In the last fifty years world tourism and hospitality industry experienced a phenomenal growth of international tourist arrivals, overnights and receipts. It is widely recognized that the tourism became one of the most dominating socio-economic activities at the beginning of the 21st Century. The example of Croatia speaks in favour of that statement. Tourism is the most prosperous industry and the essential development factor in Croatia. The great share of tourism results refers to family business that is of high importance to development strategy of Croatian tourism. Family business in Croatian tourism is based on households and family hotels. Family hotels are recognized on the tourism market by its original and identifiable service imbued with indigenous values and cultural heritage, diversity and individuality. Moreover, they are the most sound and prosperous segment of Croatian tourism and their top-level quality and high professionalism are basic elements of tourism development. Croatian strategic tourism development documents highlight the participation of private sector in tourism development. One of the possible ways of such participation is through public-private partnership (PPP). There are many examples of public-private partnerships in tourism around the world. According to world experiences, marketing and promotions and product development are the main areas where public-private partnership has developed. Despite the fact that tourism is very important economy generator, Croatian experiences with integral implementation of public-private partnerships in tourism are only at the beginning. The aim of this paper is to examine how Croatian family hotels could take a part in establishing public-private partnerships in tourism. Considering the world best practices on publicprivate partnership in tourism investment, the paper also suggests two acceptable partnership models. The first is related to existing tourism clusters while the second is more innovative and is related to the development of a new tourist complex. Proposed public-private partnership model for the new tourist complex development includes government (on local or/and national level) as public sector representative and family hotels as private sector representative. The paper also examines necessary prerequ