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Natural disaster, economic recession and political turmoil pose major challenges to local tourism in developing countries. To address such challenges, this article investigates the multiple ways in which local tourism businesses respond to crises and the resources these businesses employ to build resilience in an unpredictable business environment. The data underlying this article have been generated in a longitudinal study of small-scale businesses in the accommodation sector in the city of Yogyakarta, Indonesia. Based on qualitative research, comprising ethnographic methods, the study reveals that local tourism businesses show remarkable resilience during the decade of crisis that affected the Indonesian tourism industry. This resilience has to be understood in terms of the businesses’ embeddedness in a package of livelihood strategies.