Ugh, I hate hot spots. Do you have either a cone collar or a no-bite collar? You've got to keep him from licking it, it will get ugly fast.
Star used to get them fairly frequently. Stress seemed to trigger them, and we re-roofed their sleeping area so it no longer gets wet. As you noted, moisture made it worse. If it's getting bigger, I'd get to the vets for a shot. It really helps. This last time the vet told me to give her benedryl when I first noticed one. It really seems to have helped - she hasn't had any large hot spots for quite a while now.
Good luck with it, hope your sweetie heals up quickly.