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.
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.
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.
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.
live 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.
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.
John feels betrayed when he discovers the truth behind Sarah and Marcus' relationship. Jeffries comes back and Kate believes the Hotel is haunted.
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.
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.
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.
