This paper examines the operation and function of resort enclaves in the context of Third World tourism. The emergent linkages and inevitable tensions which develop between external capital and local entrepreneurship are examined through case studies of Indonesian resort enclaves on the islands of Bali, Lombok and Pulau Bintan in the Riau archipelago. The authors argue that the whole notion of enclavity is inherently unsustainable, marginalising local entrepreneurs and widening the economic, cultural and social gaps which already exist between hosts and guests.