Released this week, the document shows more than 150,000 fewer people explored the open air museum this year compared to the previous 12 months.

Caused in large part by the prolonged closure under pandemic restrictions, that figure meant entrance takings were down $4,796,262 - a drop of more than a quarter from the previous year's figure of $18,371,850.

The report warns of more challenges for the organisation in the year ahead, but said the not-for-profit museum was well-positioned to keep operating.

Unsurprisingly, it is the impact of COVID that stands out financially. Visitors to the open stood at 373,500, far below entrance levels of previous years. Peaking at 546,000 in 2017/18, visitor numbers had exceeded half a million for the previous five years.

Goods sales also dipped by a quarter, while rents and commissions - which include contributions from the food and beverage contract - were down by 38 per cent.

The report noted "significant reductions in core operating revenues" which would have a "profound impact" on its results and operations.

The not-for-profit museum, which is marking its 50th anniversary next month, still recorded an operating surplus of $992,873.

Its decline in income was offset largely by $6,876,046 of government grants. There was less money spent on employee costs and marketing. The report also acknowledged the help from the Federal JobKeeper scheme.

Donations increased to a total of more than $950,000, including funds raised by the "Sustain Sovereign Hill" campaign launched in June.

The report indicated the impact of the COVID-19 crisis on the attraction, which 350 permanent and casual employees as well as 200 volunteers, will carry on for the current financial year.

It notes: "These challenges are highly likely to result in a significant operating deficit being reported.

"However, the directors believe the Association in a strong financial position to maintain operations through this period."

Following the initial shutdown at the end of March, the attraction was able to re-open for several weeks at the end of June.

However it then had to shut down again in early August as a second wave of infections grew in Melbourne and the regions.

The impact this current financial year is likely to be even more profound than in 2019/20, with its doors already having been closed for almost three months.

While it is reopening later this month, it will be to a very limited audience initially, with Melburnians unable to travel to the regions, and the return of interstate and international visitors still unclear.

Can tourism ever be the same again?

The last financial year is described as a "tale of two halves", with overseas visitor numbers increasing by 10 per cent until COVID became an issue.

Sovereign Hill was a bellwether of the problems facing the tourism sector, with its CEO Sara Quon telling The Courier in late January that cancellations from the Chinese market stood at more than 70 per cent.

The report says that 147,000 visits last financial year were by Melburnians - 40 per cent of the total - while 70,000 came from regional Victoria, and 43,724 were made by the local Ballarat community.

Tellingly, perhaps, there is little mention of the international market in this year's annual report. Previously Ms Quon has said there was a "tremendous opportunity" to reconnect with Victorians once restrictions ease.

A new masterplan outlining a future strategy for the museum is due to be released late next month and is likely to include different performance measures.

Ms Quon told The Courier the impact of COVID-19 would "continue to be felt over the coming years" but she was confident about Sovereign Hill's outlook. She said: "We believe that our future looks bright and we will be able to attract new audiences and inspire future generations".

Read the full Sovereign Hill annual report here

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