KRUSTY TOWERS: On their way to work one morning, SpongeBob and Squidward discover that Mr. Krabs has converted the Krusty Krab into a hotel, inspired by a hotel stay where he was charged outrageous amounts of money- he thinks he can make profits off the residents of Bikini Bottom. To this degree, he adopts the hotel's motto as the motto for the Krusty Towers- "we shall never deny a guest even the most ridiculous request." Squidward and SpongeBob become the hotel's new employees.
The hotel's first guest is Patrick, who claims to want to get away from it all but forgets that the Krusty Krab is now a hotel. Squidward checks Patrick in and then orders SpongeBob to carry Patrick's bags and make him a Krabby Patty per his request. However, Mr. Krabs intervenes and makes Squidward carry the bags. Squidward then finds out he can't use the hotel's elevator, as it's for guests, and is forced to use the "employee elevator"- the stairs. His frustrations grow when he discovers that Patrick's bags are full of heavy rocks, Patrick doesn't tip him, and Patrick wants Squidward to give him a bubble bath- which Mr. Krabs says is his right due to the policy.
Squidward decides to turn everything around on Mr. Krabs and quits, then checks into the Krusty Towers himself. He then makes Mr. Krabs regret his policy by first forcing him to carry Squidward to his room, which since Mr. Krabs is technically an employee of the hotel forces him to climb all the way to the top floor using the stairs. Squidward then orders Mr. Krabs to eat a Krabby Patty with toenail clippings and nose hairs, which he must do due to policy (and which also doesn't have cheese as Squidward ordered; all of the cheese was put into Patrick's room per his request).
Squidward's next request is for a batch of cookies "just like mother used to make". Of course, since he's taking advantage of Mr. Krabs' policies, he means this literally and SpongeBob and Mr. Krabs have to enlist the help of Mother Tentacles to make the cookies. Once this is done, Squidward demands his room be redesigned. After several redesigns they end up with the room exactly as it was designed when they began.
Squidward's final request is to get a pool put in his room so he can swim as he refuses to use the hotel pool outside. When Patrick discovers this he wants to join in, but after executing a cannonball dive the weight of the pool and the people in it causes the floor to buckle and soon the Krusty Towers begins to collapse, with each floor pancaking onto the one below.
Squidward, SpongeBob, Patrick, and Mr. Krabs end up in the hospital with severe injuries and Mr. Krabs is forced to pay the bill. When he sees it's $15,000, he hatches another great idea...he's going to open a hospital, and the boys are going to medical school!