The festival's executive director, Tisa Ho, says next year's festival is innovative, yet retains its strong sense of history.

In Scary Monster, for instance, Guillem and Khan have created something new by fusing classical ballet with kathak, a 500-year-old Indian classical dance, Ho says. The performance will also feature additional choreography by Lin Hwai-min of Taiwan's Cloud Gate Dance Theatre.

Jiangsu Province Kunqu Opera's The Peach Blossom Fan also honours tradition, but takes the opportunity to do something fresh with the material, Ho says. 'It isn't, 'We will now do kunqu in a totally different way and we'll violate or change or disregard the rules',' she says. 'It's very respectful, but within that, there is the opportunity to do something different and new.'

And Stealing the Imperial Horse, a new work commissioned for the festival, is a classical Beijing opera 'transmorphed' into Cantonese opera, Ho says.

At a time when the local cultural calendar is increasingly crowded with public or commercially run arts shows and festivals, the Hong Kong Arts Festival now faces a significant challenge in maintaining its role as the city's premier international arts event. The Leisure and Cultural Services Department's (LCSD) New Vision Arts Festival is giving it a run for its money.

But with two exhibitions, over 150 performances and events featuring 34 performing groups - 11 of which are local - next year's festival aims to repeat this year's record HK$31.6 million takings, in which 103,000 tickets were sold, accounting for an average attendance of nearly 93 per cent.

The 2007 festival's budget is more than HK$63 million, and it has received a HK$15.73 million subvention from the government through the LCSD and a HK$3.84 million contribution from the Hong Kong Jockey Club Charities Trust. Festival organisers hope to raise about HK$15 million through sponsorship, donations and its Young Friends Scheme, and generate about HK$26.5 million in ticket sales.

Despite box office pressure, ticket prices remain roughly the same, with only the best seats for The Great Mass - featuring the Leipzig Ballet, Gewandhaus Orchestra and Opera Choir - costing HK$1,200 each.

The festival has not shied away from new, and sometimes risky, commissions, such as Lost Village. A joint commission and production with the National Theatre Company of China, the Hong Kong Arts Festival and the New National Theatre, Tokyo, Lost Village will be directed by pioneering playwrights/directors Li Liuyi and Oriza Hirata.

Another new piece, My Life as a Dancer, will feature 16 local dancers from three generations, including Lau Siu-ming, Willy Tsao Sing-yuen, Helen Lai Hoi-ling, Yuri Ng Yue-lit and Xing Liang.

Again, this piece pays tribute to the past by merging it with the new. The same goes for Artemis Quartet's Johannes Brahms/Anton Webern programme, which features Brahms' three-string quartets, each prefaced with a piece by 20th-century composer Webern.

Ho says what she loves most about next year's festival is the 'emotional and intellectual connection with the past'.

'That's what I love. It's not, 'we're going to do something new, blank slate time now',' she says. 'We acknowledge, we respect and we take on the history, but at the same time we're not being trapped by it.'