Lambton Park Hotel manager Michael Campbell said the changes were "most welcome" and would ease some of the difficulties of the existing 10-person limit.

"We are open for dining now, but in some respects it's not something we were looking to do," he said. "We've decided to do it because a lot of our competitors are.

"There was a plan for us to do that though once the limit moved to 50, it's something we were working towards.

"The greatest obstacle with a 10-person limit is that a lot of people want to book for two or three or four. With the 50, it allows you to return to nearly a normal operation for your dining side of things. Some venues like ours might not be able to fully fit 50 people if you adhere to social distancing, but you'll be able to get very close to it."

Swansea Hotel licensee Kathy Edwards said the new limit would "make a huge difference to our income".

"We're stoked, absolutely stoked," she said.

"We've been doing takeaways for two weeks, sit-down dinners for a week and starting lunches from tomorrow.

"So we're really excited to move forward. It will put my permanent staff back into permanent positions. All of our guys have been on JobKeeper. Only our management staff and chefs have been doing a few hours."

Premier Gladys Berejiklian said the changes were a "critical" step for the state but stressed very strict rules would be in place for venues. Pubs, clubs, restaurants and cafes still have to allow four square metres of space per person. Bookings of more than 10 people are banned and patrons must not stand.

Mr Campbell said he was concerned about some details, including the rule that alcohol must be served via table service. He said it required assessment before committing to opening the hotel for more patrons.

Ms Edwards said given the limit would be raised on June 1, the same day people can travel for holidays in NSW, the hotel would try to take advantage of tourists visiting Lake Macquarie, especially over the long weekend.

"If things go well that first week, I reckon it will only be middle to late June before they [ease restrictions again]," she said. "We have accommodation in the hotel as well and would be hoping to get a bit of traction from the long weekend onwards.

"It would be good if we could get the TAB and the KENO and gaming machines up and running, but it is what it is - you just take what you can get at this stage.

"Hopefully it won't be too much longer."

Deputy Premier John Barilaro said relaxing restrictions would help boost regional businesses which have suffered through drought, bushfires and the pandemic. "It's out happy hour - it's time to wine and dine," he said.

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