Thank you for being here with a special thanks to the audience in the cspan world for joining us this even if is recorded by cspan thanks to the team to be here and joining us. I am the director of the Caribbean Center we are located at Florida International university here in miami and we have another campus where the center is located. The center that i direct is one of the institutes or programs of centers that the school of Public International affairs we are absolutely delighted to be hosting or coasting these events a thanks to the Chaplains School thanks for supporting this it is degraded to have on your campus. Also to the Cuban Research institute a little bit of why we are here last year the Brookings Institution specific and Foreign Policy team from the Latin American Initiative reach out to me to see if we were interested in cosponsoring a steady a steady on one of the of more dynamic sectors of the cuban economy in the context of 2014 of the relationship since then. So ted reach out to see if they were interested helping with the study and of course, we agreed immediate easily are delighted to be a part of the steady launched in washington dc December December 2nd last year so were doing a miami launch with the two authors joining us so i will tell you how we will proceed. I will introduce the two coauthors to present their steady there are copies of the steady by the way in the back of the lobby featured to take one day will do the presentation then i will ask dave put out a panel of experts to give their reactions we will add a conversation appear onstage we will go from now when tell 6 00 let me introduce uh to coauthors. First Richard Feinberg a nonresidents senior fellow of the Latin American Initiative with the school of Global Policy and strategy at the university of california in san diego. Previously dr. Feinberg served as a specialist to president clinton for National Security affairs of the National SecurityCouncil Office of Interamerican Affairs from the Clinton Administration author of numerous books and works but one that i want to mention is his most recent book open for Business Building of a new cuban economy it is available with amazon as well as of website is getting wonderful reviews that i hope you get a chance to read it. Also has the new magazine and has the peace based on the exact steady cuban trade that is the name. The other richard works with the International Growth center for rwanda and uganda and is part of the joint venture from Oxford University from the school of economics that provides independent Research Based analysis from selected countries and in africa. Senior fellow, non resident and a distinguished researcher from canada and consults with a number of International Organizations in the International Trade center we are fortunate to have these two scholars with us gasping and and number of months with the challenges that cubas faces as boat as as well as the two authors to come up and talk about their work. [applause] they give for the wonderful introduction it is the pleasure for us to be here at the Chapin School unit europe the right place when the school of management that you deal with is located over a wine bar. [laughter] frittered deny a our humble economist be came to the winds of growth and if we had only known you had figured out we would have started much earlier in the quest to understand uh Tourism Industry so bear with us as we pass the baton with this study so i will give you the headlines first if i can get this to work is the industry was booming so asking the question who benefits . That is politically important because of the prospect of possible reversals and there has been the assertion that jurors are really doesnt benefit the economy that maybe the economy. How can be industry be structured to drive growth . Back chile had growth implications of allowing them to rise much more rapidly . The short answer to both is that the industry has a wide swath the Cuban Society and has the potential to dry Sustainable Development into the future it is well short with the state sector ownership and regulation to create obstacles to help the industry grow so we think the way this has been proven over the last four or five years has unleashed a torrent of private sector activities so that now accounts for more than 30 percent of the industrys earnings the government does have been vicious plans it would like to accommodate 10 million visitors that is a big increase we want to look at the realism of lettuce at estimate. It is possible but unlikely unless cuba changes the number of its policies we will lavery with those could be and of course, finally the industry has important implications for the United States and its own National Interest it should move forward with the normalization process that mr. Obama has launched already so first of all, cuba has the abundant tourists attacked attraction this was uh tough assignment that fell to as with me with their budget just a photo from the north coast of cuba and of course, it has extensive beaches like this to be developed further but that is not only is it because it does have the opportunity is vast and enormous this graph simply shows the number of arrivals over the period 1995 through 2015 you can see with a rather steady stream and course this only goes through 2015 not only asking me to do that projection but the what allowed the number of tourists to reach almost for a million by 2016. But if you look at the earnings per tourist berries widely yeartoyear in response to domestic policies but in 2014 you see an upswing governess is operating at a much higher capacity so the benefits of the industry is widespread perhaps you could clarify with bob terrorist revenues threequarters of all merchandise earnings so was the exporter to play important role. Seventy of tourist earnings is a pretty good number depending on wages or cultural activities and a major force linking cuba to the of Global Economy on a daily basis to the International Environment this graph shows the cuban industry has ample opportunity to grow if you think thatll like this term carrying capacity is shows the number of visitors as a share of population relative to the Dominican Republic and was twice what cuba is today there are many other measures we could use. It has not contributed as much as it could occur there are signs it is falling behind with the far left you can see in blue to point 5 of gdp if use those numbers it expands to the total contribution of the economy as well as indirect spending. But substantially less like a poster rica compared to countries that we think that there is more that cuba could be doing. This graph shows this is in index all economies and the exact same level this is the indication of the efficiency and effectiveness of the industry and as you can see cuba does rather poor the relative to the other countries like custer rica or Dominican Republic another important point but the caribbean itself is doing relatively poorly compared to the rest of the world it is losing market share to other destinations major new destinations have opened in china or Southeast Asia and as a result the tourist dollars are spread with a much wider array of countries which means the industry has to be competitive to survive and prosper. For one of the reasons one of the things day talk about is the Service Quality and lower it is nonexistent these things cuba is working on redo has some suggestions and part of the reason has to do with the nature of the organization and the incentive that it transmits to the workers now why will turnover to richard. The industry in cuba there are three Main Enterprises to of them are under the ministry of tourism but we also see that under the military we have the preferred name so of these three states only one is the military. Of these 3140 percent is the terrorism Tourism Sector. You have heard it all goes to the cuban military is that with this graph jet says or is it illegal into gaviota which is the military on the . With uh a purely private sector care tourism people opening their homes remodeling the rooms so the travelers can stay at the bed and breakfasts that is another 25 percent of rooms if you add that to the total terror tourism capacity gaviota is only 35 of total where you could consider staying if you visit cuba. It is simply not cute not true all of these revenues go to the coffers of the cuban armed forces. The appoint with 45 percent have some Foreign Partnership mostly spanish or canadian or other International Hotel operators. Most have an International Presence however the way it has operated there are endless speeches that is whether growth is you dont see many cranes operating if you look at the beach resorts youll see a lot and so why arent they building more capacity of those 44,000 rooms 6,000 are in havana you pay between three and 4 a night if you stay in havana the early three sites currently in reconstruction and there should be one dozen. It is easier to build boxes on the beach bin to do Interesting Hotel and also questioning profitability. And spreading the investment of around the second problem the the Tourism Sector needs to be better integrated there were no numbers published on what percentage of food and beverages provided those that look at in those categories we roughly estimate twothirds of food and beverages are provided domestically but it could be a higher percent that has to do with the Agricultural Sector providing much better incentive so there is better integration of the role sector into the overall Tourism Sector. Third issues various organizational issues in labor International Hotels is hired through the humanresources disease so they have to bosses this confusing and not productive in the other problem is why not more direct investment . Not just in management contracts by joint ventures . Only 6,000 rooms right now include joint ventures the government has projected of the 110,000 rooms over the next 15 years only 30,000 or under 30 percent will have for investment so in other words, 70 percent of new investment is projected to be paid for with domestic capital. Mentioning that of private sector growing dramatically. Between 15 and. [applause] thousand dollars you put up a new room you go to teach 20 with a high amount of occupancy. Which would provide yet more dynamism by the year. These are two places where eventually there will be plaques. These are private homes renting out, bed and breakfast breakfasts. There will be plaques eventually which will say here slept new farmer and feinberg. Richard do you want to continue . These are nice places. These are lovely places. Whats interesting about this picture the one on your left is this is a private bed and breakfast in trinidad and you can see the sign bearer advertising it is english and i thought it was kind of revealing of the new clientele that they are catering to internationally. At one point, just to scroll back for a moment it should be mentioned here that an air bnb has now set up a program with more than 4000 listings in cuba and this to me honors a new impetus to growth because a person can go on line, look at the myriad of offerings in havana, get testimonials from people who have stayed in those areas and see what the price is, pay with a credit card in dollars and show up in cuba with your piece of paper and happily stay in that place as well. Airbnb salt to the trust problem that links individual entrepreneurs with the global marketplace. In the case of cuba as with elsewhere and i think because particularly in havana this is important and worth emphasizing. But cuba has big plans for the industry and richard and i thought it would be worthwhile to analyze those plans and think through some of the implications of them. Basically the government would like to expand the current level of participation in the industry of tourism up to some 10 million from 4 million at the end of december of last year. Thats a big increase. To do that they plan to build 108,000 new rooms onto a stock of 54,000 rooms of international quality. Thats three or fourstar hotels in the stateowned enterprises. And it advertises sites perspective investors from all over the world including golf courses, marinas and other tourist potential developments. We met when we were in havana earlier this week we met with the head of the Port Authority and they are talking about doing any number investments including things like as strange as a theme park in cuba so theres a lot of broad thinking looking to the future. That said we wanted to look also at feasibility and some of the economic implications because in the plans that you get very frequently you dont find very much information about what are the Economic Investment requirements and the like. Because we know that these numbers were realized would give an impetus to growth and it could be, the industry could become a real locomotive on the economy into the future. For purposes of our calculations we wanted to protect the investment over 15 years and a steady stage of 17 per year to get that extra repacked about including they were for rich finke appreciation charges and other things. Those of you who are in the Business School in the Tourism Industry will immediately recognize the complexity of this but where they are with me for just a moment. We put it all together in a table which you can find in the report and i will just highlight a couple of numbers coming out of this rather complex table. The first is the 108,000. This is the number of rooms they seek to add over the next 15 years or so. The second number is the cost per room. When you talk to industry sources in the United States and in europe as well as in cuba to find out, give us an estimate of what it costs to build a hotel room and we came up with a number of 200,000 per room. By the way we went back and talk to some industry sources earlier this week just to verify that number. We were quite pleased to hear that number to be spot on in terms of the departments view. The total calculation when you add in the other things that we put in here, depreciation, restoration and some of the rooms are out of order because many of the motels in fact have a large number of rooms which for whatever reason have not been refurbished. You added numbers to refurbish those terms an avid mobile depreciation and normal remodeling costs that should occur over every five years or so and what you end up with is 33 billion total investment will be required over the next 15 years to realize this objective. Thats a big number. Anyone know what the gdp of cuba is . The gdp is probably 86 billion according to their statistics. If you were to apply depreciation to the currency was some sort of marketbased formulation it would be substantially less. The point is this is a very big number relative to this rather small economy. In fact if you look at it as a share of gdp while today the numbers 2016 wouldnt look to be very big 1. 3 that would more than triple over the next 15 years if this number holds correct and if cuba doesnt grow any faster than it has for the last four. If we assume it grows at 2. 8 basically these numbers would have to double. More importantly they would have to, almost triple in the share of total investment. This is clearly unrealistic. Its not realistic to assume that cuba is going to be able to invest some 33 of its total, sorry 33 of its total investment in the Tourism Industry loan. Why is that . Because it has education highways and needs major we conclude under the cert current circumstances under the current circumstances the industry is unlikely to be a driver of rising incomes without major internal policy changes. The internal policy changes have to focus on two or three things. One is it has to focus on increasing domestic savings particularly to begin with investment and savings. How can it do this . One ways to accelerate the development of the bmvs in the restaurants because these already represent a barely tap the potential for future growth. Similarly it has to begin to also think about ways to tap into foreign savings more efficiently than it already has. This can include Foreign Direct Investment which is very important but also more importantly might be the savings from the diaspora savings from lets say the Cuban Community in florida that his party financed much of the bmv development. We have some ideas by the way on ways to structure financial intermediation so the investment coming in during a transition period and housing and expanded Development Might be undertaken without alienating property in cuba from cuban owner