Despite the growing importance of foreign direct investment (FDI) for tourism in developing countries and its perceived importance for stimulating sustainable development, few empirical studies have examined its impact. This paper explored the links between tourism FDI and poverty alleviation in The Gambia, through a comparative study of foreign versus locally-owned hotels. Data was collected via an in-depth questionnaire with senior management across a range of different hotels, and through key informant interviews with tourism officials and other stakeholders. Findings suggest that different forms of hotel ownership have advantages and disadvantages in terms of pro-poor impact. The study provides empirical evidence of the relative characteristics, performance and benefits of foreign investments, and discusses the current and potential contribution of the hotel sector to sustainable development in The Gambia.