HST: Strong Q2 Revpar And Ebitda Will Drive Bullish Momentum

Analysts nudged their fair value estimate for Host Hotels & Resorts higher, from about $19.54 to $19.79. They cited stronger than expected Q2 RevPAR and EBITDA performance, along with raised 2025 guidance that supports slightly faster revenue growth, a richer future multiple, and only a modestly higher discount rate despite somewhat lower profit margin assumptions.

Analyst Commentary

Bullish Takeaways

Bullish analysts highlight that Q2 RevPAR and EBITDA meaningfully exceeded expectations, reinforcing confidence in management execution and near term earnings power.
Raised fiscal 2025 guidance above prior estimates is viewed as a signal of sustained demand strength and improved visibility into growth, supporting higher valuation multiples.
The upward revision to price targets, even if modest, reflects growing conviction that the shares more accurately price in the improved fundamental outlook.
Stronger than expected operating trends are seen as providing additional flexibility for capital allocation, which could further enhance shareholder returns over time.

Bearish Takeaways

Bearish analysts maintain a cautious stance as current valuation already embeds a portion of the recent outperformance, which limits upside relative to risk.
Despite better results, lingering concerns over potential margin pressure and higher operating costs temper enthusiasm about the durability of earnings growth.
Some remain wary that elevated expectations for 2025 could prove challenging to meet if macro conditions soften or leisure and group demand normalize more quickly than anticipated.
The decision to keep ratings more neutral suggests that, while fundamentals have improved, the risk reward profile is not yet compelling enough to justify a more aggressive stance.

What's in the News

Raised fourth quarter 2025 guidance, now expecting low single digit RevPAR growth, helped by an estimated 5.5% RevPAR increase in October (Key Developments).
Increased full year 2025 guidance after outperforming expectations in the third quarter, targeting approximately 3% comparable hotel RevPAR growth and 3.4% comparable total RevPAR growth versus 2024 (Key Developments).
Completed its long running share repurchase program announced in 2017, having bought back 69,099,174 shares, or 9.65% of shares outstanding, for about $1.15 billion, with no additional repurchases in the latest quarter (Key Developments).
Removed from the FTSE All World Index, potentially affecting passive fund ownership and trading liquidity for the stock (Key Developments).

Valuation Changes

The fair value estimate has risen slightly, moving from approximately $19.54 to $19.79 per share, reflecting modestly stronger fundamentals.
The discount rate has edged up marginally, from about 7.94% to 7.95%, signaling a slightly higher required return in the valuation model.
Revenue growth assumptions have increased modestly, from roughly 2.11% to 2.21%, indicating a somewhat more optimistic top-line outlook.
Net profit margin expectations have fallen meaningfully, from about 11.86% to 10.81%, incorporating higher cost or mix-related pressures.
The future P/E multiple has expanded noticeably, from approximately 21.4x to 23.7x, suggesting a richer valuation on forward earnings despite lower margin assumptions.

Focus on experiential travel and premium asset upgrades is driving high revenue growth, with strong customer demand for luxury and urban resort experiences.
Prudent financial management enables ongoing reinvestment and shareholder returns, supporting stable earnings and premium market positioning.
Structural shifts in business travel, climate risks, geographic concentration, rising capital and labor costs, and competition from alternative accommodations threaten revenue growth, margins, and earnings stability.

Catalysts

About Host Hotels & Resorts

An S&P 500 company and is the largest lodging real estate investment trust and one of the largest owners of luxury and upper-upscale hotels.What are the underlying business or industry changes driving this perspective?

The ongoing rebound and expansion in leisure and experiential travel is driving outsized transient demand at Host's luxury and upper-upscale resorts, evidenced by double-digit RevPAR and F&B growth at destinations like Maui and Miami; as travel preferences continue tilting toward experiences, this is expected to support above-average revenue and margin growth over the long term.
The company's strategic focus on upgrading and repositioning premium assets in top markets-exemplified by substantial ROI from major renovations and development projects-continues to enhance RevPAR index and property values, signaling a strong runway for RevPAR-led earnings growth as consumer demand for high-end urban and resort experiences rises.
Host's ability to capture increased out-of-room, spa, and ancillary spending (golf, F&B, retail) reflects a shift in consumer spending preference and provides incremental revenue streams with high flow-through, supporting improved net margins and EBITDA beyond base ADR increases.
A sustained increase in group bookings, especially for mega-events and in gateway cities, alongside a growing international and urban customer base, lays the foundation for long-term occupancy and ADR gains, translating into higher topline and strong cash flow visibility.
Prudent balance sheet management, with low leverage and ample liquidity, positions Host to continue capital recycling, share buybacks, and accretive reinvestment, all of which enhance FFO per share, drive long-term earnings, and support premium valuation as institutional demand for high-quality, income-producing real estate assets persists.

Host Hotels & Resorts Earnings and Revenue Growth

Host Hotels & Resorts Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Host Hotels & Resorts's revenue will grow by 2.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 11.1% today to 11.2% in 3 years time.
Analysts expect earnings to reach $703.2 million (and earnings per share of $1.0) by about September 2028, up from $659.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.3x on those 2028 earnings, up from 18.2x today. This future PE is lower than the current PE for the US Hotel and Resort REITs industry at 29.5x.
Analysts expect the number of shares outstanding to decline by 1.64% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.47%, as per the Simply Wall St company report.

Host Hotels & Resorts Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company is experiencing ongoing structural headwinds in business transient demand, with business travel revenue flat and corporate negotiated room night volumes down, signaling persistent impacts from the shift to remote/hybrid work; this can result in structurally lower occupancy and ADR, depressing future revenue growth and EBITDA.
Host remains exposed to significant risks from climate change and extreme weather events, as evidenced by frequent business interruption insurance proceeds related to hurricanes and wildfires; recurring physical damage and rising insurance premiums or CAPEX requirements could compress net operating income and reduce net margins over the long term.
The company's portfolio is heavily concentrated in premium urban and high-end resort markets, making it particularly vulnerable to local oversupply, economic downturns, or shifts in leisure and group travel preferences; this geographic and segment concentration could lead to revenue and earnings volatility during adverse cycles.
The ongoing need for substantial capital expenditures to renovate, upgrade, and reposition legacy properties-highlighted by multi-year programs like the Hyatt Transformational Capital Program-may constrain free cash flow and pressure net margins, particularly as wage and benefit expenses rise (guided up 6% in 2025 and expected to stay elevated).
Alternative accommodations (e.g., Airbnb, Vrbo) continue to exert competitive pressure on traditional hotels, eroding Host's pricing power and occupancy rates; a long-term shift in consumer preferences toward boutique/lifestyle lodging or short-term rentals could limit RevPAR and earnings growth for legacy branded hotel portfolios.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $18.559 for Host Hotels & Resorts based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $22.0, and the most bearish reporting a price target of just $16.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $6.3 billion, earnings will come to $703.2 million, and it would be trading on a PE ratio of 22.3x, assuming you use a discount rate of 8.5%.
Given the current share price of $17.44, the analyst price target of $18.56 is 6.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analyst Commentary Highlights Upgraded Price Target for Host Hotels and Improved 2025 Outlook

HST: Strong Q2 Revpar And Ebitda Will Drive Bullish Momentum