Festive occasion hosted by Donegal area (4)
I believe the answer is:
gala
'festive occasion' is the definition.
(I've seen this before)
'hosted by donegal area' is the wordplay.
'hosted by' indicates the answer is hidden within the clue (the answer is hosted or welcomed by the clue).
'GALA' is hidden in the letters of 'donegal area'.
(Other definitions for gala that I've seen before include "Public party" , "Swimming competition" , "Social occasion with special performances" , "Jamboree" , "Special festivity" .)