The Garveys arrive in Benidorm to spend Christmas with Madge and Mel at their palatial villa but Mel is absent, apparently stuck in Morocco on business. Donald and Jacqueline book into the Solanas with ten like-minded 'swingers', annoying manageress Janey whilst the Oracle's mother Noreen, a recent lottery winner, turns up with her new beau Clive - whose bad back leads them to be charged for lewd behaviour on the beach. Su Pollard is due to headline at Mel's Benidorm Palace but, after accidentally ending up at a nudist hotel, she is not happy and when Madge mistakes her for Rod Hull, with whom she argued twenty-five years earlier and insults her, Su walks out. Fortunately Donald and Jacqueline save the day by getting their friend Roy Wood to fill the breach and the evening is a great success with Clive also proposing to Noreen for the right reasons. Then Madge takes a fateful call from Morocco

Donald's practical joker pal Wink causes a stir when he checks in, Martin begs Kate to take him back and the Oracle tells his mum Noreen he is leaving home. Madge and Mel decide to stay and pursue a new business in the resort, but need to get permission from the deputy mayor.

Gavin begins to suspect Troy is cheating on him and the Oracle's tall tales get him into trouble with the police. A visit from Martin's mother Diana (guest star Una Stubbs) fails to raise his spirits, and Mel treads the boards with Madge at the Benidorm Palace.

Madge suspects her estranged daughter has turned up at the Solana with her eyes on Mel's money. Meanwhile, a cockney conman (guest star Robin Askwith from the Confessions films) starts working his charm on the guests.

The Oracle is given the runaround from a blind date with a big secret, and Brandy seduces Mateo while Martin is not paying attention. Mel sets his heart on buying local tourist spot Peacock Island - but first he must find the mysterious Spanish owner.

Mick upsets Janice during a trip to the Callosa waterfalls, putting a strain on their relationship, while Brandy plays a practical joke on Martin that exposes his gullible side. Noreen comes to the conclusion her son, the Oracle, must be gay. 

The gang returns for a goodwill stay at the Solana after being held hostage by drug dealers on their last holiday. Mel recruits Mick to run his new mobility shop, the Oracle's search for love goes on and Martin appears to have ditched wife Kate for a younger model.