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VENICE (Reuters) - A dearth of big Hollywood stars, Venice's notoriously high costs, fierce competition from Toronto -- this year's film festival on the Lido is fighting to keep its place on the map as one of cinema's most prestigious events.
The venue itself is a building site, with completion of the long-delayed new Palazzo del Cinema -- its main screening theater -- now not expected until 2012.
On the waterfront, the legendary Hotel Des Bains where Thomas Mann set his "Death in Venice" classic -- and Luchino Visconti shot its famous film adaptation -- is shut, and work is under way to convert it into luxury apartments.
With the recent financial crisis still biting, and both the industry and media in cost-cutting mode, the Mostra del Cinema is feeling the heat from the Toronto festival, which overlaps with Venice and is showing many of the same films.
Its location in North America, lower costs and the presence of so many deal-making industry executives all make Toronto a tempting and cheaper alternative for studios keen to showcase their films as the unofficial cinema awards race gets underway.
"For American stars it's just a lot easier to go to Toronto, and for producers it's a matter of money -- it costs a third of what Venice does or less," said Natalia Aspesi, a veteran critic for Italian daily La Repubblica.
As the festival, the world's oldest, hits the half-way mark ahead of the awards ceremony on Saturday, most film watchers agree this year's line-up on the Lido is strong but may lack the defining masterpiece that makes for a vintage year.
Films tipped to bag the top Golden Lion prize include China's "The Ditch," a hard-hitting look at the fate of political prisoners condemned to forced labor camps in 1960.
Another critics' favorite is "Essential Killing," with Vincent Gallo starring as a suspected Taliban fighter on the run from U.S. forces -- and not uttering a single word throughout the film.
Outside the competition, Casey Affleck's documentary on Joaquin Phoenix and his transition from acclaimed actor to shambolic hip-hop wannabe -- whether a hoax or not -- captivated viewers and kept media attention high.
Still, directors like Clint Eastwood, Robert Redford and Danny Boyle have all opted to premiere their latest films in Toronto, whose own movie showcase kicks off on September 9.
Marco Mueller, the respected chief of the 12-million euro Venice festival, has put on a brave face, insisting he believes the two events could continue to exist side-by-side.
"I'm convinced that Venice is still strong," he told Reuters, adding that "the visibility, the impact of a film is created here and the market potential of the film is then completely assessed only in Toronto."
He is also keen to point out that he deemed some films screening in Toronto just not good enough for Venice, especially when they come with strings attached by the studios. For example, he turned down "The American," with George Clooney, which producers wanted to open his festival.
Instead Mueller opted for youth -- the average age of directors in the main competition is an unusually low 47 -- and Hollywood misfits rather than A-listers this year.
Stars on the Lido red carpet, vital to feed the media buzz around a festival, have so far included Natalie Portman, Catherine Deneuve and Quentin Tarantino -- but that is a far cry from celebrity-studded editions seen in the past.
"Toronto is becoming more aggressive and it is a great launching pad for North America. Now they've also started getting a higher profile internationally, and that has to be a concern for Venice," said a publicist who asked not to be named.
"Still, the Biennale has been around a long time and if they can get their politics right then I think Venice still has a future. But they need to react to a changing landscape and increasing competition," he said.
Additional reporting by Mike Collett-White, editing by Paul Casciato