Hotel owner and operator La Quinta (NYSE:LQI) isn't exactly broke, with $103 million in cash and equivalents. But with $926 million in debt to go along with a net loss for 2004 and a projected loss in 2005, this enterprise can hardly be confused with a cash factory.

For the fourth quarter, La Quinta ended with a net loss of $13 million, despite its 32% increase in sales. The company states that the loss was due in large part to the $8 million "impairment" expense associated with the anticipated selling of units in fiscal 2005.

Fortunately, the quarterly results were an anomaly, right? Um, no. La Quinta's fiscal 2004 revenues increased 15% to $563.4 million; however, its losses continued, with a $45 million hit. The latest comes off 2003's $84 million loss.

Are you tired of reading the word "loss" yet? I'm growing weary of writing it, but we'll have to get used to it as the company expects losses to continue into fiscal 2005. For the upcoming year, La Quinta estimates its net loss to come in at around $10 million.

Optimists will have identified a positive trend: an $84 million loss, followed by a $45 million loss, and then a projected $10 million loss. Investors have obviously taken notice, bidding up its stock by 200% from its $3 lows two years ago to the recent $9 range. The market doesn't appear to be expecting the worst from this pattern of loss.

No doubt, the hotel business is a fickle one, subject to the whims of seasonality. And this industry faces no more difficult an environment than a recession. The weak economy from 2001 into early 2003 was a major part of La Quinta's pattern of poor performance. Most recently, however, its losses can attributed to its efforts to sell underperforming and condemned units, as well as acquisitions, including 86 Baymont Inns units.

Does the company's pattern of improvement make it La Quinta-ssential for potential investors? Let's play it out a little and see. Suppose the trend were to continue and La Quinta manages to finally turn its losses into a hearty $50 million in net income for fiscal 2006. And let's assume that the company keeps share dilution stable, maintaining shares outstanding at around 177 million. The company's earnings per share in 2006 would then be approximately $0.28. In a best-case scenario, this would give its stock a very forward-looking price-to-earnings ratio (P/E) of 32.

La Quinta's stock appears awfully pricey, given that the current P/Es for competitors Choice Hotels (NYSE:CHH) and Marriott (NYSE:MAR) are 27 and 32, respectively. Even if revenue growth continues at a robust 15% clip for a while, it's difficult to find a reason to invest at the current level.

You may find a comfortable night's rest at La Quinta's hotels, but if you have money in its stock, you might find yourself losing sleep instead.

Fool contributor Jeremy MacNealy does not own shares in any company mentioned.