It could result in nearly 1000 winter jobs across Queenstown and Wanaka.
Queenstown Lakes Mayor Jim Boult said it was a huge relief.
Local business owners could take "hope" from a recent survey that showed Queenstown and Wanaka were top destinations for New Zealanders once travel was allowed.
KJet and Time Tripper owner Shaun Kelly urged the Government to move to Level 2 on Wednesday, so he could reopen with distancing and hygiene measures in place.
"I truly believe, get to Level 2, everyone knows what we are dealing with now, just get business cranking again.
"Health and wealth go hand in hand. Businesses folding is not good for people’s health, either."
Cardrona Alpine Resort general manager Bridget Legnavsky said "we’re stoked actually", while NZSki chief executive Paul Anderson said he was "heartened" by the Level 2 rules and was "excited to get open".
NZSki planned to recruit 400-500 people alongside its 70 permanent staff, and Cardrona was to add 300-400 staff to its regular contingent of 71.
Clutha-Southland MP Hamish Walker said in a "massive win" for the region, Air New Zealand had committed to returning flights to Queenstown under Level 2.
An airline spokesman said it was reviewing the network schedule and would announce information soon.
Queenstown Airport Corporation chief executive Colin Keel said he welcomed Ms Ardern’s announcement and called it a "step forward to recovery".
However, not all businesses believe the move to Level 2 will be a silver bullet.
Southern Discoveries chief executive Tim Hunter said demand would not be there to operate its cruises at Milford Sound or Lake Wakatipu.
Rival operator Jucy was also cautious about resuming operations, but southern lakes general manager Kat Van Dijk said "overall, we’re feeling really positive about it".
Enterprise Dunedin director John Christie said the rules allowed for more than businesses had probably expected and were welcomed.
However, he warned a timeline for the move between Levels 2 and 1 would be needed so businesses could judge whether to adapt to suit the rules or hold off from opening.
Invercargill’s Transport World marketing and tourism manager Hannah Whyte said the business was "very relieved".
"Having the ability to attract guests from out of town gives us a shot and it will be welcome news to many tourism and hospitality businesses."
Tourism Minister Kelvin Davis said the return of domestic travel was "terrific news" for tourism operators and hinted at more positive news to come.
"Right now, Tourism New Zealand are working on something special to encourage Kiwis to experience what New Zealand has on offer and it will be ready to launch when it’s in the best interest for the industry and the country."
Tourism New Zealand chief executive Stephen England-Hall said the industry would play an important role in the country’s economic recovery. — Additional reporting Mark Price and Luisa Girao.
