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. . .

A busload of guests including Noreen,Gavin minus Troy and Sam with her raucous friend Trudy arrive at the Solana,unlike their luggage which got lost on the way. There are several changes - Madge has lost her bar,Kenneth has opened his own salon with local Carmen as his assistant and Liam is the complex's clumsy odd job man. Most significantly Janey has gone,replaced by snooty Joyce Temple-Savage,who aims to make the Solana more up-market - or at least efficient,having arrived incognito and been shocked by what she sees. This leads to open conflict with Madge and the near demise of Jacqueline and Donald,who has returned from the dead and a jail sentence for faking his death to claim the insurance whilst Sam,having broken her leg last year,has yet another mishap.

Kenneth starts to regret employing non-English speaking Carmen and offering free treatment at the salon as first prize in the dance contest Joyce is organizing,to be judged by her old flame,professional dancer Cyril Babcock. Janice is puzzled when young Jack,her former stalker,reappears and claims not to recognize her,involving her in a fight with Trudy. However come the contest he sweeps her off her feet confessing it was all a ruse to get close to her. Fortunately Mick comes to her rescue whilst Gavin and Carmen win the competition,releasing Kenneth from giving the prize.

Mick is not pleased when his gormless younger brother Pete,who owes him money,arrives for his stag party with cantankerous father Stan in tow. Nonetheless a fancy dress bar crawl ensues but all ends in anti-climax when Stan admits that there is no wedding and Pete is just taking a break from being his father's carer.After Joyce insists there should be life guard cover at the pool Trudy plans to get the kiss of life from Mateo but ends up being revived by Les dressed as Pamela Anderson whilst Kenneth's misreading of a text from Troy almost leads to his splitting him up from Gavin.

Hearing that a gang is abducting people to sell their organs,the Garveys are alarmed when Michael sees Madge getting into a car with a swarthy young man. Giving chase they learn that he is Mohammed,a Moroccan whose father did business with Mel and who is returning some of her late husband's belongings to Madge. Joyce aims to impress Victor St James,editor of the 'Costa Class' magazine,mistakenly believing that his loutish behaviour is a front to catch her out. After Mateo has burnt the paella and Trudy nutted Victor for thinking she was a prostitute Joyce is fearful of a negative review. However salvation comes from a most unlikely quarter. Donald and Jacqueline meanwhile set out to meet some swingers but,due to a misunderstanding,Gavin and Noreen unwittingly beat them to it.

After their night with the swingers,which Noreen enjoyed without understanding,she and Gavin get locked out on his balcony whilst Madge shocks her family by announcing her forthcoming marriage to Mohammed as a tax dodge to regain money owed to Mel by his father. The British Olympic Synchronised Swimming team arrive at the Solana,led by frosty Hazel McCafferty. Joyce delegates Liam to show the girls around but they trick him into taking them onto an 18 to 30 booze cruise. Whilst Trudy and Michael fail in their efforts to join the cruise as being too old or too young,come evening the girls are too smashed to give their gala demonstration. Fortunately Lesley saves the situation with an impromptu pool party and Joyce gets her own back on the snide Hazel.

When elegant Barbara Simmonds arrives Joyce is sure she is the hotel inspector who will give the Solana its fourth star so it is not a good idea for Joyce and Kenneth,angry because his salon has been closed for non-payment of rent,to start brawling in front of her. To compensate Joyce offers Mrs Simmonds free beauty treatment but of course she has been misinformed though fortunately she is able to bribe the real inspector. The Stewarts seek the help of the consul to see off Donald's heavy ex-cell mates but Mick has to admit failure when he tells Madge that all her - uninsured - tanning shops burned down ,though Michael still has faith in him.

The Garveys arrive for the new season but run into trouble at customs when Madge's crushed tanning powder is mistaken for something illegal and Mick is held overnight. Meanwhile Kenneth, running his hair salon with Liam, accidentally starts a fire, which does not impress Clive and Tonya Dyke from Watford, who already see the Solana as a dump. They are also less than impressed by the overtures of Jacqueline and Donald, who stage a protest to insure the free holiday they were promised. Whilst the Dykes' boy Tiger leads Michael astray - including getting a tattoo - Tonya is suspicious of Clive's genuine efforts to be helpful to Janice and Kenneth has to appear in front of the hairdressers' Mafia don Herbert, who turns out to be harmless and a friend of Kenneth's mother.

Mick is released from prison and Janice grudgingly accepts a lift from Clive to go and meet him though, thanks to Donald's navigation, they end up getting lost. Michael covers his tattoo in a bandage and begs Janice not to tell his father but he and Tiger still run riot, stealing cigarettes and raiding the office whilst the Dykes' daughter Bianca arrives and is mistaken for a prostitute. Mateo is angry when Joyce employs hunky young Jason as a barman on a week's trial as he is a hit with the ladies and better at making cocktails. Les introduces Mateo to a friend who will school him to beat the younger man at a cocktails shaking contest but in the meantime Kenneth discovers that Jason is a wanted man and provides information that will remove him from the Solanas.

Martin Weedon arrives with his noisy friends for his wealthy mate Jonty's stag weekend, immediately annoying staff and the other guests. Clive and Mick make up whilst their sons steal some odd pills from the Garveys' room to help the celebrants get high as the Stewarts take the partyers out on a night to remember, especially as Jacqueline is standing in for the stripper. Madge meanwhile undoes the harmony between the Dykes and the Garveys whilst next morning Mateo discovers that Joyce is not as opposed to Jonty as she had previously claimed.

Joyce takes a three day break leaving Les in charge. He is not very good, accidentally attacking Clive and being coerced by Bianca into sacking Mateo for flirting with her, though a full-scale protest with television coverage leads to his reinstatement. The Stewarts prepare to scatter the ashes of a deceased friend but the wind blows away the box, opening it to reveal what appears to be a severed head - actually Les's new wig, as the boxes got mixed up, All this determines Joyce to return to work early, with old flame Cyril, who has escaped from a Thai prison. Madge, meanwhile, is untypically nice to everybody, believing she is terminally ill, but, as she breaks the news to the Garveys a fight breaks out, due to Les's incompetence.

Now appointed assistant manager Cyril organizes an eating contest, Hombre Versus Food though Kenneth does not take part and, encouraged by Liam, goes on a health kick, not that it does him much good. Mick discovers that Madge is not terminally ill, though, when confronted, she blames the doctor for a misdiagnosis whilst Tonya persuades Janice that she needs an expensive make-over at the spa where she is a beauty therapist. Meanwhile Michael and Tiger vie for the attention of the lovely Elena and Michael is delighted when she chooses him. The eating contest goes ahead, causing mass sickness as the meat was obtained from a butcher's dumpster. Joyce prepares to resign but she is saved when Cyril does a runner.

Dominant Crystal Hennessy-Vass, the founder and chief executive of the Solana group, sweeps in, demanding that Joyce downgrade the hotel from a four to a three star, to give the impression that the guests are getting better value for money. After she has left a party of Dutch businessmen arrive and Les and Mateo, in their efforts to make them feel at home, are accused of racial stereotyping. Kenneth leaves hospital to find that Herbert has bought his salon and the Stewarts are invited by their raucous friend Queenie to the Costa Blanca Swingers Association party, where they meet former porn star Pepe De La Cruz and his wife Agnes, who turns out to be an old flame of Donald. Tiger tries to prevent Michael from seeing Elena but, impressed when Michael tricks the warring Dykes and Garveys into making up, tells him that she is waiting for him on the beach.