The article studies directions of stimulation of development of small and medium business in the sphere of tourism. It reveals barriers that interfere with development of the subjects of small and medium entrepreneurship in Ukraine. It considers main organisational and legal forms of entrepreneurship of the innovation type in the tourist industry. It describes conceptual measures of development of innovation processes: within the innovation infrastructure; within innovation products; within organisational innovations; within technological innovations and within marketing innovations. It offers the ways of increase of competitiveness of tourist enterprises and main directions of innovation development of small and medium business in the modern tourist industry. It identifies that the basis of development of the tourist industry is highly qualified specialists who can develop qualitatively new tourist products and apply in practice principally new approaches to managing tourist enterprises and also new forms and types of consumer servicing in the market of tourist products.