The Trump Administration change the obama administrations cuba normalization policies . A panel at Florida International university looked at the booming Tourism Industry in cuba under the Top Administration and economic prospects for the future. Panelists include academics plus the office of the recent report on cuban tourism. This is about an hour and a half. Good afternoon everyone thank you all for being here. A special thanks to our audience in the cspan world for joining us as this event is being recorded by the cspan, so thank you for the cspan team for being here and for the audience for joining us. My name is frank moore. On the director of the kimberly green latin america and Caribbean Center here at Florida International university. We are for our friends in cspan, we are here located at the biscayne bay campus of Florida International university in miami. We have another campus, where the center is located in west dade. The center that i direct is one of the institutes of programs or centers at the stephen j green school of public and international affairs, again at Florida International university. We are just absolutely delighted to be hosting for cohosting this event. I want to thank our dean, the dean of the Chaplain School of tourism management, mike hampton. [applause] thank you, dean, for supporting this. This is a great event to have here on your campus, right . Also want to thank another cohost, the Cuban Research institute, the directories you with us today and will be joining the panel in a second. A little bit about why were here and how we got here. Last year the Brookings Institution, specifically the foreignpolicy team and group and ted picone in the Latin American Initiative team, reached out to me to see if we were interested in cosponsoring a study, a study on as you all i think no one of the more Dynamic Industries or sectors of the cuban economy. And all this of course was in the context of december 17, 2014, and many different changes that have occurred in the relationship between the United States and cuba since then. And so ted reached out to see the center was interested in helping and funding this study and, of course, we reached out and agreed immediately. We are very delighted to be very much a part of this. The study was first launched in washington d. C. , i think december 2 of last year, and so were doing a kind of miami launch, if you will come of the study with the two authors who are joining us and you will hear from here very soon. So let me tell you how were going to proceed. So here i will introduce the two coauthors in a second. They will present their study. There are copies of the study, by the way, in the back in the lobby of the auditorium. So please make sure to take one. They will do the presentation for about 2025 minutes and then i asked a panel of experts here from Florida International university and st. Thomas university to sort of give the remarks, reactions to the study. We will have a kind of conversation up here on stage before we turn it over to you for your questions and your comments. And then well go from about now anuntil 6 00 when we will end te session. So let me introduce the two coauthors of this important study. First let me introduce Richard Feinberg. Hes the gentlemen right there that you see. Doctor feinberg as a nonresident senior fellow in the Latin American Initiative at brookings and a professor of International Political economy in the school of Global Policy and strategy of the university of california in san diego. Previously, dr. Feinberg served as special assistant to president clinton for National Security affairs and senior director of the National SecurityCouncils Office of Interamerican Affairs back during again in the clinton administration. He is the author of numerous books and works, too many to mention here but there is one thought of what to mention. Its really his most recent book, open for business, building the new cuban economy. Here it is. Its available both of course at amazon as well as the Brookings Institution website bookstore website. And its getting some really wonderful reviews. And i hope you get a chance to read. Also Richard Haskin has come ths sort of a plug for a new magazine, cuba trade. Richard has a piece based on this exact study where he lays out the basic guidelines and elements of the study, and so cuban trade, thats the name of the magazine for trade investment in cuba. The other richard, that is author of this important study works with the International Growth center as the country director for rwanda, who god in south sudan who gonda. Its a joint venture of Oxford University and the London School of economics. Provides the institute provides independent researchbased analysis at the request of governments of selected countries in asia and africa. He is a senior fellow nonresident at the World Trade Institute in bern switzerland and a distinguished research, research at the northsouth institute in canada. He consults with a number of International Organizations including the world bank, the organizationof Economic Cooperation to velvet and the International Trade center that where very, very fortunate to have these two scholars with us today to present their work that span an a number of months and s pretty detailed. Anything it makes an important contribution both in terms of the challenges that cuba faces in expanding tourism in cuba as well as some of the opportunities. So with that i turn it over to our two coauthors who will come up and present their work. [applause] well, thank you very much, frank, for the wonderful introduction. Also thank you to dean hampton for the welcome to the Chaplain School. It really is a pleasure for us to be here. You know youre in the right place when the school of management that you are dealing with is located over a wine bar. You know, this is, richard and i are just humble Development Economist and we came to tourism sorted through the lens of growth and distribution of those kinds of issues. And if wed only known what you guys have only figured out, we wouldve started much earlier in our quest to understand the Tourism Industry. Richard and i are going to bit of a tag team here and so bear with us as we pass the baton and discuss this study. Just a couple of points. Let me give you the headlines first. First of all if i can get this thing to work, one of the reasons we wanted to go to study tourism was the industry was booming. We wanted to ask the question who benefits . That equation is important, has become important politically in the United States because of the recent election and now we see the prospect of possible reverse some of the obama issues. Theres been the assertion that impacthat,in fact, tourism realt benefit the economy. Benefits mainly the military. And so therefore we ought to shut down what is been happening already. The question were also interested in was how can interested be structured so that it drives growth courts we did want it to be just an enclave industry. We should benefit only a few people that benefit only a few people but had growth to rise much more readily than the rather anemic performance it had in the past. The short answer to both those questions is that the industry in fact, is benefiting and wide swath of Cuban Society and indeed it has the potential to drive a Sustainable Development into the future. That said the industry actually u. S. Wil followed behind the otr caribbean countries. It operates well short of its potential in our view. One reason is the combination of state sector ownership and regulations that have created obstacles, particularly for Sports Industry and Linkage Industries to help the industry grow. So we will elaborate a bit of that in the course of this discussion. We think that the way this is proven, in fact, is even modest changes in regulation that occurred over the last four or five years have unleashed a torrent of private sector activities in bread and breakfasts, and restaurants come in transportation, taxicabs and so forth. That private sector cluster now counts for more than 30 of the industries are links. The government does in fact, have ambitious plans for the industry lik would like to accommodate some 10 million visitors by 2030. Thats a big increase. One of the things we wanted to do was look at the realism of the estimate. But they do this . Are estimates suggests that its possible but its unlikely unless cuba changes a number of its policies and will elaborate on what some of those policy changes might be to promote growth. And, of course, finally the industry has important implications come if i can get the last point to boot up, for the United States. We think in its own National Interest of the United States should move forward with the normalization process that mr. Obama has launched already. Let me elaborate on these points together with richard. First of all cuba of course has abundant Tourist Attractions that could be a driver of growth and prosperity. I dont need to tell this audience that. This was the tough assignment that felt to us when we went to there, but this is just a photo of santa maria in the north coast of cuba and, of course, cuba has extensive beaches like this that can be developed further but thats not the only important point. It is a rich culture inland that merits consideration and development. So the opportunities for the industry to grow are really fast and enormous. In fact, already, of course cuba is booming. This simply knows silva shows the number of arrivals for the 19952015. You can see the number of rather steady stream. And, of course, this graph only goes up to 2015. Sally asked me to do a projection 2016 based on more recent numbers, and, of course, that would allow i think for the number of tourists to reach almost 4 million at the end of 2016. If you look at the earnings, the pattern is much more varied. The earnings per tourist varies quite widely from yeartoyear, and response to domestic policies among other things. But in 201415 you see an important upswing in earnings. In 2015 its its likely be even greater simply because the industrieindustry is operating h higher capacity in part due to the normalization efforts of the United States and cuba together. The benefits of the industry as i asserted at the beginning are actually quite widespread. It is one of the major sources of growth in economy, perhaps you could argue it is the principal source of growth in the economy. Its a major source of Foreign Exchange and foreign earnings. Tourist revenues are some twothirds or threequarters of all merchandise earnings. So cuba is a Service Sector exporter as an economy and tourism plays an important role. Some 70 of tourist earnings stay in the country, which is a pretty good number. Through spending on wages, agricultural products, cultural activities, transport and the like. And it is a major force linking cuba to the Global Economy exposing cubans on a daily basis to the international environment. This graph shows the fact that cuban industry has ample opportunity to grow. If you think about, i dont like this term carrying capacity but this simply shows the number of visitors as a share of the population. And indeed relative to the Dominican Republic, here almost at. 5 of the total population, its about twice what cuba is today. So there is considerable upside potentially if you just use this measure and i would argue there are many other measures we could use that would show the same thing. The industry has not contribute to cubas growth as much as it could otherwise occur, as it otherwise could. In fact, that our site is kind of falling behind. This graph simply shows the contribution to the economy on the far left you see in blue the direct contribution to the economy of cuba. Its about 2. 5 of gdp. Of gdp. If you use the world Tourism Councils numbers, that number expansive some 10 total contribution to the economy and this includes induced spending as well as indirect spending. Substantial lesson what we see in either the Dominican Republic or costa rica, comparative countries which are think a pretty good comparatives for cuba. Theres more that cuba could be doing. This shows two things the first is that the bottom line, this is an index in 1995, sort of sort of putting all economies at exactly the same level and saying lets look at revenue per visitor over the long sweep of things. This is an indication of the efficiency and effectiveness of the industry in growth. As you can see, cuba is doing rather poorly relative to the other comparative countries or costa rica, Dominican Republic and this is the average for all of developing countries. Another important point is not only cuba doing relatively poorly compared to the rest of the caribbean, the caribbean itself is doing relatively poorly compared to the rest of the world. The caribbean is losing market share to other destinations. Why . Over the last 20 years major new destinations have opened up in china, in southeast asia, and africa. And as a result the tourist dollars a getting spread over a much wider array of countries, which means that the industry is really has to be competitive in order to survive and to actually prosper. Cuba has more to be in this regard if it wants to upgrade its industries. One of the reasons is that if you talk to some taurus, one of the things that typically complain about our poor maintenance, the service quality, or the fact that the internet is virtually nonexistent or very expensive and awkward. These are things cuba is working on. We have some suggestions about this and we think part of the reason for these particular factors has to do with the nature of the organization of the industry and the incentives that the industry transmits to its workers and to its management. Let me turn it over to richard at this point and he will talk a little bit about the organization of the industry, and its future that way. Richard, thanks very much. So the industry in cuba of tourism is dominant by Stateowned Enterprises. Of course it still a statist economy. Many, there are three main Stateowned Enterprises and the Tourism Sector. Two of them are under mentor, the ministry of tourism. But we also see that under the military we have the third main stateowned enterprise. Some of these three Stateowned Enterprises, only one of the three is the military. Of these three, one accounts for about 40 of the rooms in the Tourism Sector. You may have heard, its often said rhetorically, that tourist money is all going to the cuban military. Is that what this graph says . Or is actually only 40 going to the military owned stateowned enterprise, one of the three . Plus, as i will explain in a minute, you had a boom in the purely private sector person to people opening up their homes, remodeling rooms and creating places where travelers can stay at a bedandbreakfast. That accounts for about another 25 of rooms, about 16,000 rooms. Add that to the total tourism capacity and it is only 2530 of total international rooms, four and five star quality where you might consider staying if you were to visit cuba. The main point here is it is simply not true that all of these traveler revenues are going into the coffers of the far of the cuban armed forces, okay . The other point here is that, as you can see 45 of the main hotels have some foreign partnership. Of course not with u. S. Companies accept a little bit of marriott but mostly with spanish, canadian and other International Hotel operators that are active now in cuba. So most of the hotels that we would stay at it is some international presence. However, we point to forming problems with the way the Tourism Sector has operated. One is a lot, there are endless beaches. Thats with the growth is. You dont see many cranes operating in havana. But if you travel to these beach resort you see a lot of cranes. It seems odd, doesnt it . Why are they not Building Work capacity in havana . There are various reasons which ill report explains how to do with infrastructure. What of 44,000 rooms, only got only about 6000 are in havana. Fy 2 20 statically to tell in advance today you will pay 400 a night. There are only three important new hotel sites currently under construction in havana. There should be a dozen. F