In the competition of equal apartments, rooms and holiday homes, an innovative and attractive model of hotel accommodation, that is, a diffused hotel, has emerged. The diffused hotel is a functional unit of dislocated accommodation within the old town, which is united by a common reception. One of the goals of such a hotel is to connect guests with the locals in an intertwined story and give them a sense of belonging to the community. The paper further clarifies the business concept of tourist accommodation facilities, especially the diffused hotel, and raises the question of whether such a form could be realized in the small Municipality of Žminj in Istria County. Therefore, a survey was conducted, which aimed to analyze the offer of the Municipality of Žminj, to determine the possibilities and limitations of such a way of doing business and to examine opinions and attitudes of the local residents about it.The paper finds that Žminj represents a place full of potential for further development of different types and forms of tourism, and accordingly a diffused hotel. A diffused hotel would, as such an innovative way of doing business, develop the Žminj destination, where Žminj would be ready to compete with all other tourist spots within the County of Istria. In doing so, the tourist offer would be united and marketed, which would bring numerous benefits to the locals and to the future guests, in order to enhance their tourist experience and increase the economic development of Žminj.