He comes to the hotel for rest, as he's tired from giving too many pony rides. However, as guests continue to ask, he cannot turn them down. The Furchesters try to think of ways to help Carrot get his rest, first by disguising him as an Elephant and then a lettuce, but unfortunately, guests want to ride both things, even before finding out he's a pony. Harvey P. Dull comes up with a solution though--just say "No", which he does to the next person who asks for a ride while explaining he needs rest and they completely understand.
The horse was previously used as Luka. It also has appeared on the Elmo the Musical segment, "Karate Master the Musical" (performed by Martin P. Robinson), the Eine Möhre für Zwei episode "In die Lüfte!" as Tante Hüfli, and was rebuilt from a horse in Elmo's World: Wild Wild West!.