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Investment Thesis: While Host Hotels & Resorts could see some upside if RevPAR levels improve, high debt and a decline in cash levels remain risk factors.

In a previous article back in April, I made the argument that Host Hotels & Resorts (NASDAQ:HST) could be set to benefit from rising real estate prices as a result of inflation. However, I also cautioned that the company would also need to ensure that it maintains sufficient cash reserves to continue funding its expansion.

Since April, the stock has seen a significant decline – in line with that of the broader market.

investing.com

investing.com

The purpose of this article is to determine whether Host Hotels & Resorts can potentially see a rebound in upside going forward.

Performance

From a revenue standpoint, we can see that while Host Hotels & Resorts has yet to see a rebound to 2019 levels – revenue growth is still far above what it was in the quarter of March 2021.

Host Hotels & Resorts: First Quarter 2022 Operating Results

Host Hotels & Resorts: First Quarter 2022 Operating Results

However, I previously cautioned that the company also needs to control its cash to total debt levels – as this will be necessary to fund the purchases of new properties before prices rise further.

From the below, we can see that the portion of cash relative to total debt has decreased significantly since the last quarter – meaning that the company has less immediate cash available to meet its liabilities.

December 2021 March 2022
Cash and cash equivalents 807 266
Total debt 4891 4210
Cash to total debt (%) 16.49% 6.32%

Source: Figures sourced from Host Hotels & Resorts First Quarter 2022 Operating Results. Cash to total debt calculated by author.

In this regard, while the company has seen diluted earnings per share rebound to positive territory

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