Ash, Misty, and Brock are riding a boat to Cinnabar Island. Brock tells Ash about the lab that's on the island, and how it's world famous. All Ash cares about at the moment, however, is getting his next badge. Ash notices all the people on board, and wonders if they're all Pokémon trainers. Gary, who also happens to be on board, informs him that trainers haven't gone to the island for a long time, and it is now a tourist resort. Gary tells Ash that he's taking a vacation to the island. When Ash tells Gary that he's going to get a Volcano Badge, Gary says that there isn't even a gym on the island. Ash doesn't believe him, and rushes off, as the boat has pulled into port.
After getting off, Ash and his friends look around. All they see are shops, souvenir stands, and tourists. As they walk, they don't see any sign of a gym. Brock wonders aloud why people like Cinnabar Island so much, and a hippie nearby offers them an answer in the form of a riddle: What do tourists think is hot and cool. Misty comes up with the solution: Hot springs. The hippie explains that, because of the volcano on the island, there are many hot springs. This has brought more and more tourists every year. Soon, the entire island was "overrun" with these visitors, and Pokémon trainers never came any more. Misty asks the hippie about the gym that's supposed to be on the island, and he responds with another riddle: It's where you put your glasses. Brock and Ash are stumped, but Misty again comes up with the correct answer: In front of your eyes. They all glance around, and soon see the caved in remains of the gym. The hippie explains that the tourists never wanted to fight for badges, and the gym leader, Blaine, got bored and left. He hands Ash his card for the Big Riddle Inn. They all look at it, and the hippie walks away before they can ask anything else.
Later, Ash and his friends look for the lab, only to discover a bunch of souvenir stands. They dejectedly leave to look for the Pokémon Center to spend the night. Nearby, Team Rocket is manning a snack stand. They review they're plan to steal the Pokémon inside the lab.
Meanwhile, Ash and his friends have located the Center, but they are filled up with tourists. They then go from hotel to hotel in search of some place to stay. Unfortunately, they are all filled to capacity. As they walk away from a hotel, Ash notices a banquet going on inside it. His stomach rumbles, and one of the figures inside stands up and opens the door. It's Gary, and he laughs at Ash for not being able to find a hotel. He lets them look inside, and they see tables of food, as well as a Hitmonchan and Electabuzz dressed as musicians. Gary offers them the leftovers if he spins around three times and says Pikachu. Pikachu is about to do so, but Ash stops him, telling him not to stoop to Gary's level. Gary laughs, telling him that he is pathetic. Suddenly, the door opens, and there stands Jigglypuff, the entertainer. Since Ash and his friends already know what Jigglypuff can do, they run off. Everyone else sits down to listen to Jigglypuff's song and, needless to say, fall asleep. Jigglypuff gets upset, and doodles all over their faces.
Ash and his friends stop in a playground to rest. Brock asks Ash about the card the hippie gave him, and he pulls it out. On it are directions to the Inn in, you guessed it, riddle form. It reads: If you look near the swing, you'll see my hands, or at least my face. Brock notices a nearby swing set, but doesn't see anything else. Misty thinks, picturing a clock. She points up the hill, and they all see a building with a clock tower. They dash up, and the hippie is happy to see them all, giving them free rooms for figuring out the answer. Ash's stomach grumbles, and the hippie offers them dinner as well, which they happily accept.
Meanwhile, Team Rocket attacks the Pokémon lab in their balloon. They toss a couple bombs, and blow the roof off the building. Back at the Inn, the phone rings, and the person on the other side tells him the situation. They all rush to the building, and Ash sends out Pidgeotto. Pikachu jumps on the bird's back, and they send Team Rocket over the horizon. The hippie thanks Ash and rewards him with a secret. He tells him that Blaine still has an arena where tourists could never find. He tells them where with another riddle: It's in a place where firefighters could never win.
Later, Ash, Misty, Brock soak in a hot spring while they think about the riddle. Togepi climbs up on a fountain, which sinks down. Suddenly, a large portion of rock slides out of the way, destroying the fence that separates the men and women sections of the spring. Ash, Misty, and Brock stare at each other for a few seconds, then they all scream. After they all get dressed, they go down the staircase behind the rock. As they descend, it gets steadily more and more hot. They reach a door, and Ash grabs the handle, only to get burned. The doors open, to reveal a fighting arena suspended over a large pool of lava. Brock notes that no firefighter could win here, and concludes that this must be Blaine's arena. Suddenly, the lights turn on, and the hippie is standing on the other side of the arena. He poses Ash and his friends with another riddle: It's not a hat, but it keeps your head dry. If you wear it, its only because you already lost it. Misty once again comes up with the solution: a wig. The hippie congratulates her, and pulls off his wig, revealing himself to be Blaine. Ash tells him that he wants to battle and Blaine sends out his first Pokémon: Ninetales. Ash sends out Squirtle, but Blaine quickly defeats it anyway with a Fire Spin attack. Ash decides to use Charizard, and Blaine send out Rhydon. Ash tries to get Charizard to battle, but he flies over to a ledge and falls asleep. Ash then sends out Pikachu, who is able to dodge Rhydon's Fury Attack. Unfortunately, his Thunderbolt doesn't faze Rhydon. Ash tells Pikachu to go for the horn, and he does so, defeating Rhydon.
Blaine then sends out his most powerful Pokémon: Magmar. Pikachu is able to dodge his Fire Punch attack, save for a slight scorch on his cheek. Pikachu uses Thundershock, but Magmar deflects it with what Brock calls an Air Lance. Pikachu is pushed towards the edge of the arena, and Blaine commands Magmar to use Fire Blast. Ash quickly thinks about what to do as the fire gets closer and closer. Better hurry Ash...