The surprise move to take away funding was unanimously approved by councillors at a full council meeting earlier this month, The Courier has also learned.

The decision was made in camera - or behind closed doors - due to the implications over people's employment.

The 16 full and part-time employees of Visit Ballarat were informed of the move on Tuesday. The service agreement will end on September 30.

The Courier understands that some staff will lose their jobs, while others may be offered a position within an expanded council team when it takes the marketing strategy in house.

The council's decision to remove funding - which stood at $2.78 million for its tourism marketing and research arm for this year's budget - came as a surprise to many within the local tourism industry, who expressed support for Visit Ballarat.

Sara Quon, CEO of Ballarat's biggest attraction Sovereign Hill, said in a statement: "The Visit Ballarat team and board have been incredibly supportive. This week our thoughts are with them. We look forward to a strong collaboration process around the next tourism strategy."

Greg Parker, the founder of Ballarat Wildlife Park, said it was worrying to see upheaval within the local tourism industry. "We shall just wait and see what happens," he said.

Tim Matthews, a Visit Ballarat member who runs the successful Armstrong Street pizzeria The Forge, said the reasons for the change remained unclear. He told The Courier that many Visit Ballarat members were frustrated and uncertain and that he believed Visit Ballarat had "been really positive for the hospitality sector". He said he had even employed staff who were inspired by the recent Made of Ballarat campaign.

Visit Ballarat board member David Canny, who runs the Red Lion Hotel on Main Road, said he was "exceptionally disappointed" by the move.

"Who's going to be our voice now?" he said. "Who's going to represent our needs? Who's going to tell council what is good for our businesses? Council is not equipped to do it."

"The tourism industry is deeply concerned about this."

The Courier also understands that meetings have recently taken place between the council and hospitality industry professionals, who voiced frustration over what one described as council's "culture of secrecy".

Jodie Gillett of Commerce Ballarat meanwhile acknowledged "an extremely difficult time for [Visit Ballarat CEO] Noel [Dempsey], the Board and staff of Visit Ballarat."

"We would like to in particular acknowledge the beautiful Made of Ballarat campaign, just a perfect fit for our clever, creative city.

"Ballarat's future and our business community is the critical aspect of this situation and it is imperative that we work together to ensure great success in the future.

"We would encourage Council to ensure that industry has a seat at the table from the very initial planning of events, through to delivery."

Tourism office volunteers will also now work under the council's auspices. Gary Fitzgerald has been a volunteer at the tourist information centre both under the council and Visit Ballarat when the arm's length relationship came into being in 2012.

"What the council seem to be doing is a backward step," he said. "I don't think they have the expertise to run it sufficiently - that should have been obvious last time."

The Courier also spoke to three councillors for background to the decision yesterday. They all told a similar story, saying that the decision was ultimately a financial one. They said the City of Ballarat Council spends significantly more per capita on tourism marketing than councils such as Geelong and Bendigo - but without a significantly higher increases in overnight stays or tourism.

For the year until September 2018, domestic and international overnight visitors to the Ballarat region dropped by 13,000 to 754,000 and 21,000 respectively according to Tourism Research Australia figures released earlier this year.

There was also a $57m dip in expenditure for the same period, with the total amount spent by visitors falling to $443m dollars for the year - although an analyst said variations were subject to a margin of error.

The Visit Ballarat CEO Noel Dempsey said earlier this year that day trip visitors had increased by more than 30 per cent in the past five years, while domestic and international visitors to Ballarat had increased by more than a quarter.

Councillor Daniel Moloney said: "The Visit Ballarat staff have done some great stuff over the years. It's vital we do everything possible to help them through."

He said that bringing the events planning in house a year ago had run smoothly, and that the expertise of existing Visit Ballarat staff members would be welcomed within the new council set-up.

"The challenge is how we can continue to deliver those services in a financially efficient way," he said.

Meanwhile, Stuart Benjamin, who was formerly chair of Ballarat Regional Tourism - as Visit Ballarat used to be known - said he had noticed a significant downturn in the number of overnight visitors in the past few years. He said there was too much focus was on community events rather than "events that fill beds."

Angelique Lush, the council's director of development and planning, said the success of the move in-house would be judged on whether more visitors stayed longer and spent more money in Ballarat's businesses.

"While it is too early to state our targets, our immediate intention is to get more people visiting overnight and experiencing Ballarat like a local."

She said marketing domestically and overseas would continue to be a key focus.

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