Tourism bosses blame the strong pound, poor weather and the 1998 World Cup for a 6% fall in tourism turnover last year.

More Scots went abroad

But they say Scottish tourism can bounce back with the establishment of a Scottish Parliament, which they believe can create the conditions in which the industry can "grow and prosper".

Total tourism turnover in Scotland for 1998 was £2.47bn.

A 38% fall in the number of Scots holidaying in their own country contributed to the 6% overall decline.

Board Chairman Lord Gordon of Strathblane said the fall was disappointing after record figures achieved in the previous three years.

STB Chief Executive Tom Buncle looks for the silver lining in the cloud

But he added: "It is a reminder that tourism income does not come automatically and must be hard won by everyone in the industry.

"An increasing number of competitive destinations beckon visitors from around the world and we must benchmark ourselves against the best.

"The tourism futures group has analysed current and future trends in the industry and this will be reflected in the new strategic plan for tourism to be presented later this year," he said.

The STB remains optimistic

There was, however, some encouraging news for the Scottish Tourist Board in its report.

The overseas tourism market to Scotland increased by 6%, from £891m to £940m, while the English short break holiday market also rose by 6%, from £126m to £133m.

STB Chief Executive Tom Buncle said tourism would become the world's biggest industry by the end of this year, presenting Scotland with "a huge opportunity" as well as a challenge from well-organised competition.

"Businesses are going to have to adjust to more change in the next four years than we have seen in the last 20," he said.

"At the STB, we are going to have to make the adjustment too - and that is why we have begun the process by re-shaping the organisation."

The board will be turning to the new Scottish Parliament for measures which will boost the industry in Scotland.