"The Blue Hotel" is considered one of Crane's finest three short stories, along with the "Open Boat" and "The Bride comes to Yellow Sky". The story starts with the hotel owner trolling for guests at the train station and finding three: the Swede, the Cowboy, and the Easterner. As with many stories, the personalities are known by their titles not their names; the two known by their names are the hotel keeper, Scully, and his son Johnny. The first major event is in a play for fun (no money) card game in which the Swede accuses Johnny of cheating. Johnny skillfully defends himself by saying he won't put up with the accusation, while side stepping the truth of the matter. The Swede is all worked up; no one comes to his rescue; he has a fight with the boy; wins; and leaves. He goes to the local saloon and gets into event number 2 in challenging the gambler after he won't take a drink. As with most Crane stories, the irony is building as the story goes on.

In the spirit of the literary times, as reflected in Spoon River by Edgar Lee Masters and Winesburg, Ohio by Sherwood Anderson, this is the key moment in the story that could change everything. The gambler does not take the free drink; he winds up killing the Swede; he goes to jail and the Swede is dead. He could have just taken the drink and didn't. Later, the Easterner tells the Cowboy that no, Johnny wasn't innocent, he was cheating and the Easterner didn't have the guts to stop it by speaking out. Then the Swede would have stayed in the hotel and wouldn't have died. Another landmark story with the last turn of events topping it off.