Tourism is an industry that in ideal situations when it is not affected by the crisis on a global level, has a growing tendency. Tourism as such has not bypassed Budapest and Zagreb and makes a great contribution to the development of these destinations. This thesis analyzes the effect that tourism has on development of Zagreb and Budapest in the form of tourism. Also, it shows significant natural and cultural features, i.e. tourism resources, of selected destinations as well as their impact on tourism. Alongside the effects of tourism development, this thesis researches other factors that are important for comparison of tourist destination characteristics such as: hotel accommodations, tourist arrivals, emitting markets, transport infrastructure and connectivity with other destinations. Zagreb and Budapest have a lot of similarities, primarily they are both capitals and administrative centers of their countries. They also have a lot of similar natural tourism resources, such as the hills that are the natural city border on one side or the passage of the river through the city. Common history of selected cities also contributed to great similarities of their cultural resources. In addition to presented similarities, the paper also provides insight into differences (between the cities). A SWOT analysis was made in the paper, which represents the strengths, weaknesses, opportunities and threats for the future development of Budapest and Zagreb. This paper presents why is Budapest one of the most visited European destinations and its comparison with Zagreb. Also, the thesis presents the threat that Zagreb as growing tourist destination has on Budapest.