Host Hotels and Resorts
Host Hotels and Resorts (HST) is a hotel REIT that owns 118 hotels across the world totaling more than luxury 62,000 hotel rooms in all. While it's easy to think of Host primarily as a conventional hotelier, the firm's REIT status also makes it a direct income play that's obligated to pay out the vast majority of its earnings out to shareholders in the form of dividends. And dividends are like kryptonite to short sellers.
At last count, Host's short interest ratio of 11.14 means that it would take more than two weeks of buying pressure for short sellers to exit their bets.
Host's properties skew heavily in the upscale and luxury segments, a portion of the hotel business that's (perhaps surprisingly) been a whole lot susceptible to down-swings in the wake of the Great Recession. As margins on the luxury side of the business remain strong, Host has been able to recover from the challenges of a leveraged balance sheet. The hotel ownership business is typically less attractive than management, which is service-driven and lacks the capital-intensity that owning the hotels requires; that said, our current low interest rate environment is well-suited to profitability for Host, and it isn't showing signs of abating.
Even though Host's model doesn't court the same kind of REIT investors that pile into commercial landlords, the structure has proven sensible for shareholders, particularly as the properties that HST owns continue to appreciate. Earnings on Feb. 17 could be a big catalyst in the near-term.