Lack of international promotion is the cause indicated by entrepreneurs of the fall in the average rate in the capital, which has dropped by 40% in the past five years. I suggest that it another typical cycle of overbuilding in the market place that many times does not look at hard statistics.
The union says the problem of oversupply of rooms in the country began to get worse in 2012, when the international tourism promotion agreement which the government signed with an advertising agency ended. They argue that “…While Panama disappeared from international markets, other countries such as Costa Rica, Mexico, Ecuador and the Dominican Republic increased their spending on advertising. ”
“.. There are hotels that opened two years ago and now have rates of less than 50 dollars. It is estimated that the average rate in the capital has fallen by over 40% because the influx of tourists has not grown at the same rate as supply. Of the 24,978 rooms that the Tourism Authority of Panama registered in late 2014, 15,000 are in the capital city. Between 2009 and 2014 alone more than 4000 rooms were added in the province of Panama. ”
Prensa.com reports that “… The hope held by tourism associations is that specific campaigns made by the Tourism Authority of Panama in Mexico, the United States, Colombia and Brazil will create an increase in the entry of visitors to the country. “
Most of the issues are self inflicted most by the Tourism Authority. They have made it illegal for a web site run by a Panama company to mention hotels and staying at hotels if they do not of a tourist license, which is very convoluted, hard to get and not available to foreigners. I had a friend that started bring tourists to Panama and was booking 15 to 20 people per day to Panama in hotels and such. One person with his web sites. But the rules of Panama drove him out of Panama he sold the business to a Panamanian for about $200K and left. It has since gone to shit and went out of business under the care of the Panamanian. Even this website pushes the legal limits at times because if you say people should come to visit Panama that is against the law in Panama if you do not have a tourist license in Panama. So Panama has a lot of anti Tourist laws that stop tourism in Panama. In many countries as much as 30% of the tourist industry is run by small individuals which due to the laws of Panama are almost non existent in Panama. That 30% would take the accommodations from 50% to 80% So it is a choice to fail that Panama has actively chosen to make. But the good things is we now have laws about what you can eat in the movie theaters so well cannot really thing of why they wasted time on such laws but those are the important issues this administration is dealing with.
Tom
The lower rates for hotel rooms are mostly determined by the very high exchange of the Balboa against all other currencies in the Latin-american block. Having a strong currency is a boon for the people of Panama so long as the government does not do things to prevent increased productivity. Sadly, governments are always introducing new obstacles to business and trade, not only by higher taxation. The answer is not to de-couple from the US$, but rather to increase competition internally. Latin countries are not known for their competitive fervour.
Secondly, Panama has a very high cost of travel, largely because of COPA’s near monopoly. COPA is one of the most profitable airines in the world because it charges such high prices. COPA continues to charge the same high fuel surcharge as when oil was well over $100/barrel. Panama, among other measures, should introduce an open-skies policy. It should also let other airports, such as David and Rio Hato, operate as the wish. COPA’s high fares encourage high fares from other airlines.
Thirdly, a new road across the Darien to Colombia would increase tourism immensely, along with lowering consumer prices. Similarly, more opening of the border with Costa Rica would help tourism. Tourism is almost totally dependant on airlines right now. More diversity would be a shot in the arm for the sector.
Regards
Harry