Doctor Otternschlag (Lewis Stone), a disfigured veteran of World War I and a permanent resident of the Grand Hotel in Berlin, wryly observes, "People coming, going. Nothing ever happens", after which a great deal transpires. Baron Felix von Geigern (John Barrymore), who squandered his fortune and supports himself as a card player and occasional jewel thief, befriends Otto Kringelein (Lionel Barrymore), a meek accountant who, having discovered he is dying, has decided to spend his remaining days in the lap of luxury. Kringelein's former employer, industrialist General Director Preysing (Wallace Beery), is at the hotel to close an important deal, and he hires stenographer Flaemmchen (Joan Crawford) to assist him. She aspires to be an actress and shows Preysing some magazine photos for which she posed, implying she is willing to offer him more than typing if he is willing to help advance her career.
Another guest is Russian ballerina Grusinskaya (Greta Garbo), whose career is on the wane. She is high strung and seemingly on the verge of a breakdown. When the Baron is in her room to steal her jewelry and she returns from the theatre, he hides in her room and overhears her as she talks to herself in despair about wanting to end it all, holding a vial of medication in her hand. He comes out of hiding and engages her in conversation, and Grusinskaya finds herself attracted to him.
The following morning, a repentant Baron returns Grusinskaya's jewels, and she is able to forgive his crime. Instead, she invites him to accompany her to Vienna, an offer he accepts.
The Baron joins Kringelein and Flaemmchen at the hotel bar, and she cajoles the ailing man into dancing with her. Preysing interrupts them and imperiously demands she join him. Irritated by his former employer's coarse behavior, Kringelein – who is aware of Preysing's many swindles – tells him what he thinks of him. Surprised by his uncharacteristic audacity, Preysing attacks Kringelein and the two men must be separated. The Baron is desperate for money to pay his way out of the criminal group he had been working with. He and Kringelein decide to get a card game going, and Kringelein wins everything, and then becomes intoxicated. When he drops his wallet, the Baron locates and quietly stashes it in his jacket pocket, intending to keep the winnings for himself. However, after Kringelein begins to frantically search for his lost belongings, the Baron – who desperately needs the money but has become very fond of Kringelein – pretends to have suddenly discovered the wallet and returns it to him. As part of a current desperate merger plan, Preysing must travel to London, and he asks Flaemmchen to accompany him. Later, when the two are in her room, which opens on to his, Preysing sees the shadow of the Baron rifling through his belongings. He confronts the Baron; the two struggle, and Preysing bludgeons the Baron with the telephone, killing him. Flaemmchen comes in and sees what happened and tells Kringelein, who confronts Preysing. He insists he acted in self-defense, but Kringelein, whom always hated Preysing's guts, summons the police and Preysing is arrested.
Grusinskaya departs for the train station, fully expecting to find the Baron waiting for her there. Meanwhile, Kringelein offers to take care of Flaemmchen, who suggests they go to Paris and seek a cure for his illness. As they leave the hotel, Doctor Otternschlag once again observes, "Grand Hotel. Always the same. People come. People go. Nothing ever happens."

Question: Why is Geigern hiding inside Grusinskaya's bedroom closet?
Answer: He was stealing her jewelry when she returned to her room.
Alternative answer: He was trying to rob her.