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Tourism industry plays significant role in the regional economic development in developed and developing countries. This paper clarifies to what extent the Indonesian tourist village industrial cluster have embraced service innovation practices. The qualitative research approach was undertaken in the cluster area. In-depth face to face interview among key informants were implemented in the cluster area. Thus, the triangulation technique was used for explaining the data analysis. This research found the service innovation among the Indonesian tourist village industrial cluster were contributed by the collaboration of the government-university-industry partnership. The collaboration among many different institutions in the cluster area might produce new service concept, new delivery concept and new customer interface which is supported by the ownership of the technology optional in the tourist village industrial cluster. Further result of the new product or services, processes, material, market and organizational were also explained on the paper