Luxury is only worth its price when it delivers the quality that buyers expect. You don't buy a Margaux because it tastes like jug wine, you don't buy a Jaguar because it runs like a Kia, and you don't buy high-end stocks with the expectation that they'll disappoint you. Unfortunately for shareholders, Four Seasons (NYSE:FS) seemed a bit low-class after its earnings report.

Revenue performance was OK. Although the reported number was down more than 17%, it didn't miss the consens-a-guess by all that much. What's more, RevPAR (revenue per available room) trends looked pretty respectable, with worldwide growth above 13% and growth in core U.S. hotels of 16%, due partly to a high single-digit increase in room rates. Occupancy trends were also solid, with only the Middle East region showing a decline, perhaps partially due to terrorist activities.

Gross operating margin performance also improved by almost 3 full percentage points. But that's about the extent of the good news. Higher expenses chewed up profits, and the company's loss from operations nearly doubled. Looking at adjusted net earnings (adjusting mostly for foreign exchange, financing costs, and impairments), the company posted $0.22 a share, below last year's $0.24.

Although this stock was simply on fire from early 2003 to the end of 2004, investors who bought at the beginning of 2005 might feel like their portfolios are getting burned.

While estimates have been dropping, I think the trouble lies less with management or corporate performance and more with overinflated expectations and valuations earlier in the year. This is a great brand, and the company should see solid growth as it works to grow its hotel base by almost 50% to 100 properties within a few years. But there is a reasonable price for every asset, and $80 a share was beyond reasonable for this company.

Lodging has been pretty active of late, with Blackstone's announced acquisition of La Quinta (NYSE:LQI) just the most recent example. What's more, it looks like people really are starting to travel more, which is good for the industry as a whole. Four Seasons' drop might make the shares more interesting to some investors, but destinations like Equity Inns (NYSE:ENN) may appeal as well.

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Equity Inns is a Motley Fool Income Investor recommendation.

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