Foreign direct investments play an important role in tourism worldwide. The development of the Croatian hotel industry in the past period mainly relies on domestic capital, in the absence of which the Croatian hotel industry has shown a slow growth in the number of hotel accommodation capacities and a low share of hotel beds in the accommodation offered in the Republic of Croatia. Despite the attractiveness of the Republic of Croatia as a tourist destination, which in recent years has achieved an increase in the number of tourist arrivals and overnight stays, insufficient application of the foreign direct investment strategy has been observed in the Croatian hotel industry. The research has identified the reasons and obstacles resulting in such a situation, some of which being political instability, a long dispute resolution period, administrative barriers, corruption, etc. Direct investments require significant financial investments, more significant than for other forms of market presence, so that, due to the great seasonality of Croatian tourism, there is a risk and apprehension among investors that they will not return their investment within a satisfactory timeframe or that the rate of return will be lower in Croatia than in some other destinations. The research has shown good foreign investor practices of investing in the Croatian hotel industry, as well as the practice of Croatian companies in expanding to the foreign market through foreign direct investments. By connecting different destinations or different segments of tourism, it is possible to reduce the effect of seasonality and increase the income of the hotel industry. By comparing the performance of hotel companies, it was determined that companies with domestic and foreign ownership are equally distributed among the leading hotel companies in the Republic of Croatia, and it was not observed that foreign-owned companies perform better than domestically owned ones on the Croatian hotel services market.