This study investigates the role of hydration and its relationship to the conformational equilibrium of the host molecule beta-cyclodextrin. Molecular dynamics simulations indicate that the unbound beta-cyclodextrin exhibits two state behavior in explicit solvent due to the opening and closing of its cavity. In implicit solvent, these transitions are not observed, and there is one dominant conformation of beta-cyclodextrin with an open cavity. Based on these observations, we investigate the hypothesis that the expulsion of thermodynamically unfavorable water molecules into the bulk plays an important role in controlling the accessibility of the closed macrostate at room temperature. We compare the results of the molecular mechanics analytical generalized Born plus nonpolar solvation approach to those obtained through grid inhomogeneous solvation theory analysis with explicit solvation to elucidate the thermodynamic forces at play. The work illustrates the use of continuum solvent models to tease out solvation effects related to the inhomogeneity and the molecular nature of water and demonstrates the key role of the thermodynamics of enclosed hydration in driving the conformational equilibrium of molecules in solution.