Hampshire have reached agreement with Eastleigh Borough Council over planned development of the Rose Bowl.
The county has been given the green light to build a hotel at the venue, for which the council will provide the £30m funding.
Hampshire chairman Rod Bransgrove told BBC Radio Solent: "This is the latest stage towards the Rose Bowl becoming the premier Test venue in England."
The plans are part of a £48m overhaul, which will take capacity over 20,000.
The council are borrowing the money to fund the hotel, which is likely be a Hilton brand.
They say the financial commitment will have no impact on local tax-payers, and estimate that the project will create 200 jobs.
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