Tourism in Panama has been a growing sector for many years now, as Panama has become a go-to Latin American/Caribbean destination for international travelers. However, not everyone in Panama is a believer. Hotels have had a tougher time filling rooms than expected, despite an increasing number of tourists. Many small business owners felt there was, in fact, a lull period in spending between 2013-2015, again, despite increasing amounts of actual tourists entering the country. In a nutshell, the economy doesn’t just rely on tourists coming into the country; it relies heavily on how much they spend while they’re there. In the case of 2015, according to the numbers so far, both are now happening at healthy rate.
Tourism in Panama by the Numbers
As far as an economic driver, tourism in Panama is huge. According to the World Bank, Panama’s tourism sector accounts for around 6-7% of the country’s GDP, which is around $2.5 billion a year. Copa Airlines alone counts for around half of that, with hotels, restaurants, city/canal tours, sports excursions, and eco tourism programs making up the majority of the rest. And according to Panama’s Board of Tourism, the first six months of 2015 have been great. So great, in fact, that it may be a signal of another wave of growth for tourism in Panama, much like we saw in 2011, and into 2012. In 2015, about 1.1 million tourists entered Panama, which is down from the 2011 peak, but up by about 50,000 from last year.
Balancing Hotel Supply With Demand
One of the biggest issues with Panama’s tourism dollars is the amount of hotels being built, compared to the amount of rooms that are occupied. With so many developers wanting a piece of the action, Panama’s hotel sector boomed a bit too fast. The rush to get hotels built fast may have seemed like a mistake, as they rely on a steady increase of tourists entering Panama to match the amount of empty rooms available. But with 2015’s numbers growing significantly, filling Panama’s mega-hotel infrastructure is a reasonable goal.
The question is, can these hotels afford to keep the rooms empty in the interim? It’s a problem that may not be an issue, if tourist dollars continue to grow at their current rate. And that’s good news for the industry.
Getting Tourists to Spend More While They’re here
With the infrastructure capable of holding nearly double the number of tourists Panama already has, boosting the economy through tourism will not only rely on the amount of tourists, but also what and how they spend their money. Hotels, restaurants, and resorts know this, and have been coming up with creative ways to make it happen. The key to spent tourist dollars increasing relies on a high quality product, low overhead, and access to businesses where people can spend their money in. In Panama City, it’s shopping, nightlife, and restaurants that are jumping to this need by offering both local boutique and luxury travel experiences close to hotels and accessible areas. City tourism-based businesses are also making a killing by partnering up with non-urban excursions, allowing the traveler easy access to different parts of Panama without having to do much planning. And it all adds up to more dollars spent in the tourism sector.
Creating Sustainable Growth With Panama Tourism
One of the biggest challenges for the tourism sector in Panama will be adapting to trends in the regional economy. For the most part, Panamanian tourism comes from other countries in Latin America, meaning that if the regional economy struggles, less people will be inclined to visit Panama. In order to prevent this from happening, the tourism industry in Panama needs to expand their market; and they’re doing just that. Panama is aggressively targeting North American travel companies to promote package tourism to the country.
The Board of Tourism is pushing Panama as an easily accessible, multi faceted (beach, city, sports, shopping) destination that is both luxurious, and reasonably priced. And by all economic indicators, the people are listening. It’s now up to Panama to keep there end of the bargain, and make sure the quality matches the promise.
