TOURISM bosses say they are on course to enjoy their best year's business since the start of the economic downturn.

A survey by the Scottish Chambers of Commerce (SCC) has found takings in the tourist industry are on the up and expectations are at their highest point for four years.

Green shoots of recovery were recorded in many areas of the sector in the first three months of the year, with revenue up on the same time last year.

However, the survey found a split between city and rural tourism, with the high cost of transport slowing down growth outside the main urban areas.

Garry Clark, head of policy and public affairs at SCC, said: "Our survey suggests Scottish businesses had a better start to 2012 than for the same period last year, led by more positive indicators in manufacturing and tourism.

"Tourism businesses reported a better than anticipated first quarter and expectations for the year ahead are at their highest levels for four years.

"Importantly, the return to a positive trend in daily rates means the hotel industry is becoming less reliant on widespread discounting to fill rooms.However, looking behind the data reveals differences between urban and rural businesses.

"Concerns over the cost of transport, including ferry travel, are being cited by rural and island businesses and this could have a material effect on their ability to attract visitors over the year ahead."

The upswing in bookings has led to hotels enjoying increased profits as it has allowed them to scrap discounts they had put in place to attract guests.

Now the SCC is calling on the Scottish and UK governments to extend support to ensure the recovery is not short-lived.

There are 20,000 tourism businesses in the country, generating £4.2 billion each year. More than 215,000 people are employed in the industry, 8% of the total workforce.

Mr Clark said tax breaks were needed to ensure the industry continues to prosper, and more consideration should be given to ways to cut travel costs.

He also called for air passenger duty (APD) to be devolved to the Scottish Government to allow it to set a lower rate and use the proceeds to invest in an air route marketing fund to boost Scotland's direct international connections.

This would have the knock-on effect of making Scotland a more attractive destination for tourists travelling by air and for investors looking to expand their businesses in the country.

Scotland's hotels and attractions are confident the coming months will also be profitable. It is hoped the London Olympics and the Queen's Diamond Jubilee celebrations will lead to spin-off visits to Scotland, while the high cost of foreign travel may boost the "staycation" market.

This year will also see the release of Disney/Pixar's Scottish-themed animated adventure Brave, described by Mike Cantley, chairman of VisitScotland, as the "biggest film tourism opportunity for Scotland since Braveheart".

Mr Cantlay said: "This report clearly is encouraging for our tourism industry for the year so far, with optimism about the year ahead particularly welcome as we head into traditionally busier summer months. Although times continue to be challenging for the tourism industry, we are hearing lots of positive noises from businesses across the country."

Mark Gallagher, co-chairman of the Glasgow Hoteliers Association, added: "It has been a good start to the year and the summer is looking fairly bright

"Leisure tourism is looking stronger going forward, and there are now more direct flights from European cities coming into Glasgow."