This paper analyses and explicates the limiting role of multiple and varied challenges in the realisation of a country's tourism potential using Uganda as an exemplar. Two objectives are pursued, one that entails an assessment of the competitive potential of Uganda's tourism and another, an explication of the challenges that limit its full realisation. The study is based on secondary data supplemented through in-depth interviews with some key informants in Ugandan tourism. The paper identifies disparities in destination product and demand patterns, inadequate marketing budgets in the face of a persistent negative image and inadequate institutional and managerial capabilities as key challenges. It concludes that the complexity of challenges faced by Uganda, a non-traditional destination, makes the notion of competitive advantage used in conventional strategy and tourism destinations competitiveness literature seem inappropriate. This has implications for tourism development and management in such destinations with particular focus on resource allocation and utilisation.