Hosting will certainly work to determine geographical location but it is certainly not the main factor Google will take into account in order to assess geographical relevance.
How do I know it? Apart from personal experience in working with several multilingual projects in the past because Google admits it too. See Vanessa Fox blog post about how Google determine geolocation
Making Geotargeted Content Findable For the Right Searchers - Nine By Blue. As you might know Vanessa Fox was the Google Engineer in charge of the Google Webmaster Tools project and introduced the geotargeting tool on a folder basis as a result of some sites not being able to use ccTLD but they admit that is the best way to go.