In a move greeted with surprise by many the Rose of Tralee company is planning to buy the Fels Point Hotel in the town.
Rose of Tralee Executive Chairman Anthony O'Gara announced on Saturday morning that the festival company will enter the bidding process to purchase the hotel.
Mr O'Gara said financial backing has been secured and the festival is in a position to make a cash purchase of the hotel which has been home to the festival since 2007.
The hotel is being sold as part of a portfolio of NAMA hotels with a combined value of €600 million.
The purchase of the hotel would allow the Rose of Tralee company to move ahead with its long standing plans to build a permanent 'Rose Dome' to house the pageant.
"Such a move would be key to the long-term development and viability of the Festival in Tralee. Ownership of the hotel would be a pre-requisite for the development of a permanent Dome on the adjacent Fels Point site. If the bid is successful, it would allow us to unlock the full potential of the Festival." said Mr O'Gara.
Should the purchase go ahead the new permanent dome could be built in time for the 2017 festival.
A new Rose of Tralee Festival Trust is being established with a view to eventually managing the overall project and the hotel may eventually be rebranded as the "Rose of Tralee Hotel".
A permanent 'Dome' would provide Tralee with venue that could rival Killarney's INEC and would be used to host events and conferences on a year round basis.
Mr O'Gara said that local ownership of the hotel, together with the development of a permanent Dome on the Fels Point site, would provide a major boost to the local economy in Tralee and Kerry.