Plot

Mr. Krabs turns the Krusty Krab into a hotel; SpongeBob's record of failed boating tests caused Mrs. Puff to lose her job.

Krusty Towers: In another attempt to make more money, Mr. Krabs decides to turn the Krusty Krabs into Krusty Towers, an upscale hotel where the customer is king. This includes even the most obnoxious and demanding customers; whatever they request, The Krusty Krabs/ Krusty Towers crew must obey. This of course pushes Squidward to the point of quitting. But Mr. Krabs hasn't seen the last of his disgruntled employee. Squidward returns as a guest, and makes a series of outrageous requests that now Mr. Krabs must obey. Mrs. Puff, You're Fired: Word of SpongeBob's record of failed boating tests has traveled to the top of the boating school industry. With such a huge blight on Mrs. Puff's teaching record, she is fired from her post. SpongeBob learns the reason for his teacher's dismissal. So he tries to convince the powers that be Mrs. Puff is not to blame-SpongeBob is just naturally a terrible driver.—NAS

Krusty Towers:

The episode begins with Squidward and SpongeBob walking to work, where SpongeBob tells a false story about overcooking the fries as usual, much to Squidward's annoyance. However, when they reach their workplace, SpongeBob and Squidward are both shocked to see that the Krusty Krab has dramatically changed. Mr. Krabs comes out and reveals that he has turned the restaurant into a hotel and renamed it the Krusty Towers, with the original building now on top of a large tower. When SpongeBob asks Mr. Krabs why he's built the hotel, he explains that while he was on vacation, he had fun, but was shocked by his outrageously high hotel bills, tallying up to $345.00, and realized how much money hotels can make off of anything, including food. He also says that the employees at his hotel lived by a code: "We shall never deny a guest even the most ridiculous request," which was on a gold plaque above a fireplace in the hotel he stayed at. He puts that code in for the Krusty Towers as well. Mr. Krabs then brings SpongeBob and Squidward into the hotel and quickly makes them his new hotel employees.

A customer enters and orders a Double Krabby Patty with no onions and extra pickles, but then leaves when Mr. Krabs tells him that he must book a hotel room and order room service to eat their food because the customer only has an hour for lunch. Patrick soon arrives and becomes the hotel's first actual guest, which Squidward can't help but question. Patrick tells Squidward that he sometimes just needs to "get away from it all". After Patrick signs the register, which he initially believed was a test he'd failed to study for, Squidward carries Patrick's bags up to his room. He tries to take the guest elevator, but Mr. Krabs stops him and explains that he must take the "employee elevator," which is actually in fact, a staircase. Patrick then requests Squidward to come several more times for ridiculous reasons. Whenever Squidward gets to the bottom of the hotel, Mr. Krabs tells him to go back up to do something that Patrick wants, which annoys Squidward more and more. Squidward complains to Mr. Krabs about his unreasonable behavior, but Mr. Krabs refuses to do anything about it, citing the plaque. After being ordered to give Patrick a "bubble bath," Squidward refuses, states that he has had enough, and rides the guest elevator down to the lobby where he stubbornly quits his job despite Mr. Krabs' protests.

He walks out the door and immediately comes back to the hotel as a guest instead of an employee. He decides to punish Mr. Krabs by taking advantage of his code. Squidward demands a room on the top floor and that Mr. Krabs carry him to get there, which he gets both by paying him and using the plaque. He orders a Krabby Patty with cheese, nose hair, and toenail clippings, and forces Mr. Krabs to eat it for his own humor. Also, Patrick has the cheese all over his room, which is supposed to be on that Krabby Patty, because he said earlier, he wanted the room with cheese. Squidward then wants his cookies like the ones his mother makes, which Mr. Krabs resentfully has to get from Mrs. Tentacles. SpongeBob comes with him to have Squidward's mother help him make the cookies. Then after the cookies are completed to Squidward's satisfaction, he asks Mr. Krabs and SpongeBob to repaint his room and change his furniture, only to get it back to its original state after they go through several different design ideas. Squidward then asks for the pool, which Mr. Krabs tells him is out in the back of the building, to be brought inside and made into an indoor pool. After getting the indoor pool, Patrick jumps in to join Squidward and SpongeBob, but the force causes the hotel to collapse, leaving only the original Krusty Krab standing.

Patrick, SpongeBob, Squidward, and Mr. Krabs luckily survive the destruction, but end up in the hospital with massive injuries, requiring casts and bandages to be wrapped around them. When the episode ends with Mr. Krabs outraged to see the hospital fee ($15,000), he scraps the idea of a hotel and tells Squidward, SpongeBob, and Patrick that they are going to medical school, much to Squidward's dismay and SpongeBob and Patrick's delight.

Mrs. Puff, You're Fired:

At Mrs. Puff's Boating School, Mr. Fitz, the superintendent, is talking to Mrs. Puff about renewing her teaching certificate, but then informs her of the high record of failing students. However, SpongeBob is the only student who has ever failed her boating class, but has done so 1,258,056 times. Mrs. Puff is told to show Mr. Fitz everything she has taught SpongeBob, and within seconds, he fails yet another driving test by bashing in a boatmobile. Mr. Fitz fires Mrs. Puff, much to her delight of not having to deal with SpongeBob anymore. A new boating instructor named Sergeant Roderick comes in and takes over the school.

Sergeant Roderick is a viciously hard-drill instructor, who immediately throws out one student for talking and another one for eating. All of the other students run away, except for SpongeBob, who is now his only student. The new boating instructor has set up a difficult course, which he trains SpongeBob to crawl, walk, run, and eventually drive through while blindfolded. Despite SpongeBob's unprofessional driving skills, he surprisingly masters this.

During the time of his final exam, which Mr. Fitz personally comes to watch, SpongeBob attempts to wear his blindfold for it, but Roderick tells him that's illegal and orders him to drive. SpongeBob does what he's told and starts driving with the same disastrous results, destroying part of Bikini Bottom in the process. While driving thru a field, the boat picks up Mrs. Puff while she is painting. Roderick tells SpongeBob to use the breaks, but he misunderstands what he means and removes them. Roderick then jumps out of the boat and tries to stop it by jumping in front of it, but is easily run over by it. After SpongeBob loses his sight due to getting Patrick's pants over his eyes, he begins to drive easily again and parked the boat. However, due to the damage he did to the city, he fails his test once again. Mr. Fitz realizes that SpongeBob is "unteachable" even with their best teacher and rehires Mrs. Puff.

The next day, SpongeBob goes to Mrs. Puff's class and gives her a "welcome back" gift, then proceeding to apologize for his destruction. Though Mrs. Puff tearfully tells him that she got her teaching degree back, and SpongeBob's file was destroyed in the fire, so it was as if he never failed her boating school. SpongeBob leaves, promising it will not take him a "million times" to pass school, leaving a devastated Mrs. Puff to cry and finishing the episode from there.