"Hot spots" happen when the skin is abraded (it can even be something as small as a tick bite that causes the skin to open). When the skin is abraded and it then gets wet from licking or swimming, etc, bacteria is introduced because of the moisture and this causes the hot spot.
The best thing for a hot spot or bacterial problems is to wash the area well with peroxide and then shave all the hair away from the sore. Hair traps moisture and you don't want that. Then dry the area completely and apply some neosporine ointment. Distract the dog for 5 minutes and then wipe off the excess. It's ok if he licks it after that. But most dogs won't because it tastes terrible.
If this doesn't help, you will need to see the vet to be sure it IS a hot spot and to get possible antibiotics.
I would also recommend an e-collar to limit his access to the area.
Let me know if you need more help.
It sounds like a hot spot. But it could also be an infection, allergies, or other skin issue.
I would treat it as a hot spot and see if it starts to improve.
Not an active Expert