| Resumo: | Purpose: The development of rural and peripheral areas is still a matter of concern in most western countries. Rural tourism has long been understood as an effective catalyst of change in depressed and deprived. Nevertheless, the tourism led approach produced mixed results. In this vein, this study is concerned with the analysis of the potentialities, weakness and strengths of the rural hinterland in Madeira, in light of the recent developments in this sector. Design/methodology approach: The analysis pursued in this paper refers to a case study approach employed to outline the prospects of developing the rural hinterland based on rural tourism ventures. Secondary data was gathered from the Local Statistical Office, but this study derives the main conclusions from the analysis of descriptive content of structured interviews held with rural houses managers. Findings: The analysis reviews several papers in order to identify the main challenges faced by the local authorities at the county level. As found elsewhere, institutional factors will be decisive in succeed in this regard. The local authorities are well placed to act as a resource provider and coordinators/team leaders. Originality/value: This paper provides an analysis of the development path of rural tourism in Madeira and explores how local policy makers may be the “missing link” needed to improve the sector prospects based on tangible and intangible amenities and better entrepreneurial activities. This paper provides unique insights about the development of rural tourism in localities still learning how to best promote alternative market niches
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