Both Squidward and SpongeBob are walking to work, and SpongeBob tells a story about overcooking the fries. In the meantime, Squidward realizes the Krusty Krab has dramatically changed. Mr. Krabs has turned it into the Krusty Towers, with the original building now on top of a large tower. Mr. Krabs explains that while he was on vacation, he was shocked by his outrageously high hotel bills, tallying up to $345.00 (mostly shocked at a twenty-five dollar charge for a hamburger he had), and realized how much money hotels can make. He says that the employees there lived by a code: "We shall never deny a guest even the most ridiculous request," which was on a gold plaque above a fireplace in the hotel he stayed at. He put that one for the Krusty Towers.
A customer enters to buy a Double Krabby Patty with cheese, then leaves when Mr. Krabs tells him that he must book a hotel room to order room service to eat their food. Patrick soon arrives and becomes the hotel's first actual guest. After signing the register, which he believed was a test, Squidward carries Patrick's bags (which were full of rocks), and he tries to take the guest elevator, but Mr. Krabs stops him and explains that he must take the "employee elevator," which is in fact, a staircase. Patrick then requests Squidward several more times for ridiculous reasons. Whenever Squidward got to the bottom of the hotel, Mr. Krabs told him to go back up to do something that Patrick wants. After failing to give Patrick a "bubble bath," he quits.
He walks out the door and comes back as a guest instead of an employee. He demands a room on the top floor and that Mr. Krabs to carry him to get there. Then he ordered a Krabby Patty with cheese, nose hair, and toenail clippings, and forced Mr. Krabs to eat for humor. Also, Patrick had all the cheese all over his room which was supposed to be on that Krabby Patty. Squidward then wanted his cookies like the ones his mother makes which Mr. Krabs resentfully had to get. Then, he wanted Mr. Krabs and SpongeBob to repaint his room and change his furniture only to get it back to its original state. He then wanted an indoor pool. After getting the indoor pool, Patrick jumps in, and the force causes the hotel to collapse, leaving only the original Krusty Krab standing.
Patrick, SpongeBob, Squidward and Mr. Krabs luckily survive, but end up in the hospital with massive injuries. When Mr. Krabs sees the hospital fee ($15,000), he scraps the idea of a hotel and tells Squidward, SpongeBob, and Patrick that they are going to medical school, much to Squidward's dismay and SpongeBob and Patrick's delight.
Running Gags: Patrick keeps on forgetting where he is, saying "This is a ______?" and Mr. Krabs receiving overpriced bills.
Although Patrick said he didn't like the crust on the patties, but when he eats the patties with SpongeBob, he didn't mind the crust.
Season 4 Volume 1 disc 2 has a case with a cover based on this episode.
This episode premiered six years after the premiere of "Fools in April" and "Neptune's Spatula."
When Squidward said "Too bad we couldn't take the elevator" a sign can be seen saying "FLOOR 17." Since that he requested a room on the top floor, it's possible that the seventeenth floor may be the Top floor.
However, it's possible that Squidward wasn't taking him seriously, so there might be more than seventeen floors.
One of Squidward's suitcases has what appears to be the Taiwanese flag.
The title is a parody of a UK series "Fawlty Towers," which was also about a hotel and its owners.
Despite the episode and the building being named "The Krusty Towers," there is only one building.
The Krusty Towers has seventeen floors (as shown when Squidward says "Too bad we couldn't take the elevator...), but everytime it is shown outside, there are twelve floors.
In addition to this, in the DVD cover based on this episode, the Krusty Towers has only 6 floors. Although this may have been done because it would be hard to fit all 12 floors of the Krusty Towers on the background of the DVD cover artwork.
In the DVD cover based on this episode, SpongeBob can be seen wearing a red employee outfit in the front cover where it should be blue.
When SpongeBob says "How may I serve you, sir?" he has no eyelashes, until when he salutes, then they appear in the rest.
The first clip showing Mr. Krabs saying, "That hotel was a bad idea" it showed bandages on his feet, but when he says "forget hotels" they were gone, then when he said "pack your bags, boys" they were shown again.
When Mr. Krabs first served Squidward and took him upstairs, he was wearing blue clothes. When he went back to the reception desk, the former was wearing a black suit. When he once again went upstairs to assist Squidward, he was in his blue clothes.