There is a jubilant mood at Manchester's Grand Hotel when John and Sarah Bannerman hold an extravagant party to celebrate its re-opening. However, the atmosphere soon changes when the book keeper commits suicide and confesses to defrauding the hotel out of thousands of pounds. John's brother Marcus is prepared to help the Bannerman's out of their difficult financial situation, but only if Sarah is prepared to sleep with him.

Whilst Sarah feels under-mined by Marcus's cocky attitude,she is aware that he is the Grand's best hope for survival as he is an ideas man. He sells off some slum dwellings he owns but his proposal that the resident staff be made to live outside of the hotel in order to facilitate more guest rooms is vehemently opposed with the staff threatening strike action and ultimately the idea is rejected. Instead the hotel's laundry will do the washing for other hotels and institutions in the city. Janet Brady, an unmarried, pregnant ex-employee of the Grand, indirectly made homeless by Marcus's sale, comes to the hotel for work and when Sarah can only offer to recommend her to a hostel,spits in her face.

John and Sarah's son Stephen is keen to make a good impression on Celia Sutton. In order to finance their nights out together he takes money from the till without his parents' knowledge. When the takings are down, the finger is pointed at the staff below stairs. Meanwhile Esme struggles to keep her real occupation a secret when she recognises Celia, a prostitute she used to take care of. Collins is aware of Stephen's wrong doing but his diplomatic character prevents him from revealing the truth. The Grand Hotel's reputation is put in jeopardy thanks to Esme's reputation and her past.

acob Collins is embarrassed by the knowledge that his son was branded a deserter in World War One and he is ashamed when his colleagues find out what happened. He decides to give all in savings in an attempt to clear the names of other soldiers who suffered the same fate, but finds himself the victim of a scam. Marcus does some dubious business dealings in an effort to recoup Collins' money.

Adele finds herself attracted to Maggie, the daughter of a friend of the Bannermans who stays at the hotel to recover from appendicitis. When their relationship becomes more intimate, Adele struggles with her desires and her knowledge of what is socially acceptable. Meanwhile Sarah is left devastated following the death of a child.

A dog runs amok around the hotel and strikes fear in to the staff when it is thought to be suffering from rabies. John is bitten and is taken ill while his wife finally succumbs to Marcus' request. However after a night with Sarah, Marcus makes a shock announcement the following day: he plans to marry Ruth. Monica goes against hotel staff rules when she is taken under Esme's wing in search of alternative employment.

Monica is forced to face the consequences of her actions when she is put on trial for murder while Esme and Kate attempt to keep her neck out of the noose. Stephen is determined not to have his relationship ruined with Kate by the class barrier. Meanwhile Ruth and Marcus' marriage goes ahead but he finds a quiet moment with Sarah to reveal the truth behind his decision to wed.