Peter Lederer believes the industry can bounce back

VisitScotland estimates losses from foot-and-mouth will reach �350m, while the terrorist attacks will account for �150m.

But the tourist board chief said tourism authorities and providers were successfully "refocusing" to move forward.

Mr Lederer also believes the industry will benefit from a heightened awareness about its importance to the Scottish economy.

He said: "Scottish tourism has been operating against some very difficult trading conditions.

"An undeniable fact is that the world is getting smaller and there are more countries competing for the same customers and the competition is becoming fierce.

Budget doubled

"Events this year have made it all the more difficult to operate and will undoubtedly have negative effects on our industry."

He added: "To meet the enormous challenges facing Scottish tourism we must pull in the same direction to achieve one common goal - that is wealth for Scotland."

VisitScotland believes the need for urgent support during the foot-and-mouth crisis was recognised by the Scottish Executive.

As a result, VisitScotland's budget was doubled to �38m to help the industry fight back with campaigns and global marketing.

The trade was affected by foot-and-mouth and global events

Mr Lederer said there is a pressing need for standards in Scotland to be improved, but he praised those businesses which had listened to customers and acted on their comments.

"The coming year holds much potential for us. Our marketing efforts are becoming more focused and customer led," he said.

"Our new product portfolio allows us to sell Scotland on a theme basis rather than on a geographical basis.

"This we know will reap the best return for Scotland in markets that are already strong and will help us tap into new territories."

VisitScotland, the former Scottish Tourist Board, has been putting together a marketing agenda for the next year, which it believes will set the industry on a "solid footing".

The spring sees the launch of the largest ever domestic short breaks campaign, backed with �3m to kick start the 2002 season.

Other key campaigns will target lucrative sectors such as walking, cycling, golf, sailing and genealogy.