VENICE— Gianluigi Rizo, a porter at Venice’s iconic Piazza San Marco, pushes a cart of luggage as scores of tourists hop off water taxis, coming in from the airport through the medieval city’s canals.

Business is picking up as Covid-19 restrictions are lifted. But a ruling last month by the Italian government to ban cruise ships from approaching Venice’s lagoon is threatening to deprive the city of its most lucrative visitors for another summer season.

“It’s good that tourists are back, but the real money comes from the cruise ships with the Americans and the well-off Asians,” Mr. Rizo said. “They spend big in a short time, before sailing out.”

A restaurant in Piazza San Marco in June, following an easing of pandemic restrictions.

Photo: yara nardi/Reuters

Venice, which averaged around 20 million tourists a year before the pandemic, is desperate to bring back the foreign visitors that keep its economy afloat. Tourism revenue dried up over the past two years, but the city’s canals and piazzas are busy again and hotels are 80% full on average in August.

Access to the lagoon and Piazza San Marco has for years been a bone of contention between environmental campaigners, tourism bodies and cruise operators. Critics argue that runaway tourism—fed by the massive ships that move more than 5,000 passengers each—has pushed out many of Venice’s permanent residents, put a strain on housing and destroyed jobs not related to travel and hospitality. Tensions heightened in 2019 when a cruise ship crashed into a small tourist boat inside the lagoon, injuring five people.

Members of the group 'No Grandi Navi' (No Big Ships) protested the presence of a cruise ship in Venice’s lagoon in June.

Photo: andrea merola/Shutterstock

“With Covid the city was a ghost town, and we spent our savings on food and rent,” said Stefano Esposito, who owns a Murano glassware shop at Rialto Bridge, one of Venice’s busiest crossings. “The cruise crowds can be overwhelming, but they put food on the table and if the ships don’t come back, we are finished.”

Before the pandemic, Venice hotels hosted around 10.5 million foreign guests a year, according to Italy’s statistics bureau. The number doesn’t account for day visitors from cruise ships; they boost overall tourism arrivals to around 20 million annually, according to Italy’s tourism ministry.

The tourists, who mostly concentrate in an area of two square miles around Piazza San Marco, pour in about $3.3 billion annually, according to tourism ministry officials. About a fifth of the city’s 50,000 year-round residents depend directly on cruise ships for work, officials say.

Tourism in Venice has been picking up. Gondolas plied its canals in late July.

Photo: manuel silvestri/Reuters

The government has outlined a plan to temporarily divert ships to the nearby port of Marghera, while work is being done to build a cruise terminal outside the lagoon. Unesco, the United Nations culture and heritage agency, said in July that it could put Venice on its endangered list if a permanent ban on cruise ships docking in the city center wasn’t addressed.

Venice bans could have wider ramifications for the cruise industry, which is trying to lure back passengers after onboard Covid-19 outbreaks and travel restrictions halted most sailings in 2020. Itineraries in the Adriatic hinge on Venice being a home port, where passengers fly in and get on a ship or arrive on one vessel and board another after spending a few days in the city.

“If you can’t call at Venice, you might as well cancel many itineraries in the Adriatic Sea,” said Francesco Galietti, director for Italy at the Cruise Lines International Association, the industry’s main trade body.

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The cruise season here lasts from late March to early October. In 2019, before the pandemic, 600 ships called at Venice. There were practically zero arrivals in 2020, and through late September this year only 20 ships were scheduled to come in, docking at nearby ports like Ravenna and Falcone.

Gianmatteo Zampieri, the general manager of Baglioni Hotel Luna that overlooks the lagoon, says the debate on the cruise ships is mostly political, and that practical steps are needed for crowd control. “You can’t have half a dozen ships in the lagoon,” he said. “The ship arrivals need to be spaced out.”

Yet, many Venetians can’t wait for the foreign masses to return.

“If Athens, Paris and Barcelona can handle mass tourism, so can we,” said Luigi Rossi, who takes tourists around Venice’s canals in his gondola. “Stopping the ships so abruptly is absurd.”

Piazza San Marco, shown in late July, is at the center of Venice’s tourist activity.

Photo: manuel silvestri/Reuters

Write to Costas Paris at costas.paris@wsj.com