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.
Jacob 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 finds herself in serious trouble when she meets up with an old boyfriend. Later she is forced into a dangerous situation when she ends alone in one of the hotel rooms with two male guests. In an act of self-defence, she ends up killing one of them. Meanwhile Ruth prepares for her wedding day but Marcus is not so certain he is doing the right thing.
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.
Marcus helps Stephen in his new business venture: a night club. Ruth's staunch grandmother arrives and creates friction at the Hotel. Meanwhile things heat up between Sarah and Marcus.
When Stephen's army comrade is shot, the Hotel's reputation is at risk when Stephen and Collins try to help out. Lynne makes her stage debut.
Ruth suffers a miscarriage but decides to keep it a secret through fear of losing Marcus. Meanwhile, Sarah continues to live a life of turmoil as her relationship with her husband becomes more distant and her desire for Marcus grows stronger.
John feels betrayed when he discovers the truth behind Sarah and Marcus' relationship. Jeffries comes back and Kate believes the Hotel is haunted.
Following the departure of Sarah and John, there are some radical changes at the Grand Hotel. With Marcus at the helm, staff cuts ensue and Kate finds herself being the personal maid to Madame De Bourg D'Oisans, a Russian madam. Meanwhile Marcus is inquisitive about his new guest.
Clive receives a promotion but there is a difficult time ahead for him when a homosexual theatre impresario stays at the hotel and he is forced to confront some uncomfortable home truths. Meanwhile Stephen gets engaged to Christina.
When Marcus is concerned that Ruth's baby is overdue and forces her into taking a medical examination, she takes drastic action to conceal the truth. Meanwhile Esme receives a proposal of marriage from an old admirer. Clive wants the hotel staff to become part of the union.
When Esme goes into partnership with Marcus, not everyone is pleased by the venture and she receives dangerous threats. Christina cancels her engagement to Stephen, and on the staff day out he finds that he still has feelings for Kate.
Ruth is put in an awkward position because of the secret she hides. Meanwhile Kate and Stephen's relationship flourishes despite the class difference. Marcus uses the hotel for some dubious business dealings and Mrs Harvey resigns.
Ruth cannot prevent Marcus from discovering Charlie's real parentage. Meanwhile a scandal has the potential to destroy the Hotel's reputation. Kate and Stephen's relationship goes from strength to strength but his desire to enlist in the army threatens to destroy their happiness.
