In the Wall Street world of "bigger is better," Host Hotels & Resorts
Host reported 8.8% growth in revenue per available room (the primary hotel-industry operating metric, otherwise known as RevPAR) during the first calendar quarter. That's a solid increase, but it falls short of the first-quarter RevPAR increases already posted by fellow REIT LaSalle Hotel Properties
Host's size can work as a stabilizing influence, with its results spread over a large portfolio of hotels. On the flip side, it can be difficult to generate external growth that is substantial enough to move the needle. Host did recently make a very large acquisition, picking up 28 hotels from Starwood Hotels & Resorts
And while Host's first-quarter operating results were certainly impressive, they weren't spectacular. That may seem like a high bar to set, but the shares already trade at a premium to the peer group, and Host's dividend yield of 2.7% is the lowest among dividend-paying REITs in the hotel sector.
Host's strong earnings report should reassure current long-term stockholders that the company is operating well and steadily. For investors looking to open a position in the hotel REIT sector, however, other options appear to offer more attractive valuations and greater growth prospects.
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Fool contributor Sean P. Smith is a freelance writer living in St. Louis. He does not own shares of any company mentioned in this article.