They were just some of the ideas raised by councillors at Monday night's public meeting who want to "reimagine" the site to bring in more money.

They unanimously voted to back a $120,000 business case and master plan for the facility that has been a major drain on city council finances and a source of contention for councillors for years.

Part of the business case will investigate potential investment from the private sector in the "tired" and "dated" facility.

The potential co-location of other public facilities on the site will also be looked at.

Cr Max Taylor said Flagstaff Hill was the sole and only tourist attraction in Warrnambool aside from the beach and foreshore area.

"If Warrnambool all of a sudden found itself without Flagstaff Hill, it would leave a major hole in the tourism attractions in Warrnambool," he said.

Cr Richard Ziegeler said Flagstaff Hill had been a much loved feature of the local community for some time. "I remember well the bare paddock that was there beforehand. It was never envisaged as a competitor to Swan Hill or Ballarat's Sovereign Hill," he said.

"It was actually envisaged as a legitimate museum and at some points in its history it's actually been regarded as a fairly important reference point for research for a somewhat narrow frame of reference in terms of the times it represented."

Cr Ziegeler said it could be expanded to become more of a "legitimate museum" and also potentially include Indigenous aspects.

"It could also, given cooperation with our Indigenous community, possibly be a place of remembrance and a museum for those kind of subjects and topics for them which at present it doesn't consider at all," he said.

"We're told that particular part of Warrnambool has particular significance for the Indigenous community and I believe there is certainly scope for us to develop something much more relevant in that area."

Cr Ziegeler said a business case and master plan was needed to make Flagstaff Hill much more relevant to the modern community.

"I'd like to see it become more, or re-regarded, as a legitimate scientific point of reference as a museum and for research," he said. "I'd like to see it stop bleeding money." Cr Debbie Arnott said Flagstaff Hill Maritime Museum was a very well loved facility which had been operating since the mid-1970s on Crown land.

"So of course looking at the time lapse it is going to be tired, it does need some major works and it may need to be reimagined," she said.

"It does help our tourism industry but are we using it to our best advantage? How much money does it need to be spent on it?"

She said the business case was important for the growth tourism and attractions in Warrnambool.

Cr Arnott said the $120,000 business case has been funded with $110,000 from the state government.

Cr Otha Akoch said Flagstaff Hill was a historical pride of the city and needed to be maintained but at the moment it was a big liability on the budget.

He said the business case would help make it generate more money.

The final report is expected to be finished early next year.

Mayor Vicki Jellie urged the community to get involved.