposure with the added benefit of diversification for a pure REIT portfolio.