AN Irish hotel group has withdrawn from a planned 120 bedroom budget hotel project at Laganside near the new Waterfront concert hall.

The Tower Group was in discussions with the development company, Finbrook, which has the contract to develop the £40 million sterling Laganside site. It is owned by the Laganside Corporation, a public corporation. The Tower Group operates hotels in Killarney, Waterford, Sligo and Temple Bar.

The chief executive of Laganside, Mr George Mackie, said yesterday that although "talks were progressing", the Tower Group was "not in contract, but simply exploring a possible interest". There was nobody from the Tower Group available for comment about its withdrawal.

There have been reports that Tower pulled out because of the violence in the North last summer, but Mr Mackie said: "I don't know that you can isolate various factors. The Tower Group's interest was comparatively recent and although the talks were progressing, they have withdrawn for their own reasons."

Other factors which it is believed may have influenced its decision include the already huge growth in hotel accommodation in the city with further - expansion well under way. Yesterday, a local leisure group announced plans to build an 80 bedroom hotel on the old gas works off Belfast's Ormeau Road.

Mr Mackie added that the development company was in discussions with a number of other interested hotel groups, "not all of them local". He was confident that an alternative hotel operator would be found soon for the site.

The Laganside development includes a number of projects including apartments as well as a hotel and other amenities. Work has already begun on the apartments near the Waterfront concert and conference hall, which opened last month.