As the 64th Venice Film Fest opens tonight with Joe Wright's Atonement, thoughts are on expansion and stability. While the Italian industry will have to wait to see if artistic director Marco Mueller and Biennale President Davide Croff will be reinstated for a second mandate - all festivalgoers are wondering how long Venice will wait for its new Palazzo'

The duo met journalists at Venice's opening conference that focused on the Palazzo project and their mandate.

'The new Palazzo is not a hope any longer it is a reality,' assured Croff while making reference to a 'demolition ball' designed by Dante Feretti that 'smashes' through the current Palazzo del Cinema. 'The metaphor goes beyond infrastructure, it signals the opening of new horizons.'

Italy's culture minister Francesco Rutelli will face the long-term questions this winter (Mueller's and Croff's mandates expire at the end of this year). But Rutelli is expected in Venice where he'll meet with Biennale organisers and regional and local politicians - likely to talk about the Palazzo plans.

A state co-financing deal has already been signed and if all goes well, Venice will see a new space completed by 2011, which will include four new cinemas and a market exhibition area: much needed upgrades to the Lido's fascist-era infrastructure.

Even without a Palazzo, sales are done here, industry professionals insist. But they say Venice's importance is still the prestige that pans out in deals finalised at Toronto or even Rome, which in its first year in 2006 already carved a niche with its four-day Business Street industry event.

Venice is still a crucial stop on the festival calendar for most. 'Venice is more of an outdoor dialogue with directors and producers, it is still a place that isn't that commercial and everything happens walking around on the terrace of the Hotel Excelsior, which I use as my office. Venice is important for visibility, and deals will happen here,' says veteran Italian sales agent Adrianna Chiesa, in Venice with competition drama The Sweet And The Bitter (Il dolce e l'amaro). She adds: 'I am focusing on the market in Rome, which has already given good results at the Business Street last year.'

Meanwhile Pierre Menahem of Paris-based Scalpel has picked up two Venice titles before the event, and is highly enthusiastic about Venice's contribution to world sales, despite the lack of a formal market structure.

Menahem's titles include Spanish director Jose Luis Guerin's competition entry In the City of Sylvia (En la ciudad de Sylvia) and Venice Days title Valzer (Waltz) by Salvatore Maira - billed as a one-take melodrama.

He calls Venice the 'ideal platform' for debut sales of both films. 'Venice brings us prestige that art house movies need. We hope to generate buzz with film critics, or eventually with a prize. There is a market in Venice,' he argues. 'We do close deals in Venice but of course not all the buyers are in Venice and we do make effort to wait for buyers from other markets that will go to Toronto. It's only fair.'

The festival will officially kick off tonight with the highly anticipated opening film Atonement, Joe Wright's follow-up to his Oscar-nominated feature debut Pride & Prejudice. Wright will be on the red carpet with stars Keira Knightley and James McAvoy.

This year's streamlined line-up reflects Mueller's passion for English language and Asian cinema, includes a competition roster of all world premieres and a balanced representation of the old guard as well as new talents.

While Mueller says he took over Venice when it was 'up and running,' he doesn't deny that his compact line up (there are about 60 titles in total) is a good format. 'We have even made the programming so that every film will be in response to the ones screened before or after,' Mueller said.

But he does add that he was asked four years ago to put special attention on reinforcing the bond with US cinema and to upping star power on the red carpet.

If the first days of the festival are any example, it appears he's hit the nail on the head. George Clooney, Tilda Swinton, Scarlett Johansson, Brad Pitt, Michael Caine, Jude Law and Charlize Theron will all be trekking down the 'passerella,' Venice's red carpet.

The festival's all-director jury led by Zhang Yimou also held their opening press conference Wednesday, but without Jane Campion. Mueller explained she was detained due to a serious family health issue and assured that the New Zealand director would be able to make up the missed screenings.

Finally, rumors that Mad Detective by Hong Kong director Johnnie To will be this year's surprise film are all but officially confirmed.

'It will be from an Asian master, who is actually still mixing the film. And he won't be from Korea, Japan, or China,' said Mueller when confronted.