To escape the stress of the holidays, the Heffleys decide to get out of town and go to a resort instead of celebrating Christmas at home. But what's billed as a stress-free vacation becomes a holiday nightmare.
When Greg Heffley's family try to prepare for Christmas, Greg's parents decide to skip Christmas and travel by plane to Isla De Corales after seeing an ad for it, the resort they stayed at while on their honeymoon, much to Greg's dismay, as he does not like the idea of skipping Christmas.
On Christmas Eve they drive to the airport but are delayed by a series of mishaps. They encounter holiday traffic but arrive at the airport. As they fail to unload in time at the drop off zone, Frank and Greg have to return later with the luggage. Greg steps in a slush puddle and they end up missing the shuttle. They are forced to walk to their terminal.
Greg is first impressed by the plane's first class seats before he discovers that they have to sit in economy. However, Frank Heffley (Greg's dad) collected enough air miles because of all his business trips to sit in first class. In the economy, Mom, Rodrick, and Manny are seated in the right row. Greg finds out he has two extra seats to himself until a couple with a baby arrives late on board. The couple sits on either side of him with their baby. Greg becomes paranoid when he watches the plane's safety video and begins to ask questions about unfortunate events. Greg is very aggravated of the other passengers because most aren't watching the safety video. Mid-flight, he feels boxed in when the people in front recline and the person behind slides his feet on Greg's armrest. Greg tries to recline his chair too but when he asks the flight attendant how he learns that he can't because the row behind him is an emergency exit. He tries to swap seats with Frank but Rodrick beats him to it. He stays in the bathroom because the couple's baby starts to annoy him, but then he returns to his seat after experiencing turbulence. He somehow was able to sleep for the rest of the flight.
As they land on Christmas Day, Greg begins to understand why the family came there. They touch down and began to head to the resort, Isla de Corales (Coral Island in English). He is even excited by the activities the resort offer which he sees on the bus. However, Frank and Susan are disappointed that the resort has since changed, and it is now split with a family side (the Mild Side) and a couple side (the Wild Side) and the hotel Frank and Susan (Greg's mom) stayed during their honeymoon is now in the Wild Side. The family has to stay to a different hotel. The family also discovers that they got one bag accidentally that belongs to another family. They call the airline and discover that their bag was sent back home. They only have the clothes they put in their carry-on luggage. They attempt to buy some new clothes, but Frank won't buy them as they are too expensive.
The family goes to explore the resort and end up at the pool. Greg is about to doze off when The Director of Fun shows up, and gets everybody moving. Greg is forced to take part in two games (a conga line and a "Treasure Dive"). After this, Greg sees an iguana by the pool and is worried, so the family goes to get some lunch. Greg and his family try to eat outside; however, too many birds and bugs keep ruining their meals. Frank gets diarrhea, so they head back to the suite.
The next day, Greg uses the shower which is outside. As he puts on his slipper, a giant spider falls out. Greg has an intense fear of spiders. As a result, he calls room service, but the waiter who answers says that there is a do not disturb sign on the doorknob. The waiter says he has to order food for someone to come. The waiter who arrives is also scared of spiders. Eventually, they manage to trap the spider and flush it down the toilet. The family heads to the beach without Frank as he is still at the suite. He returns, however, and reveals that he found the same spider that Greg attempted to flush away on the toilet seat. Manny develops an obsession with collecting sea creatures in his bucket so he can have them as pets. Unfortunately, he is upset by Susan when she returns them, so they go to the activities.
The next day, Susan goes to the spa and Frank goes to the gym. Rodrick then goes back to the teen zone. Greg takes Manny to the Toddler's Cabana, but Manny gets out of going there because he is not potty trained. He puts Manny in the pool but has to get him out again later. Susan booked a charter cruise for the whole family due in thirty minutes. On the cruise (which turns out to be a regular glass-bottomed boat), the captain offers them to go scuba diving. Greg is freaked out by all of the deadly animals, including the venomous box jellyfish, and only stays in for one photo. As he surfaces, he swallows a big gulp of water. He thinks a seahorse was in there too: so they return to the resort to see a doctor. Frank and Susan were both seasick, so they just return to the poolside.
The next day, Greg goes to the tennis court in hopes of learning how to play tennis. Unfortunately, the counselor, Rodrigo, locks them in, and Greg realizes that it was a way to get kids out of their parents hair and just a cage full of children with a ball machine and tennis balls. It turns into a free-for-all, which stops suddenly when one of the kids recognizes Greg as the kid who brought the box jellyfish during the episode. He tries to tell them that it was Manny's fault, but they don't understand and attack him. He quickly escapes the cage and goes back to the suite with his family. They were out of things to do and want to leave the resort early; however, Frank refuses to leave until he gets a decent meal. Manny makes the suitcase fall and break, which has the clothes they need to get in the clubhouse. They each wear some of the clothes in there; the first head to the clubhouse, and then the putting green for golf. However, they are spotted by a security guard. They try to escape on a golf cart, but are caught. The guard escorts them out of the green because a family had reported them for wearing and stealing their missing clothes.
The Heffleys try to escape the resort. Greg heads to the beach and windsurfs away. He gets stuck in the dolphin swimming area but manages to swim to shore. He ends up on the Wild Side (couple) of the beach and lands on a private beach. Greg runs for the wall dividing the two sides; just where his family was passing. Greg tries to climb over the wall separating the two sides, but it is destroyed by a stampede of Mild Side tourists. The family escapes unnoticed and heads to the airport.
When they get back, Greg wants to show Rowley where he went to for his Christmas holidays. He discovers that he and his family has been banned from the resort for the rest of their lives and are wanted for the chaos they caused. On Isla de Corrales' website, there is a picture of Greg's family on the banana boat with words in Spanish and crosses on each member of their family: "¡Atención! Póngase en Contacto con Isla de Corrales si conoce la identidad de las personas en la foto de Arriba." translating in English to "Attention! Contact Coral Island if you know the identities of the people in the picture above."