The decision to base the New Zealand Mountain Biking Centre of Excellence at Waipa had spurred the company back into action, he said.
Rotorua District councillor Dave Donaldson said the council had been negotiating with Red Stag for "some time" over the future of the site and he was pleased agreement had been reached.
"It looks exciting for Rotorua, it's long overdue to have some decent facilities there."
He said a "dusty car park" and portaloos "didn't cut" it for the site, especially now it was to be New Zealand's official mountain biking base. Rotorua had an international reputation for the sport and could not afford to rest on its laurels, he said.
He said the hotel and all other commercial enterprises in the development would be down to Red Stag with the council responsible for the toilets and car parks. The toilet design has been confirmed, and includes a track running over top of the toilet block.
Rotorua businessman Ray Cook has long been an advocate of the value of mountain biking to the city.
"It's a major tourist attraction for Rotorua," he said. "All the other centres around New Zealand have played catch up to Rotorua - we need to keep ahead of the game."
Mr Cook said he hadn't yet seen Red Stag's plans, but supported any development of the Waipa facilities.
He said he hoped the council would prioritise building the toilet block, while sealed carparking was also good news.
Mr Cook said he wasn't sure about the demand for an on-site hotel given the abundance of accommodation in Rotorua although he presumed Red Stag would have done its research.
"When people come mountain biking there is more to it than mountain biking - [it's] the whole experience."