Tourism is today the world’s largest industry and an important economic development tool in many developing countries. However tourism sometimes causes social complications, often due to social- and economic gaps that lead to tensions between tourists and local residents. At small island destinations spatial confinement and isolation contribute to the risk of these tensions to occur, which may then ruin the destination’s image. This study examines the relationship between tourists and local residents at the small island Koh Tao, which is a popular tourist destination in Thailand. The aim is to identify possible tensions and to examine why these tensions may occur. The research material is collected through an ethnographic study, including participant observations and informal interviews. The result of the study shows an overall positive relationship between the tourists and local residents, where the tourism industry’s economic contribution to the host community is an important factor fortheir positive attitude towards tourism. A few social- and economic gaps are identified, however these do not seem to be the cause of any notable tensions. Yet, sometimes tensions do occur and are then most often related to cultural- and linguistic misunderstandings. The essay discusses how these misunderstandings could be prevented through increased knowledge and also proposes an illustrating model. Finally, suggestions for future research regarding the usage of tourism as a development tool are proposed.