The episode opens with Sybil reminding Basil of many chores he must do: prepare the bill for some guests in a hurry to depart, hang a picture in the lobby, type the menus for lunch. While Basil is trying to have a snack, Sybil confronts him about an expensive advertisement that he has placed in an upscale magazine, and he explains that he is trying to encourage a higher social class of customer. Basil informs Sybil that Sir Richard and Lady Morris, an aristocratic couple who saw the advertisement, will be arriving that evening. Soon after, a leather-jacketed Cockney guest, Danny Brown, turns up asking for a room, much to Basil's annoyance. Basil - who, it has been revealed, learned "Classical Spanish" - is further put out when Mr. Brown shows that he can communicate better than he with Manuel, as he speaks fluent Spanish.
While Basil is on the phone to a Mr. O'Reilly (a "cowboy" builder featured in the following episode) complaining about some recent shoddy workmanship, Lord Melbury, a well-dressed aristocrat, turns up out of the blue. Basil immediately becomes infatuated by Melbury's air of class and breeding. Embarrassing incidents follow, where Basil fawns over Lord Melbury and treats him better than the other guests. Basil even asks a family, in the middle of their meal, to move tables for Lord Melbury, but accidentally deposits Lord Melbury on the floor in the process which earns a passing Manuel an angry and totally undeserved blow to his head, primarily as a distraction from Basil's own ineptitude. Basil grovels to Melbury for forgiveness, which Melbury grants him.
After lunch, Melbury emerges from the dining room and Basil immediately begins fawning over him again, apologizing incessantly. Lord Melbury dismisses his apologies and claims it was merely an accident and has forgotten all about it. Basil insists that if there is anything he can do to make it up to Melbury he will. Lord Melbury immediately becomes interested and asks Basil to cash him a "small" cheque for one hundred pounds. Despite being inwardly aghast at such a large sum, Basil obsequiously asks if that would be enough; he is even more aghast when Melbury takes him up on this and revises his request to two hundred. Too late to backtrack, Basil agrees to cover this large cheque. Melbury is delighted and Basil hides the whole matter from Sybil. He then confides in Polly and asks her to go to the bank and collect the money for his lordship.
However, when Polly goes into town to take out the money, she comes across Danny Brown - who is now revealed as a policeman - and a fellow Detective Inspector. They explain that they are from the CID, and are watching Melbury, who is in turn revealed to be a Confidence Trcikster pulling off a large scam in town.
Meanwhile, Basil continues to ignore other guests while attending to Lord Melbury in the bar, neglecting their orders for drinks. Melbury offers to take Basil's collection of coins to have them valued while dining with the Duke of Buckleigh that evening. Basil is deeply honoured, and agrees.
Polly confronts Basil with the information that Melbury is an impostor, but he refuses to believe her, suggesting Brown is merely spinning tales of intrigue in order to impress her. She then tells Sybil who, despite Basil's fervent protests, takes Melbury's previously surrendered suitcase of "a few valuables" from the safe, and reveals the contents to be simply a pair of house bricks.
Basil finally realises he has been duped, and manic anger begins to brew inside him. In a cruel twist, Sir Richard and Lady Morris arrive to check in, and witness Basil's fury as he abuses and swears at Melbury, who is eventually arrested by Brown and his colleague but not before Basil takes the money he had given Melbury from Melbury's own pocket, and kicks him while he lies on the floor, winded. Horrified by all he has seen, Sir Richard leaves, vowing never to return to such a terrible hotel. Basil hypocritically curses Morris' snobbish behaviour.
A dejected Basil re-enters the hotel and begins finally to hang the picture featured at the outset. Then, a very angry Mr. Wareing (whom Basil moved from his table earlier in the episode) shouts his order, for which he has been waiting in the bar for some time and which Sybil has not bothered to serve. Basil finally snaps: he smashes Sybil's picture and frogmarches his guest back to the bar to be served at last.