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Betsy Brown bids farewell to her friends at the orphanage when she is adopted by kindly William J. "Pop" Shea.  Pop and his daughter Barbara take Betsy to New York, where they run the Hotel Variety, a show business hotel full of performers who are perpetually late with their rent.  Betsy thrives in the music-filled atmosphere, unlike the Variety's next-door neighbor, cranky Sarah Wendling, who is the Sheas's landlady.  Tired of the noise, Sarah gives Pop five days either to pay $2,500 in back rent or move out and ignores the protests of her mousy brother, Willoughby Wendling.  Pop tells the tenants they have to move, but they band together out of loyalty to Pop and pawn their belongings.

Meanwhile, Betsy goes to the Wendling house to give Sarah her piggy bank as a down payment on Pop's rent.  Penny is sitting on the doorstep when Roger Wendling, Sarah and Willoughby's nephew, arrives and takes her in with him.  Sarah dismisses Betsy's piggy bank, as well as Roger's plea that, as a third owner in the hotel, he has some say in her plans.  The disappointed pair return to the hotel, where Pop scolds Betsy, and Barbara gives Roger the cold shoulder because he is related to Sarah.

Betsy and Roger then go the stuffy City Club where Willoughby and his friends practice their barbershop quartet act.  After the other club members shush them, they return to the Variety, and Willoughby books the most expensive suite for a year as a rehearsal room, thereby allowing Pop to pay the rent.

Later, Barbara apologizes to Roger and they being seeing each other, a development that Sarah reads about in a gossip column.  Upset, Sarah rushes to the hotel and orders the young lovers to end their relationship.  Sarah later sends detectives to return Betsy to the orphanage, but the girl escapes to the Wendling house with Roger, who intends to keep her there while Sarah is on vacation.

A week later, Betsy is given a surprise birthday party at the Wendling house, which is interrupted by Sarah's unexpected return.  Sarah's detectives take the sobbing Betsy back to the orphanage.  Shortly after, Roger files suit against Sarah, trying to gain control of the hotel and his inheritance, with which he will back a show starring the hotel's residents.  At the orphanage, Betsy reads about the suit, escapes and goes to the courtroom.  As the main issue of the lawsuit involves the soundness of Roger's investment in the show, Judge Hart agrees to Betsy's suggestion that he view the production.

The next day, Betsy, Roger and the others perform in the courtroom, and an impressed viewer offers the troupe $2,500 per week for an engagement at his International Follies.  Sarah then wins everyone over when she declares that the show is worth $5,000 a week and she will not accept any less.  Shortly after, Betsy requests a marriage license for her "mother and father," Barbara and Roger, who have agreed to marry.