The structure and dynamics of water inside a water-soluble, bowl-shaped cavitand molecule with a hydrophobic interior are studied using molecular dynamics computer simulations. The simulations find that the number of inside water molecules is about 4.5, but it fluctuates from being completely empty to full on a time scale of tens of nanoseconds. The transition from empty to full is energetically favorable and entropically unfavorable. The water molecules inside have fewer hydrogen bonds than the bulk and in general weaker interactions; the lower energy results from the nearest-neighbor interactions with the cavitand atoms and the water molecules at the entrance of the cavitand, interactions that are lost upon dewetting. An analysis of translational and rotational motion suggests that the lower entropy of the inside water molecules is due to decreased translational entropy, which outweighs an increased orientational entropy. The cavitand molecule acts as a host binding hydrophobic guests, and dewetting can be induced by the presence of a hydrophobic guest molecule about 3 A above the entrance. At this position, the guest displaces the water molecules which stabilize the inside water molecules and the empty cavitand becomes more stable than the full.