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Describes some of the characteristics and possibilities for improving the Croatian tourism industry. The main characteristics of the industry are inadequate service levels, infrastructure and low levels of utilization and it is important to understand these and the operating environment. Concludes that the existing personnel and management can do little to improve the quality of service and utilization of the Croatian tourism and hotel industry. To bring about change, modern management practices will be needed, together with the creation of a desirable destination image, innovative forms of investment, and improvement in the transport infrastructure facilities.