Laverne has been imprisoned in the kennel, so you can't free to go. To release it, you need to complete something.
Making the future flag[edit]
As you're in the kennel, TALK TO tentacle guard in the right side of the door. Then choose third option. He'll visit you to the doctor room. He'll meet you with the doctor; talk to him. After he leaves, PICK UP the tentacle chart, go to the lobby and go to the kennel through the main hall. Once again, TALK TO tentacle guard again for a moment. Choose second option. He'll take you outside. Once you're clear, go to the front yard. There's the Chron-O-John here, so GIVE the tentacle chart to Hoagie. Switch to Hoagie.
As Hoagie, go to Betsy Ross' room through the lobby and first floor. If you want to talk to Betsy Ross, just choose a few option. If you stop talking, USE the tentacle chart on a pattern. This will change a future flag, so switch to Bernard.
The Human Contest[edit]
As Bernard, go up to the roof through the lobby, first floor, second floor, attic and bedroom. Pick up a crank and give it to Laverne. Switch to Laverne.
As Laverne, go back to the outside hotel and Talk to guard again. He'll take you back to the kennel. Keep talking until you're in the doctor's room again. Go up to the roof through the main hall and USE a crank in crank box. Then, PULL crank and USE a flag. You would be a patriotic tentacle, so go down to the main hall. TALK TO blue tentacle and he'll give you a name tag. When you finish talking, go to the mummy's room through the lobby and first floor. Here, USE the name tag on mummy and push it. This will be easy.
After you pushed it, go up to the second room, which is the human competition. GIVE scalpel to Bernard. Switch to Bernard.
As Bernard, go down to the party room, and to the kitchen. PICK UP fork and leave the room. Go back to the first floor through the lobby and to Green's room. If you finish talking, PUSH speaker and USE on/off button. Once to turn on, and once to turn off. The fake barf was stuck because the ceiling is so strong. Once you pushed, turn off a stereo again. Go down the lobby and PICK UP a fake barf. One more thing to do, go back to the party room and USE a scalpel on Oozo the clown. After Oozo is deflated, PICK UP a box o'laughs. GIVE fork, fake barf, and box o'laughs to Laverne. Also give a textbook to Hoagie. Switch to Hoagie.
As Hoagie, go to the second floor. USE a textbook to read the horse. When the horse sleeps, the dentures will plunge a glass. PICK UP the dentures when you ready to go. GIVE the dentures to Laverne. Go to the kitchen through the first floor, lobby and main hall. PICK UP a spaghetti in the pantry. GIVE a spaghetti to Laverne and switch her.
As Laverne, USE the soggy noodles on the mummy's head, a box o'laughs on the mummy. USE a fork in the mummy's head to tie it. Once you've done it, USE a fake barf on Harold. Doctor tentacle will come to disqualify him. After he's disqualified, go right to the judge area. TALK TO the judges three times. Once the judges congratulated him, the mummy wins.