The global structural change, together with "the green revolution", caused the economic growth to be based on the service sector today, instead on the traditional economic sectors. The main focus of this paper is on the factors that affect the decisions of households in Serbia to participate in the tourism industry in the context of the sustainable development. In particular, a significant portion of the analysis is devoted to the constraints that can be induced by inadequate drinking water supply and its quality in households. These factors can be considered the main limitations to those households that decide to provide accommodation and food services to the tourists in their local touristreceiver communities. The empirical analysis is based on survey data that describe conditions in the households, whereas the econometric framework is employed in order to determine structural relationships. The null hypothesis that drinking water supply and quality do not affect the likelihood of the household participating in the tourism industry is tested and accepted based on the probit model estimates. The difference between the public urban and local water supply systems that provide drinking water to the households is statistically confirmed, but it does not affect the likelihood of the household participating in the tourism industry.