I've always been a proponent for staying in Louisville. Yeah, it's an hour and fifteen minute drive, but you're crossing a timezone so you can leave Louisville at 9:30 and be at Holiday World in time for its 10am opening.
(also, Louisville is a cool city)
That said, pretty much the only thing in Santa Claus is Holiday World. There isn't much of a town developed around it right now. Nearby towns like Jasper are the closest places to stay right now. Personally, Louisville may be a little far for me to stay, but there's plenty to do there when you're done with the park.
They could have looked at this already, but If I were Holiday World, I would be closely examining the possibility of opening a hotel/resort/indoor water park on the property in the very near future. Santa's Lodge is nearby and has some of the abilities of such a resort, but it's just the beginning of what I'm talking about. Some of the advertised amenities are seasonal, the pools appear plain at best, and it's themed to Christmas only. It looks like a nice place and all, but other than a wedding or a banquet of some kind, to me there's no real big draw to Santa's Lodge other than a place to crash for the night during the summer.
If attendance and park success continues to grow and people from further away come to see what the fuss is about, it won't be long before rooms will be a red hot commodity...if they aren't already. Many people will choose a park hotel over one 15 miles away, and it would encourage a second day's visit. It would seem that the park is going to keep quickly growing if it's direction continues, and they will miss out on a lot more business and revenue with no nearby hotels. A standard chain hotel would only keep busy for four months, hence the reason those chains are hesitant to build. A destination resort with indoor water park and other capabilities would keep busy for much more with the right marketing...holidays, winter breaks, family weekend getaways, etc. With Holiday World's management and their gold standard bearing customer service running the place, it would be a hit so long as the price point was reasonable and the amenities and customer experience were good.
I have no idea what town government hoops (if any) they would have to jump through to do such a thing, but if they can keep it full during the season, and get some off season business with an indoor water park, it's worth a long hard look. A lot of Cedar Point's success stems from it's hotels, and all you have to do is look at the number of indoor water parks that have popped up everywhere to see that the model works. Holiday World may have to work a little harder to promote and market in the off season because they aren't in a major city, but they are close enough to a couple cities to get the business. Their reputation is what is drawing new customers to their park, and it would translate over nicely to a resort.
Walt Disney World's Magic Kingdom
Disney's Animal Kingdom
Disney's Hollywood Studios
Disney California Adventure
Universal's Islands of Adventure
Universal Studios Florida
Universal Studios Hollywood