The police revealed that everything is lost and tell Peach to pay 2 billion coins to fix it. Peach can't afford this massive debt, so Mario invites everyone to live in his house.
However, Mario proves an irritating host. His guests unanimously vote to kick him out of the house, but he breaks in again through the roof. However, he overhears the others feeling bad about kicking Mario out, and Peach deciding to bake Mario a cake. Mario gleefully leaps from his perch on the ceiling, and accidentally falls and flattens Peach. Afterward, the gang apologizes to Mario. To celebrate his return, Mario decides to once again, try and make some real spaghetti but ends up burning down his house. In the end, Mario decides to live like hobos, upon which everyone is seen in a supersized landfill.
In the blooper, "Plumber Academy for Idiots" when Mario is taking a test, there is a short clip of him burning Luigi alive with a flamethrower. Considering how the blooper opened with Luigi on fire, and that later in the blooper, Mario is seen using the same flamethrower to light SMG4 on fire, it can be assumed that Hotel Mario took place before Plumber Academy.
The name of the blooper is a reference to the CD-i Mario video game, Hotel Mario, one of the few Mario games to not have been edited by Nintendo.
When everyone is voting to kick Mario out, Toad is mistaken for Lakitu in the subtitle.
The part when SMG4 mentions that he and Mario were in jail for 3 weeks is a reference to 0% of Spaghetti.
All of the characters in the thumbnail for the video are all sprites from the game Mario and Luigi Superstar Saga.