There are questions over whether the event can continue to attract top talent and retain its position as one of the movie world's leading festivals.The Venice Film Festival's new artistic director has pledged to revive the event's facilities and fortunes as this year's festival gets under way.
Alberto Barbera said a major new cinema complex would be built despite being abandoned in 2011 due to lack of funds.
He said: "We cannot host a modern event and attract film-makers without it."
He added: "So yes, it has to happen. It was one of the conditions for me taking the role.
"We know we have this reputation for quality. It's our greatest asset, and it's a privileged position."
Barbera has cut the number of films being screened and has faced criticism over the number of stars attending this year.
Venice has come under increasing competition from the Toronto Film Festival, which overlaps with its Italian rival. Since the economic crash of 2008, Hollywood studios and celebrities have often preferred to show their movies there.
Kate Hudson
A new, state of the art cinema complex was due to open in Venice in 2012, but work was shelved last year when asbestos was discovered. That left a 100ft crater next to the Palazzo Del Cinema.
But Barbera promised the new buildings would be finished by 2015.
"It's a deal, it is signed and sealed," he told BBC News. "We will start work either later on in the year or in 2013."
Local authorities, including the city of Venice, will now fund the renovations, he added.
The film festival is the oldest in the world, and will show more than 60 world premieres over the next 10 days, including Wednesday's screening of Mira Nair's The Reluctant Fundamentalist, starring Kate Hudson and British actor Riz Ahmed.
Barbera, who used to head Italy's Museum of Cinema at Turin, also said he had other plans to change the event, including introducing a five-day film market starting this year, and giving a first time film-making prize, which would involve the festival funding three movies by new directors.
The Observer film critic Jason Solomons blamed the exodus of top films and stars on the high cost of conducting press interviews in the city and accommodating film talent.
Palazzo Del Cinema
"A few years ago, Joe Wright's Atonement had its world premiere at Venice," he said. "Now he's made Anna Karenina, again starring Keira Knightley. It's a period film all about decadence and decay, and it belongs in Venice. It should be here. But they can't afford to launch it here now."
Another problem, according to Solomons, was the recent closure of the Hotel Des Bains on the Lido island - the setting for the 1971 film Death in Venice. The hotel is being turned into luxury flats.
"Death in Venice says it all," Solomons continues. "By closing the Des Bains, the stars have nowhere to stay."
Critics, though, still say they rate the festival highly. As well as The Reluctant Fundamentalist, the event will also show Tree of Life director Terence Malick's To The Wonder and Robert Redford's The Company You Keep.
Meanwhile, Philip Seymour Hoffman and Joaquin Phoenix will star in The Master, the story of a religious cult during World War Two, directed by Magnolia's Paul Thomas Anderson.
"They've actually gone against the grain by reducing, not increasing, the amount of films on offer, and that's brave," suggested The Independent's Kaleem Aftab.
"It looks like less will be more from now on in order for Venice to overcome the impression that this is a festival on the wane. But on paper, it's delivered some big names this year."
The Venice Film Festival runs until 8 September.
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