The council’s cabinet agreed to borrow £9m to kick-start the construction of a hotel close to the St Andrew’s Road bridge entrance of the John Smith’s Stadium.
A hotel was given the green light in 2010 as part of the £100m HD One scheme featuring a ski slope, shops and bars. But the development has stalled for more than five years.
Now plans to bring forward the creation of a £13m 149-bed “business class” hotel ahead of the full HD One scheme can go ahead.
Kirklees will borrow the cash at preferential rates and make a profit on the loan.
Clr Graham Turner, cabinet member for resources, said there was a “shortage of four star hotels in Kirklees” which he claimed meant Huddersfield University put up its guests outside of Kirklees.
The council says it has analysed the risk of borrowing the cash on behalf of a private firm and believes its money is safe.
It is hoped the hotel will create lots of local jobs during construction and boost the likelihood of the full HD One scheme going ahead later this year.