So far, $33.8m has been awarded to 80 projects from the fund.
Davis said although the Government had run two successful funding rounds, the initial criteria created barriers for some councils.
But he said the new changes "remove those barriers and will improve how the fund works".
The changes include lowering the minimum funding threshold for a project from $100,000 to $25,000.
It also streamlined decision making by allowing the Ministry of Business, Innovation and Employment (MBIE) to make decisions up to $1m.
"I asked for this review because I want the Government to be an enabler to tourism and the regions," Kelvin Davis said.
"The feedback from councils made it clear we needed to improve the criteria. We've listened, and now more communities will benefit," he said.
The criteria changes followed a review conducted by MBIE and Local Government New Zealand (LGNZ), which heard from 34 councils from around the country.
LGNZ President Dave Cull said the changes would assist small communities struggling with the volume of tourists and lead to better experiences for travellers.
"As we saw last year, there was a significant gap between the increased number of travellers and the infrastructure our regions were able to provide to meet that influx."
He said the changes announced today would help bridge this gap.
Rotorua Lakes District Mayor Steve Chadwick said many small towns were hosting huge numbers of tourists.
He said the changes announced today were a "step in the right direction to ensure we're prepared for a fantastic summer".