Cost effectiveness and investment risk will be analysed in this thesis, based on a small family hotel on the example of the chosen company Ivana i Petra d.o.o. located in Veli Lošinj. Ivana i Petra d.o.o. is a currency exchange company with more than 20 years in the business. Since the income from the currency exchange dropped down in the last 10 years, the company wants to expand its business into tourism in order to sustain profitability. To achieve mentioned above, an interview with CEO has been done in the research process. In the interview, entrepreneur tells how he came to an idea of opening a small family hotel and his plans to make it happen. In order to get the answer is it cost effective for the company Ivana i Petra d.o.o. to expand their business from currency exchange to tourism, primary and secondary data sources has been used. Expand of the Ivana i Petra d.o.o. business depends on external and internal factors which have direct and indirect impact on the project success. It was established that the biggest influence on the building a small family hotel are political, economical and sociological factors. Regarding internal factors, CEO is highly motivated in opening a hotel and expanding his business. Entrepreneurial situation is shown in the first part of the thesis, followed by the theory and the interview with the company CEO. Research results, based on the example of chosen company, has been shown in the end of the thesis. Using the method of business plan and evaluation of possible risks, it has been concluded that the idea of opening a small family hotel is cost effective for Ivana i Petra d.o.o.