Institutional performance is a critical element that stakeholders must collectively strengthen to better respond to marine tourism development challenges. The institutional strength of a community has the power to influence the behaviour of local people, which drives them to conduct activities effectively and create a foundation for management. This paper uses qualitative approaches specifically through the case study method. The results of this paper show that: (1) beyond the potential of marine ecotourism development, there are several unsolved problems specifically within the ecological, social and economic areas; (2) ten indicators strengthen the institutional performance in developing Raja Ampat Tourism Villages. These indicators consist of: (1) community cooperation with outside institutions; (2) clarity of management area borderlines; (3) correspondence of regulations towards the local conditions; (4) active engagement of the community in the development and management of regulations; (5) the presence of local institutions; (6) effectiveness of supervision; (7) the imposition of sanctions; (8) conflict resolution mechanisms; (9) governmental recognition through the establishment of regulations; (10) equal access for resource users.

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