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By Shayndi Raice Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--The administrator of a $20 billion fund set up by BP (BP, BP.LN) to compensate the Gulf Coast tourism industry said Tuesday there are significant challenges ahead in assessing claims. "It's easy to compensate a hotel on the beach where there's oil. You don't need the wisdom of Solomon for that claim," said Kenneth Feinberg. "Proximity is going to be the problem here." The comments came during testimony before a U.S. House panel considering ways to ensure the Gulf Coast tourism industry receives compensation for damages it has suffered due to the Deepwater Horizon oil spill. Feinberg explained that it will be difficult, for example, to determine the claims of a restaurant that has seen a decline in business because of the lack of tourism. Feinberg was tapped by the Obama administration and BP to administer the claims process for the fund created by the company in June to compensate victims of the spill. There are 36 regional offices in place to handle claims with over 1,500 employees that will be ready to begin assessing claims in a few weeks, said Feinberg. The Gulf Coast tourism industry accounts for 1 million jobs, making it the second largest industry in the region, according to the U.S. Travel Association. The spill could cost almost $23 billion in lost travel and tourism revenue with its effect lasting up to three years, according to a study released Thursday by Oxford Economics and the U.S. Travel Association. "The region is losing business not only because the beaches may not be safe, but because travelers think it is not safe to travel to the Gulf Coast region," said Rep. Bobby Rush (D., Ill.), chairman of the House Energy and Commerce Committee. The region has just begun to heal from Hurricane Katrina and tourism companies were set for a recovery to finally kick in this year, according to witnesses. "On April 20, the Deepwater Horizon sunk and so did our hopes to finally reestablish the Mississippi Gulf Coast as a tourist destination," said Rip Daniels, vice president of the Mississippi Gulf Coast Tourism Commission, before the panel. "I don't know a single business in this town that has not been affected," said Herb Malone, president and chief executive of the Alabama Gulf Coast Convention and Visitors Bureau. "I look at the eyes of my friends and colleagues and I see despair I've never seen before." Malone told the panel he expects his state's tourism industry to lose about $1 billion. Feinberg told the committee that he anticipates a variety of claims related to removal and clean up, damages to personal injury or personal property, lost profits and earning capacity and claims for the loss of subsistence use of natural resources. "All these claims will be considered on their individual merits and decisions concerning both eligibility and calculation of awards will be made promptly, with maximum efficiency," he said in prepared testimony submitted to the panel. -By Shayndi Raice, Dow Jones Newswires; 202-862-9291; shayndi.raice@dowjones.com. (END) Dow Jones Newswires July 27, 2010 11:17 ET (15:17 GMT)