The Conservatory is due for completion in May 2013 and will add 135sqm of events space to the venue and boost the number of bedrooms by 22 to 84.
The hotel, which currently has nine rooms for events, is converting a courtyard area adjacent to its River Room Restaurant, creating a "light and airy option for functions, receptions and meetings".
The area will link to the hotel’s Little Barn space and restaurant, enabling the three areas to be used as one for large events.
The 22 new Garden Rooms, with views of the gardens and the Thames, are being built in a contemporary style to suit the existing four-star property and the hotel’s existing 22 Sandford bedrooms have been refurbished as part of the investment.
Jonathan Oldroyd, Oxford Thames Four Pillars Hotel’s general manager, said: "The Conservatory and new bedrooms will enable us to offer even more flexibility to organisers of events of all kinds, from meetings and conferences to weddings and private parties."