Development strategies are of great importance for the entire business world because they enable companies to achieve better and successful operations, and compete in the extremely dynamic tourist market. The most common growth strategies are strategic association, namely association into strategic partnerships, alliances and clusters. The main subject of this paper is precisely the association of hotel companies into clusters, as well as clustering, with the emphasis on vertical clustering of hotel companies. Clusters are a dynamic phenomenon, and are considered as one of the most important forms and stimulators of growth and development of companies. They represent a concentration of interconnected companies, suppliers, service providers and institutions, as for the cluster formation process is concerned, it is called clustering. Vertical clustering of hotel companies represents a form of business connection of higher and lower levels in value chain. Using secondary resources and conducting own research, it is observed, researched and proven whether the connection of hotel companies into clusters contributes their own development, as well as development of destination; whether clustering is an important factor for increasing competitiveness and quality of hotel company business in Dubrovnik area, and whether vertical clustering in Dubrovnik area increased quality and authenticity of hotel offer.