Ethics and ethical management have a strong influence on the hotel business. Ethical challenges are present in relation to the hotel and staff, hotel staff interrelations, relationship between managers and hotel surroundings. Successful implementation of ethical business involves setting clear rules and codes of action; it defines sanctions in the event of undesirable behavior, systematic implementation of codes and regularly monitors the implementation of the set of rules. The research on ethical governance management, business ethics and customer satisfaction, ethical business and marketing deals, and ethical business and employee satisfaction has led to evaluation of application of ethics and ethical business in the Croatian hotel industry, not only at declarative level (adoption of codes of business ethics). Unfortunately, although the code of ethics is an integral part of business policy of Croatian hotel companies, they often have a declarative character. Croatian hotel industry is still faced with a low level of application of ethical standards, despite the present important step forward application of ethics in the hotel business. This results in lower profits in relation to the European hotel industry. Hotel companies that apply ethical and moral principles in relation to their employees, business partners, service users and the local community, are investing in long-term benefits. Measures to improve ethical management in the Croatian hotel industry are the use of high ethical standards in all hotel companies. In doing so, the emphasis is on the practical application of the code of conduct in which the focus is on ethics and socially responsible behavior. The emphasis is on the harmonization of business, corporate culture and strategy of the companies with the generally accepted principles of the UN Global Compact, in the areas of human rights, labor, environment and anti-corruption.