One of the old saws of investing is that the market is a discounting mechanism: Investors establish today's prices by looking into the future. If you choose to wait for proof of improved performance in the financials, the big market moves may have already left you behind.

Keep that in mind with regard to Host Marriott (NYSE:HMT), one of the largest hospitality REITs in an industry that includes the likes of StarwoodHotels (NYSE:HOT), Hospitality Properties Trust (NYSE:HPT), and Equity Inns (NYSE:ENN). Although current results (and dividends) aren't exactly dreamy, I don't think it takes too much imagination to foresee some real potential for improvement.

For the third quarter, Host Marriott reported that revenue rose nearly 8%; revenue per available room likewise rose about 8%. Better occupancy chipped in about 1.2%, while higher rates accounted for 6.3% in growth. Margins also improved, and operating profits climbed by 59% from the year-ago level.

That said, interest expense is still a major factor. It consumed all of the operating profits and then some, leading to a loss for the quarter (albeit a smaller loss than a year ago). On a funds from operations (FFO) basis, the company reported $0.19 per share for the quarter vs. $0.06 a year ago (which was reduced by $0.05 due to some refinancing and redemption transactions).

I can certainly see why some would steer clear of this stock. There is an awful lot of debt here, the dividend yield isn't anything spectacular, and lodging is an economically sensitive business. What's more, rising costs may be an issue; it will certainly cost more to heat those buildings, and wage and benefit costs are also on the rise.

Nevertheless, I can see an argument for owning these shares. The debt situation is getting better, the company has an attractive suite of properties, and both business and leisure travel trends seem to be improving. If that holds up, and the economy doesn't go into the tank, the company should start seeing some positive operating leverage, and there's a chance that the dividend payout could improve. Nonetheless, I wouldn't advise relying too heavily on this investment for big payouts, or ignoring changes in its performance.

For more hospitable takes:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).