Transcripts For CSPAN2 Tourism In Cuba 20170418 : vimarsana.

CSPAN2 Tourism In Cuba April 18, 2017

Relations under the Trump Administration, and economic prospects for the future. Panelists also speculate whether President Trump will change the Obama Administration cuban normalization policies. Good afternoon everyone. Thank you all for being here. A special thanks to our audience in the cspan world for joining us. This event is being recorded by cspan. Thank you for being here and for the audience for joining us. My name is frank moore. I am the director of the kimberly green Caribbean Center here at Florida University. Our friends at cspan, we are here located at the biscayne bay campus of Florida University here in miami. We have another campus where the center is located in west dade. The center that i direct is one of the institutes and programs or centers at the Steven J Green school of International Affairs and university. We are absolutely delighted to be hosting or cohosting this event. I want to thank the dean of the Chaplain School of hospitality and tourism management, my campton. Thank you for supporting this and this is a great event to have here on your campus. I want to thank another cohost, the Cuban Research institute, the director is here with us today and will be joining the panel in a second. A little bit about why we are here and how we got here. Last year, the Brookings Institution and specifically the form policy team and group and ted picone and the Latin America Initiative team reached out to me to see if we were interested in cosponsoring a study, a study as you all know, one of the more Dynamic Industries or sectors of the cuban economy, and all of this within the context of december 17, the many different changes that have occurred between the United States and cuba since then. Ted reached out to see if the center was interested in helping funding the study, and of course, we reached out and agreed immediately. So, we are very delighted to be very much a part of this study. It was first launched in washington d. C. I think it was december 2 of last year, and so we are kind of doing a miami launch, if you will, of the study with the two authors joining us. Let me tell you how we are going to proceed. I will introduce the two coauthors in a second. They will present the study. There are copies of the study in the back and lobby of the auditorium so please be sure to take one. They will do the presentation for 20 or 25 minutes and i will ask a panel of experts here from Florida University and st. Thomas university to give their remarks, reactions to the study. We will have a conversation appear on stage before we turn it over to you for your questions and your comments. Then we will go from now until 6 00 p. M. When we will end the session. Let me introduce the two coauthors of this important study. First, let me introduce richard feinberg. He is the gentleman right there. Doctor feinberg is 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. as well as the broken Institution Website bookstore website and it is getting some wonderful reviews. A new magazine. And lays out basic guidelines of the study. Cuban trade is the name of the magazine for trade investment in cuba. The author of this important study, the International Growth center in uganda in south sudan. A joint venture of Oxford University cool of economics, it provides it provides independent Research Based analysis at the request of selected countries in asia. A senior fellow nonresident in switzerland, and distinguished Research Researcher at the northsouth institute, and the world bank, and development and international trade, very fortunate to have these two scholars to present their work that span a number of months that is pretty detailed, and important contribution to the challenges to expand tourism, and some of the opportunities. They present their work. Thank you very much for the wonderful introduction, thank you for the welcome to the sharpless school, it is a pleasure to be here. You know you are in the right place when the school of management you are dealing with is located over a wine are. Richard and i are economists that came to tourism through the lens of growth and distribution, we started much earlier in our quest to understand the Tourism Industry. Bearing with us as we pass the baton, to study. First of all if i can get this to work, to study tourism, who benefits . It has become important in the United States because of the recent election and the prospect, with oma issues and the assertion that really doesnt benefit the economy but mainly the military. The question we were interested in was how can the industry be structured for growth. We didnt and it just to be in enclave industry the demonstrated a few people but role duplications that would allow cuban incomes to rise more rapidly than the performance in the past. Short answer to both those questions is benefiting a wide swath of cuban society. Falling behind the caribbean countries operate well short of this potential in our view but one reason is the combination of state sector ownership and regulations that created obstacles for the support industries and Linkage Industries to help the industry grow. We will elaborate a bit. The way this has proven is modest changes in regulation over the last four or five years unleashed a torrent of privatesector activities in britain, breakfast and restaurants and transportation and so forth, that privatesector cluster counts for 30 of the industrys earnings. The government has ambitious plans for the industry. It would like to accommodate 10 million visitors by 2030, that is a big increase, look at the realism of that estimate. Could they do this. It is possible but unlikely unless cuba changes a number of its policies, to promote growth. If i can get the last point to boot up for the United States, in National Interest the United States can move forward with normalization process mister obama has launched already. Let me elaborate on these points. Cuba has abundant Tourist Attractions that could be a driver of growth, dont need to tell his audience that, this is a tough assignment that fell to us when we went there but this is a photo of santa maria in the north coast of cuba and cuba has extensive beaches like this that can be developed further but it has a rich culture inland that merits consideration and development so the opportunity for the industry to grow our vast. Already cuba is booming, this graph simply shows the number of arrivals 1995 to 2015 and they have increased with a little blip in the mid2000s. This graph goes up to 2015. Sally asked me to do a projection based on more recent numbers and that would allow for tourists to reach 4 million by 2016. If you look at the earnings the pattern is much more varied. Earnings very quite widely from yeartoyear and respond to domestic policies. We have seen an important upswing in earnings. In 2015 it is likely to be greater, the industries operating in a higher capacity in part due to the normalization efforts. Quite widespread, one of the major sources of growth in the economy, the principal source of growth in the economy, major source of Foreign Exchange and tourist revenues, two thirds and all merchandise, cuba is a Service Sector exporter, as an economy and plays an important role. 70 tourist earnings stay in the country, a pretty good number. Agricultural products and transport, it is a major force linking cuba, exposing cubans on a daily basis to the international environment. And ample opportunity to grow. And the number of visitors to share the population and indeed relative to the Dominican Republic, almost at 0. 5 of the total population, it is twice what cuba is today so there is considerable upside if you use this measure and i would argue many other measures show the same thing. The industry has not contributed to cubas growth as much as it could. There are times it has fallen behind, this graph shows contribution to the economy. On the far left you see the direct contribution to the economy is 2. 5 of gdp, the travel and Tourism Council numbers, that expands to 10 of total contribution to the economy. The Dominican Republic or costa rica, good comparatives, more that cuba could be doing. This graph shows two things. The bottom line, this is an index in 1995, and lets look at revenue per visitor over the long swath of things, this is an indication of the efficiency and effectiveness of the industry. And the Dominican Republic were developing countries. And the caribbean itself is doing relatively poorly compared to the rest of the world. The caribbean is losing market share to other destinations. Over the last 20 years new destinations of opened up in china and Southeast Asia and africa and as a result, the tourist dollars are spread over a much wider array of countries which means the industry has to be competitive in order to support and prosper. Cuba has more to do with it industries. One of the reasons is if you talk about tourists, poor maintenance, the service quality, the fact that the internet is nonexpensive and awkward. These are things we are working on. Part of the reason for these particular factors has to do with the nature of the organization of the industry and incentives the industry transmits to its workers and management. Let me turn it over to richard who will talk about the organization of the industry and its future that way. Thanks very much. The industry in cuba is dominated by state owned enterprises. Many, three enterprises in the Tourism Sector, two of them are under the ministry of tourism. We also see under the military, we have the third state of enterprise. Only one is the military. These three accounts for 40 of the rooms from the Tourism Sector. And to the cuban military. Is that what this graph says, 40 going to the military. In the private sector, people opening their homes, remodeling rooms and travelers stay at a bed and breakfast. That accounts for 25 of rooms, 16,000 rooms, add that to the total tourism capacity. 25 to 30 of total international rooms, four or five star quality, you might consider staying if you want to do that. And revenues go to the coffers of the cuban armed forces. The other point here, 45 , four and five stars have some foreign partnership, made with us companies and marriott, mostly International Operators that are active in cuba. Most of the hotels out there are international presence. Four main problems the way the Tourism Sector has operated. One, there are in the speeches where the growth is. You dont see many cranes operating in nevada but if you travel to beach resort you will see a lot of creams. It seems odd. Why arent they building more capacity . There are various reasons, 40,000 rooms, in havana. And 400 a night, only three Important Hotel sites currently under construction in havana. It is easy to build boxes on the beach than to do it Interesting Hotel and questions of profitability. Overemphasis on urban sites and elsewhere and spreading investment around the country to ecotourism etc. Second problem, the Tourism Sector needs to be better integrated into the economy. And what percentage of food and beverage, and accountants in those categories, and domestically, that has to do with the sluggishness in the agricultural sector, and would be better integration from the rural sector into the overall Tourism Sector. And in labor, International Hotels do not directly hire labor, labor is hired, Human Resource entities, our government, not directly hire than hotel. The average human voices two pauses. And this Employment Agency is productive from the underinvestment in training. The other point is why not more direct international participation, not just Management Contract but joined ventures. Only about 6000 rooms include joint ventures, the government projected of the 110,000 rooms they want to add over 15 years only about 30,000 of those rooms, under 30 will have Foreign Investment, joint ventures, 70 of the new investment going into the Tourism Sector is projected to be paid with domestic capital. We will explain that. I mentioned the private sector growing dramatically. Anyone who has a house, 15 to 20,000 investment, put up a new room, go on air b b, getting high rates of occupancy. You estimate roughly one third of money flowing into the economy is going to the private sector in cuba. We cannot emphasize this this goes to policy recommendations willake it a bit, but why cutting down visitors, trying to close off the globalization will destroy the growth of the private sector, counterproductive in National Interests. The private sector operates under various disincentives outlined in the report. Im not going to go into in detail now but just to point out there are a lot of reforms that could be made which would provide yet more dynamism in the private sector in cuba. These are two places where eventually there will be plaques, private homes renting out bed and breakfasts, plaques eventually which will say here slept new farmer ed feinberg. You want to continue . Not sure it warranted that. What is interesting about this picture, one on the left, this is a private bed and breakfast, the sign they are advertising is english. I thought it was revealing the new clientele they are catering to internationally. One point, to go back for a moment, should be mentioned here is air b b has set up a program with more than 4000 listenings in cuba and this to me augurs a new impetus to growth because a person can go online, look at the myriad of offerings in havana, get testimonials from people who stayed in those areas and see what the price is, pay with a credit card in dollars and show up in cuba the piece of paper, and happily stay in that place as well. Air b b had a trust problem that links individual entrepreneurs with the global marketplace in the place of cuba and elsewhere. Particularly in havana this is worth emphasizing. Richard thought it would be worthwhile to analyze those plans, and think through the implications of them. Basically the government would expand the current level of participation, the industry of tourism up to 10 million from 4 million at the end of last year. That is a big increase. To do that they plan to build 108,000 do rooms on stock of 8000 rooms of international quality, three or four star hotels in the state owned enterprises and it advertises sites to prospective investors from all over the world including golf courses, marinas and other tourist potential developments. We met with in havana earlier this week we met with the head of the Port Authority and they are talking about doing any number of investments including like a theme park in cuba so there is a lot of broad thinking looking to the future. We wanted to look at its feasibility and economic implications bause the plans you get frequently you dont find much information about the Economic Investment requirements and the like. If these numbers were realized it would given impetus to growth and the history could be a real locomotor, locomotives of the economy, for purposes of our calculations we want to project the investment over 15 years at a steady state of 7 to get that 108,000 additional rooms we talk about including refurbishing depreciation hook up charges and other things so those of you in the Business School in the Tourism Industry will immediately recognize the complexity of this but bear with me for a moment. We put it all together in a table in the report and i will highlight a couple numbers coming out of this complex table. The first is 108,000, the number of rooms they seek to add over the next 15 years or so. The second number is the cost per room which in the United States and europe. And when it costs to build the hotel room, he by the way went to some industry sources, to verify the number, and this performance review. The other things we did, depreciation, restoration is out of order, some of them have large number of rooms which forever reason have not been refurbished. We added normal depreciation and remodeling clause should occur, 30 billion of total investment over the last 50 years to realize this objective. Anyone know what the gdp of cuba is . 86 billion according to the statistics, if you were to apply depreciation to the currency for market based formulation is substantially less, it is a big number relative to the small economy. If you look at the share of gdp, doesnt look to be very big. That will more

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