A report will be presented at Monday's Warrnambool City Council meeting recommending councillors give the go ahead for a business case and masterplan to be completed on the maritime museum's future direction.

The business case, to be funded with $110,000 from the state government's Enabling Tourism Fund, comes after years of debate over the facility's drain on the council's finances.

The report to be tabled at the meeting said despite Flagstaff Hill being a previous multi award winning tourism facility, it was experiencing a "long-term historical decline in visitation", which was common for regional cultural attractions trying to meet contemporary visitors' needs and expectations.

It said the village's role within the broader Victorian tourism landscape needed clarification and required a "renewed vision" to inform its future.

The business case and masterplan process aims to review and assess the precinct's current attraction and offering and consider and evaluate future opportunities and options.

It will also identify physical infrastructure constraints and site land use, ownership, zoning and heritage considerations and investigate government and private investment opportunities and/or public facility location opportunities.

A proposed reference group which would oversee the business case would include councillors and officers, Friends of Flagstaff Hill, Great Ocean Road Regional Tourism and state government officials.

There will be "extensive consultation" to ensure "broad" community and stakeholder representation which will begin in November. The project is to be completed by early 2023.

The village was developed in the mid 1970s to maintain the city's links to its maritime heritage and as a "key tourism development strategy as a year-round tourist attraction".

The precinct has an annual visitation of about 50,000 people (ticketed) and 120,000-plus people through the visitor centre.

The village saw a record number of visitors over the four-day long weekend. The council was expecting more than 1000 visitors but more than 2000 turned out between September 22 and 25.

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