Panama may not be the most obvious destination for hotel investors, but with visitor numbers increasing it is proving it is one of the countries to watch for the future. Over the last five to ten years considerable tourism growth has taken place in Panama and figures from the Tourism Authority of Panama showed in 2010 USD 2.6 billion was generated by the sector. This figure only looks set to improve over the coming years, with the authority securing a budget of B/ 52 million (GBP 33 million) for 2014.
During the first half of 2013, Panama tourism grew at a rate of four per cent and with 2,857 kilometres of coastline, tropical islands and wildlife, it's not hard to see the draw. The country is also increasingly drawing in a professional crowd and in 2019 will host the World Congress of Pediatrics. This will bring 15,000 doctors to Panama for more than five nights, requiring 75,000 available hotel nights to meet capacity. With each participant expected to spend USD 270 per day (GBP 172.28), opportunities certainly abound for investors.
Ernesto Orillac, the deputy minister of tourism of Panama, added: "One of our priorities is to increase hotel occupancy by organising business conferences and events." This is being achieved by "building up infrastructure", including "setting up the city's Metro light rail system, expanding the Panama Canal, and constructing new airports".
So where should hoteliers put their money if they are to capitalise on growing demand in Panama?
Panama City is the hotspot for investors, thanks to its metropolis character and proximity to the Panama Canal. The Coastal Beltway Project has also improved connectivity to the city, reducing traffic congestion as the city expands. Skyscrapers are popping up here, there and everywhere, and it is increasingly becoming the region's capital of international finance.
For hoteliers, the city is a treasure trove, capable of attracting both rich holidaymakers and business travellers. With the wealthy drawn to the city, it's possible to demand high rates too. Since 1997, the number of hotel rooms in the city has increased from 1,400 to more than 15,000, according to figures from STR Global. Last year, the country received 2.1 million tourists and the first projections for 2013 indicate ten per cent growth for the year, with demand largely concentrated on Panama City.
Away from the hustle and bustle of Panama City is Isla Taboga. This spot is ideal for those wanting to tap into the luxury honeymoon market thanks to its seclusion and beauty. Known as the Island of Flowers, it is just an hour's boat ride from Panama City
The island benefits from a tropical maritime climate, but the edge of high pressure frontal systems can bring temperatures down. There are also gentle sea breezes, making the environment pleasant for guests. Getting to Isla Taboga is easy too, with ferry boats leaving regularly.
Naos is a causeway island and is connected to Panama City by the Amador Causeway. It is located at the entrance of the Panama Canal, making it well-placed for travellers. The island is also the site of the Naos Island Laboratories, which contain a seawater system for research on marine organisms. There is also a well-equipped molecular biological research facility and laboratories for marine and archaeological research.
This means Naos is often the site of academic travellers and those interested in marine life. It boasts rocky intertidal shores, both cobble and sand beaches and tidal mud flats.
Top tip for the future
Jones Lang LaSalle's 2013 Hotel Investment Outlook identified Panama as being in the "domain of intra-regional investors". This means demand will be coming from places such as Colombia and Venezuela. So far, hotel development has been concentrated in Panama City and resorts have been in short supply.
It is expected 2013 will see demand somewhat tempered and risk remains an issue for investors in the near-term. However, the expansion of the Panama Canal will open up the region and change the landscape of hotel development in the future.
- Thursday 12 September 2013