With Sybil in the hospital with an ingrowing toenail, a moose's head to hang up and some German guests arriving the next day, Basil has his work cut out for him. After an attempted fire drill goes wrong and Basil lands up in the hospital with concussion, he succeeds causing much offense to the German guests after finally escaping back to the hotel. This episode is the origin of the quote "Don't mention the war."

In an effort to climb another rung in the social ladder, Basil arranges a gourmet night. Unfortunately, thanks to the chef's alcoholism, Basil must try to get hold of a duck from his friend, André. This, combined with the Fawltys' faulty car and his social awkwardness leads Basil ever closer to a nervous breakdown.

When Basil hears of hotel inspectors roaming Torquay incognito, he realises with horror that guests he has been abusing could easily be among them. Basil becomes increasingly obsessed with trying to determine which guests are hotel inspectors, but his suspects turn out not to be, to his frustration.

Basil gets annoyed when a young, flirtatious couple start "hanky-pankying" under his nose and tries to avoid the advances of a wealthy French antique dealer. Meanwhile, misfortune conspires to put him in compromising situations whenever the couple are around.

Maintenance is made on the lobby while the Fawltys are out, but when a misreading causes the incompetent builders to mess it up spectacularly, Basil must try to remedy the situation before Sybil finds out.

As Basil tries to raise the tone of the hotel, the aristocratic Lord Melbury comes to stay at the hotel. Basil fawns over him at every opportunity, causing himself to neglect or annoy other guests, until Polly discovers Melbury is actually a confidence trickster. Meanwhile, Sybil orders Basil to hang a picture.