The master thesis Determinants of competitiveness of hotels in the Dubrovnik-Neretva County, depending on their categorization studies the determinants of competitiveness among the different categories of hotels in the Dubrovnik-Neretva County. This master thesis consists of five chapters. Introduction presents problems, purpose, objectives and methods of the paper. Furthermore, definitions of competitiveness and strategic management are presented. Methods of strategy selection and the relationship between globalization and tourism are explanined. Croatian and World hospitality industry is presented in the paper. The last chapter presents formal determinants of competitiveness of hotels in Croatia, and the results of empirical research on the competitive dynamics of the different categorization of hotels in the Dubrovnik-Neretva County. The main objective of the empirical research for the purpose of this paper is recognizing the importance of hotel room price. Poll showed that 60% of tourism workers feel that the hotels of lower category are not their direct competition, but 75% thought that the hotels of higher category are their direct competitors. The fact that 70% of hotel companies in the last three years lowered their hotel room prices, confirms the underlying assumption of this work: hotel competitiveness is not built only from the perspective of comparison with hotels of the same category, and the categorization itself is not necessarily a source of competitive advantage but merely a basic set of regulations that makes the choice of the hotel easier by enabling comparison of value for a price. The conclusion states that the competitiveness of the hotel derives not only from the perspective of comparison with hotels of the same category, and the categorization itself is not necessarily a source of competitive advantage but a basic set of regulations that guests use for measuring value for a price. It is inevitable that the main sources of competitiveness of the hotels in the near future will be a ranking based on the guest’s personal experience; hotels will gradually focus on the essence instead of the form because guests do evaluate the room by its size, but by their personal experience.