The council has said the approval for the project was not dependent on the outcome of the proposed merger process.
Waiariki council chairman Graeme Nahkies said it was unfortunate a number of critics of the merger proposal "tried to create the impression that instead of combining resources to create a larger, more capable organisation, Waiariki, its students and staff would be leaving town".
"News that we have started developing a brand new building that will be a centre of excellence for tourism and hospitality, with considerable benefits for the Rotorua community, our expert staff and students, should underline just how far from the truth that is."
Lobby group Keep Waiariki Local co-organiser Tamati Coffey said it was this kind of self-funded region-specific growth the group was trying to protect.
"It's fantastic news and underscores the brilliant developments and local industry-based focus Waiariki has in its current state, as one of Rotorua's biggest community partners.
"However, a building being built doesn't rule out reallocation of qualifications, loss of culture or restructuring of staff in future."
Waiariki tourism and hospitality head of department Bart Vosse said tourism and hospitality qualifications were growing in popularity with more than 500 students studying for a career in the industry.
"Our qualifications in these areas have never been as popular as they are today, with many high schools, career advisors and industry professionals understanding and supporting the transferable skills these industries offer."
He said the modern centre, to be built on the main Mokoia campus, would also be an additional drawcard for domestic and international students to come to Rotorua.
"The team are already engaged in a series of workshops to explore how we can create a learning environment that leads the way on a national level.
"Building this centre sends a strong message to our community, that Waiariki will always have a strong presence in our city's main revenue generating industry. The opportunities from there are endless."
Waiariki student association president Amy Uluave is studying a Bachelor of Tourism Management and is thrilled by the news.
"I also think it will go a long way to encouraging high school students to complete their qualifications in Rotorua because there will be less of a reason to go to university when you can stay local and still get an amazing education."
A timeline for the building's construction has not yet been decided.
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