HST Host Hotels & Resorts
Lodging recovery now priced below fair value, but capex-hungry assets cap the upside.
The story
Host is the largest lodging REIT, owning luxury/upper-upscale hotels levered to group and business-travel RevPAR recovery; revenue has compounded ~7.6% with margins holding ~17%. But it owns the full operating exposure: recurring capex runs ~9.5% of revenue, so AFFO conversion is structurally below the REIT norm. High cyclicality (beta ~1.4) and rate sensitivity dominate the risk picture; the stock's 6% post-earnings dip has moved price slightly below fair value.
Kept growth at 5% Y1 / 2.5% terminal — RevPAR momentum and margin stability support mid-single-digit FFO growth, but terminal stays well under the 4.78% risk-free given lodging's cyclical supply/demand swings. Raised AFFO ratio modestly from 0.65 to 0.67, matching actual capex (0.59B) as ~33% of FFO; lodging's asset-heavy model justifies the low end of the 0.70-0.90 norm. Beta stays 1.4 — far above the 0.9 REIT anchor because HST is effectively a hotel operator, not a lease-collection business.
Value drivers
| AFFO growth (Y1) | 5.0% |
| Terminal AFFO growth | 2.5% |
| AFFO / FFO ratio | 67.0% |
| Beta | 1.40 |
| Failure probability | 1.5% |
| Cost of equity | 11.1% |
Valuation bridge
| PV of AFFO (explicit) | 8.70B |
| PV of terminal value | 7.33B |
| Equity value | 15.79B |
| ÷ shares → per share | $23.05 |
News
bullish +0.30 · 8 articles
- Why Is Host Hotels (HST) Down 6% Since Last Earnings Report?
- Is Host Hotels & Resorts (HST) a Great Value Stock Right Now?
- Host Hotels (HST) Upgraded to Buy: What Does It Mean for the Stock?
- HST vs. AMT: Which Stock Is the Better Value Option?
- Host Hotels (HST) Just Raised Its Outlook. Can Luxury Travel Keep Delivering?
- Inflation and Taxes Are Eating Into Your Savings. What You Can Do About It.
- Should Value Investors Buy Host Hotels & Resorts (HST) Stock?
- Host Hotels & Resorts (HST) Q2 2026 Earnings Call Transcript
Projected AFFO
| Yr | FFO | AFFO | Growth | PV |
|---|---|---|---|---|
| 1 | 1.90B | 1.28B | 5.0% | 1.15B |
| 2 | 1.99B | 1.34B | 4.7% | 1.08B |
| 3 | 2.08B | 1.40B | 4.4% | 1.02B |
| 4 | 2.17B | 1.45B | 4.2% | 954.88M |
| 5 | 2.25B | 1.51B | 3.9% | 893.03M |
| 6 | 2.34B | 1.57B | 3.6% | 832.95M |
| 7 | 2.41B | 1.62B | 3.3% | 774.84M |
| 8 | 2.49B | 1.67B | 3.1% | 718.84M |
| 9 | 2.56B | 1.71B | 2.8% | 665.09M |
| 10 | 2.62B | 1.76B | 2.5% | 613.69M |
Key risks
- Lodging cycle downturn compressing RevPAR and operating leverage
- Heavy recurring capex (~9.5% of revenue) structurally limiting AFFO conversion
- Rate sensitivity: refinancing costs and multiple compression if yields stay elevated
- Concentration in group/business travel demand, which can retrench quickly
Catalysts
- Continued group booking recovery and pricing power at luxury/upper-upscale assets
- Post-dip re-rating on analyst upgrades (Buy) as price sits below fair value
- Renovation capex delivering outsized ROI on acquired/converted properties