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Hotel industry is becoming a leading segment of tourism in Croatia, evident from the constant increase in accommodation capacities, number of overnights, and employees in the hotel industry. To succeed, hotel managers need to identify the needs of their clients and find creative ways to please them. Hence, the future of small family-owned hotels is likely in differentiation by design. It implies a wide spectre of areas of applicability. The design is implemented in marketing strategy in the primary stage of creative thinking during project planning. It is later followed by original name selection. Those are the foundations upo which visual identity is built and style of architecture is selected- traditional or modern, as well as stance towards energy consumption. Further education, especially for small and medium business owners, is needed for small family hotel owners in Croatia to choose a concept of sustainable development- alternative source of energy, waste-water treatment, conservation and refinement of natural environment. H1: Small family-owned hotels in Croatia are not adequately recognizable and do not reflect the uniqueness of Croatian tradition and cultural heritage in architecture, interior design, gastronomic supply, and other amenities (content). H2: State government did not create clear legal framework, education system or instruments to stimulate and support creative and original concepts of small family hotels. Hypotheses will be proven with the results of primary research as well as with the analysis of annual brochures from Association of Family and Small Hotels in Croatia