Shortly after the events of Hostel, Paxton (Jay Hernandez) is suffering from nightmares as a result of PTSD and lives in seclusion with his girlfriend Stephanie (Jordan Ladd). The two get into an argument when Stephanie denounces Paxton’s paranoia as exaggerated and insufferable. She wakes up the next morning to find Paxton decapitated. An unmarked box (presumably containing Paxton’s severed head) is then delivered to Elite Hunting boss Sasha (Milan Kňažko), as he relaxes at an outdoor cafe.
In Italy, three art students, Beth (Lauren German), Whitney (Bijou Phillips), and Lorna (Heather Matarazzo) are convinced by Axelle (Vera Jordanova), a nude model they are sketching, to join her on a luxurious spa vacation, redirecting them from Prague. The four travel to a small Slovakian village and check into the local hostel, where the desk clerk uploads their passport photos to an auction website. American businessman Todd (Richard Burgi) submits the winning bids on Whitney and Beth for himself and his passive best friend Stuart (Roger Bart).
Later that night, at the village’s Harvest Festival, Lorna discovers that Beth has inherited a vast fortune from her mother. Stuart and Todd go to the festival, where Stuart approaches Beth and the two share a friendly, albeit awkward, conversation. Despite being warned about her safety from Beth, an intoxicated Lorna leaves to go on a boat ride with a local named Roman, who kidnaps Lorna with the help of two accomplices. Beth and Whitney leave the party, and Axelle volunteers to stay behind and wait for Lorna. Whitney wants to have sex with a local named Miroslav (Stanislav Ianevski), but Beth convinces her otherwise, stating that Miroslav is too “shady”.
The next morning Beth, Whitney, Axelle, and Miroslav head to the local spa to relax. Meanwhile, a nude Lorna is hung upside down with her wrists chained behind her back. A woman named Mrs Bathory (Monika Malacova) enters the room, and lies naked in a bathtub beneath Lorna. She then uses a long scythe to repeatedly slash Lorna’s back, and revels in bathing in her blood, before finally slashing her throat.
Beth, who dozed off, wakes up to find herself alone and her belongings stolen. While looking for her friends, she notices several men approaching her. Fearing for her life, she climbs over the spa walls. While escaping, she is ambushed by a gang of violent street children known as ‘the Bubblegum Gang’ but Sasha and Axelle arrive and save her.
At Sasha’s mansion, Beth realizes that Sasha and Axelle are responsible for Whitney and Lorna’s disappearances after seeing the men who tried to kidnap her at the spa coming up the stairs. She tries to hide and discovers a secret room filled with severed heads, including Paxton’s, before she is captured and taken to the factory.
Having been notified via pager, Todd and Stuart are chauffeured to the factory. Stuart enters his room where Beth is strapped to a chair with a sack covering her head. After looking around the room in horror he takes the sack off Beth’s head and explains what is going on. He unties her from the chair and almost decides to let her escape, but knocks her out and restrains her, having decided to take his anger for his domineering wife out on Beth.
Meanwhile, Todd gleefully terrorizes Whitney with a power saw but loses his nerve after accidentally cutting through part of her scalp. Horrified by what he has done, Todd tries to leave, but one of the guards reminds him that he is contractually obligated to kill her and cannot leave until he does so. Todd angrily refuses, prompting the other guards to turn savage dogs loose on him, who maul Todd to death. The Elite Hunting representatives try to find someone else to finish off Whitney, inquiring whether an Italian man (Cannibal Holocaust director Ruggero Deodato) who is eating Miroslav alive, and a man who has his victim chained to an electrified metal bed are interested.
Stuart is approached by The Elite Hunting representatives, and after discovering that Todd has been killed, a now deranged and sadistic Stuart accepts the offer and beheads her. When Stuart returns Beth seduces him into releasing her from the chair. Stuart attempts to rape her, but she fights him off and chains him to the chair instead. Beth demands that Stuart tell her the code to the cell door, and sticks a needle in his ear when he refuses. Stuart eventually tells Beth the code, but she still needs to be buzzed through, which inadvertently summons Sasha and the guards to the room. Beth offers to buy her freedom with part of her inheritance, but Sasha explains that in order to leave she must also kill someone. When Stuart insults Beth she cuts off his genitals and tosses them to one of the guard dogs, leaving him to bleed to death. Per the standard contract Beth is given an Elite Hunting tattoo, making her an official member.
In the closing sequence, Axelle is lured from the village festival into the woods by the Bubblegum Gang, where she is surprised by the revenge-seeking Beth, and beheaded with a two-headed axe. Beth then leaves as the Bubblegum Gang starts playing soccer with Axelle’s severed head.