Claire dies at the end of the movie after being trapped in the cellar where Madeline was buried and "seeing" Madeline approach her. The reasons for Claire's death are ultimately unclear. Before leaving. Leanne tells Luke that nothing could have been done to save Claire. After they leave, the door to Claire's room then slams shut on its own.
Claire (Sara Paxton) is a socially awkward young woman who works at the Yankee Pedlar Inn with the pessimistic Luke (Pat Healy). Local legend states that a woman named Madeline O'Malley (Brenda Cooney) haunts the hotel. The story is that Madeline was jilted on her wedding night and committed suicide in the honeymoon suite. The innkeepers, attempting to avoid a scandal, buried her in a basement room. Madeline now haunts the hotel, waiting for her true love. The Inn is closing for good after the weekend, and there are only a few guests left. Prominently, the guests include Leanne Rease-Jones (Kelly McGillis), a former TV star, and an Old Man who insists on staying in the honeymoon suite (there is also a small cameo by Lena Dunham).
Luke claims to have seen Madeline during his time at the hotel and hopes to lead ghost tours through the hotel once it closes. Claire supports his endeavor and the two intend to search the hotel for proof of Madeline, using a paranormal recording device to search for her. Though Claire is helping Luke, she is also easily frightened and asthmatic. One night, while listening for ghosts, Claire believes she can hear a woman moaning and the sounds of a piano playing. Claire watches as the lobby piano seemingly plays by itself.
Claire confides her research to Leanne. Then, Leanne admits that she is part of a psychic group and can contact spirits/see the future. Leanne contacts the spirits and then warns Claire to stay away from the basement and that there is nothing she can do to help Madeline.
The next night, Claire and Luke stay up late and get drunk together. Luke begins admitting his feelings to Claire, who gets uncomfortable and convinces Luke to seek our Madeline's resting place. The two journey down into the basement together and find Madeline's resting place in a basement storage room. Luke says he can hear sounds over the paranormal recording device, but believes that it is caused by a busted wire. Claire tries to contact Madeline and then states that Madeline is standing behind Luke. Rather than turn and look at Madeline (the viewer doesn't see Madeline either), Luke flees the hotel after admitting he has never seen the ghost.
Leanne is awakened by the commotion and after doing a psychic reading, tells Claire that she is in grave danger and that they must leave the hotel. Leanne goes to get her things while Claire goes to check on the Old Man. When Claire enters the room, she finds the Old Man had committed suicide (leaving a note apologizing to a lost love - possibly Madeline). Claire then sees Madeline's ghost hanging from the rafters of the room. She runs down to the lobby where she finds Luke, who has come back for her. They can't find Leanne and split up to cover more ground.
Claire hears sounds from the basement and peers down the stairs, seeing nothing. When she turns around, however, the ghost of the Old Man is behind her. This startles Claire who tumbles violently down the steps, suffering a bloody head wound. Dazed, Claire runs through the basement, pursued by the Old Man. She eventually locks herself into a room as the Old Man's ghost pounds on the door, not realizing it is the storage room where Madeline had been buried. The ghost of Madeline appears, hissing evilly and we watch as Claire screams.
We then cut ahead to see the bodies of Claire and the Old Man being removed in body bags. Luke talks to the police, saying that he had seen Claire in the basement and went to get her, but that she fled and locked him out of the storage room. He pounded on the door, but didn't break into the room until after Claire was dead. He also found her inhaler at the bottom of the basement stairs where it must have fallen out after she fell. The police theorize that she died of a panic attack due to her asthma.
Luke then goes to get Leanne, who is standing at the open window of Claire's hotel room. As they walk out, she tells Luke that nothing could have saved Claire. We then watch as the door to Claire's room shuts on its own (a gust of wind, or Claire's spirit - we will never know).
The ending is purposefully ambiguous. There are two predominant theories:
1) The Inn wasn't haunted, and Claire was simply imagining everything, especially after the trauma of seeing the suicidal Old Man. No other person in the film ever actually saw Madeline's ghost. She hallucinated Luke as the Old Man due to her head wound and when she realized she was trapped in Madeline's burial place, imagined Madeline's ghost attacking her. Claire suffered a panic attack and ultimately died without her inhaler. We never see Madeline attack (or touch) Claire and her face was bloodied by her fall down the stairs. Leanne, who can see the future, realized that Claire would ultimately do herself in and that is why she tried to get Claire to leave the hotel and stay out of the basement - but fate can't be changed. The wind blowing through the open window in Claire's room closes Claire's door at the end.
2) The Inn was haunted and the Old Man was the fiancee that jilted Madeline all those years ago. Leanne had warned Claire not to deal with the spirits as contacting spirits attracts their notice. When Claire saw the Old Man's ghost heading to the basement, he was simply trying to return to Madeline, who had been waiting for him all these years. When she barricades herself in Madeline's resting place, she inhibits the ghostly reunion and is killed by Madeline. Leanne realized that Claire would die if she interfered with these spirits and tried to get her to leave, but seeing her warnings were futile, realized that Claire's fate had always been intertwined with the ghosts. Claire's spirit, now also residing in the Inn, closes her door at the end.
NOTE: Fi writes in to say, "If you watch the end of the film VERY closely, you can see Clare's ghostly image in the curtains. As she turns her head, the door slams shut. It's hard to spot, I only noticed it because I knew there had to be something more to the final scene, as the camera held it for so long."