IT HAS been a positive year for Scottish tourism, culminating in Glasgow's successful bid to host the Commonwealth Games in 2014. There have also been challenges this year, from the attempted terrorist attack at Glasgow Airport to poor weather in the summer. However, early indications show that tourism businesses generally performed well over the year.

The political changes in 2007, with the creation of an SNP government, has resulted in tourism being aligned more closely with business and enterprise, and reflects how crucial it is for Scotland's future economic prosperity.

Tourism is the nation's most important industry, bringing more than £4 billion into our economy annually and employing more than 200,000 people in 20,000 diverse businesses across the country. From rural areas to our big cities, it is the lifeblood of many of our communities.

The industry shares an ambitious target for growth, aiming to increase revenues by 50% by 2015.

Indications for Scottish tourism in 2007 are positive. For the first nine months of the year, hotels, guest houses and B&Bs have had the best occupancy rates for five years and many visitor attractions have been faring well, with the wetter weather in July and August benefiting indoor attractions.

Events and festivals are an important part of Scotland's tourism scene, with an estimated 40% of visitors taking in an event as part of their trip.

Highland 2007, the year-long celebration of Highland culture, brought about an investment of more than £35 million in the cultural infrastructure of the Highlands and Islands through events and capital projects. As well as fostering a cultural legacy for future generations, the programme of more than 100 major and 500 community events provided a diverse line-up of national and local stars.

As part of Highland 2007, Scotland hosted the UCI Mountain Bike World Championships and Trials in Fort William. This, the biggest event on the international mountain biking calendar, attracted 40,000 spectators to the town, generating £2m for the local economy.

Among established major events such as T in the Park, the Scottish Open and the Edinburgh Festival Fringe - which sold a record 1.7 million tickets this year, a rise of 11% - there were also a wealth of high-quality smaller events that brought crucial revenue into many parts of Scotland.

Looking ahead to 2008, confidence among the majority of Scottish tourism businesses is high. A study carried out by George Street Research for VisitScotland in September and October 2007 showed that 50% of those surveyed believe they will see an increase in business in 2008.

Growth in tourism revenues in the new year will depend to a large extent on the wider economic situation in the UK. Although growth projections have been scaled back in light of the "credit crunch", if the UK economy remains stable throughout 2008, holidays are likely to remain a priority for many households, and we would expect to see slight growth in 2008 and 2009 of between 1% and 2%. UK residents account for over 80% of Scotland's visitors and with a stable economy we would expect their spending to increase by around 2%. Inflationary pressures, consumer credit and competition may mean a slow-down in the strong growth in European visitors. Poor exchange rates for the US dollar, housing market deflation and growing consumer debt will also impact on North American visitors, although the affluent US visitors Scotland attracts are less sensitive to these pressures.

If there is a decline in the UK economy we may see a temporary dip in tourism revenues, but we would expect this to recover in 2009.

The target revenue increase of 50% by 2015 is still achievable, but it will require action from everyone involved in the industry. VisitScotland will play its part by focusing on marketing, providing information and inspiration for visitors and potential visitors, and quality advice to the industry.

The other essential ingredients to achieve growth will be increased investment to expand the industry and greater productivity.

Increased investment must include capital developments, marketing and product quality. Greater productivity must focus on ensuring we are encouraging visitors to come to Scotland year round, as well as businesses working together on joint initiatives and increasing their focus on sales.

This is an exciting time to be involved in Scotland's foremost industry and we know we have people the length and breadth of the country ready to meet the challenges ahead.

Philip Riddell is chief executive of VisitScotland