Discussing their New Year's plans, Ryan and Marissa decide to stay in and keep it quiet, especially after such an eventful Christmas. They kiss and Marissa whispers that she loves him. Ryan freezes and says "thank you". She stumbles off awkwardly and Ryan feels stupid. Just as Ryan is wishing he could turn back time, Hailey walks in, in her underclothes. Ryan doesn't know who she is at first but then figures out it is Kirsten's younger sister. Hailey has had a history of coming and going when she needs money, or between exotic destinations.
The next morning, everyone discovers Hailey's arrival, with much indifference. Seth also learns of Ryan's foible the night before. At the therapist's, Marissa encounters Oliver once again. He gets a bit nosy and invites her to a party he is throwing at his home, the Four Season's Hotel. When he mentions he has a girlfriend she accepts, thinking that Ryan won't mind. Back at the house, Kirsten and Hailey feud over Hailey's lack of plans, and Kirsten's boring married life. They aren't the closest of sisters. Out in the poolhouse, Ryan tells Marissa that he doesn't want to go to Oliver's party. She says fine nonchalantly and decides to go anyway. Seth later tells Ryan he's blown it and Hailey tells Ryan that Marissa is bound to kiss Oliver at midnight now.
Summer goes to Oliver's party with Marissa, and vocalizes how much she ISN'T thinking about Seth. Anna happens to be there as well. Both Summer and Anna discuss how much they don't care that Seth isn't at the party. They both talk about how much Seth doesn't mean to them. Back at the Cohen house, Ryan and Seth are trying to prevent the house from crashing down as a result of the massive, loud, and active party that Hailey has thrown while Kirsten and Sandy are out.
Kirsten and Sandy are driving to their party and Kirsten asks if they are in a "rut". Sandy laughs it off, but then they decide they might be a bit boring. So they find their way to a swingers party. Neither of them really want to be there, but they pretend they are having fun.
Back at Oliver's, he tells Marissa that his girlfriend couldn't make it. At the Cohen's, Ryan overhears a heated conversation Hailey is having with a former friend. Turns out Hailey owes her friend three thousand dollars, and she's only popular because she can throw wild, drug-ridden parties. When Ryan confronts Hailey about the issue, she locks him, and Seth into the poolhouse.
Oliver works his magic and talks about love, and how guys should treat their girlfriends, and Marissa begins to feel that perhaps Ryan doesn't love her, and that is why he couldn't say the words the other night. The opposite is happening back in the Cohen poolhouse, where Ryan reveals to Seth that he does love Marissa. Ryan tells Seth to choose between Summer and Anna. He says he might just want to try the friend thing.
Hailey finally returns to the poolhouse with the news that there are some girls out in the house that might want to hurt her. Ryan pretends he doesn't care, and that he just wants to get to Marissa, but then Hailey says the house will get torn apart if he doesn't do something. So he helps her get everyone out. Then, with 30 minutes to go, he races toward the Four Season's.
Sandy and Kirsten return home, after choosing each other at the swingers party, to find their house trashed. Kirsten is furious and rages at Hailey. She says there are rules to follow, and that she is going to have to stop living her life like a child. Kirsten just wants Hailey to grow up. Kirsten questions whether Hailey is even having any fun. Upstairs, Sandy walks in on a threesome. Outside, Seth finds that Anna has come to see him. He accepts her self-invite happily.
Ryan finally arrives at the hotel, and gets into the penthouse just as the ball drops and New Year's rings in. He runs to Marissa's arms, and she breaks away from Oliver's potentially harmful presence. Ryan and Marissa kiss at midnight and Ryan tells Marissa that he loves her. Welcome to 2004.