Panama’s hotel industry is projected to close 2025 with an average occupancy rate of 56.5 percent, a figure that leaves more than four thousand rooms empty nightly and limits new investment. Preliminary data from the first half of 2026 points to sustained growth in tourist arrivals, but industry leaders argue the country must intensify its international promotion and improve service quality to compete with regional rivals.
Victor Concepcion, a director of the Panamanian Hotel Association (Apatel), confirmed the estimate this week. He noted the rate represents a two percent increase over 2024, a positive but insufficient step. The current level, he explained, allows hotels only to survive, not thrive or expand their operations meaningfully.
“As we often say, this percentage allows us to keep our heads above water, but it is not optimal. An occupancy rate of 56 percent only allows hotels to survive. This is an industry that contributes significantly to the economy in terms of employment and taxes.” [Translated from Spanish]
Concepcion stated that Apatel’s member hotels represent over ten thousand rooms. With the estimated 56.5 percent occupancy, more than four thousand rooms remained unoccupied on an average night throughout the year. The total national room count remains uncertain as many establishments that closed during the Covid-19 pandemic have not reopened.
Tourist Growth Fails to Boost Hotel Bookings
Official tourism statistics reveal a puzzling disconnect. Data from the Panama Tourism Authority shows visitor flow for the first nine months of 2025 grew 5.7 percent compared to the same period last year. More significantly, the number of tourists, defined as visitors staying over 24 hours, jumped 10.1 percent to 1.71 million.
Tourism revenue climbed nine percent, adding $405.4 million for a total of at least $4.9 billion. The sector projects total tourist arrivals for 2025 will reach between 2.2 and 2.3 million, a solid double-digit increase. This growth, however, is not translating into higher hotel occupancy.
Industry analysts point directly to the rapid expansion of digital rental platforms. The surge in alternative accommodations like private apartments and vacation rentals is capturing a substantial share of the growing tourist market. This fragmentation means more visitors are not booking traditional hotel rooms, diluting the economic impact for the formal lodging sector.
Regional Competition Outpaces Panama’s Efforts
The occupancy gap between Panama and its primary competitors is stark. Countries like the Dominican Republic and Costa Rica expect to close 2025 with hotel occupancy above 75 percent. Specific destinations like Punta Cana are surpassing 80 percent.
Concepcion attributes this disparity partly to marketing investment. He noted that the Dominican Republic invests approximately $100 million annually in international promotion, while Costa Rica dedicates around $40 million. Both nations also benefit from longer-established reputations as premier tourist destinations.
“We always will have the individual tourist, the one seeking nature, sustainability experiences, and that more authentic touch Panama has. But if we want that demand to translate into repeat visits and better recommendations, we must work on existing tourist infrastructure. Visitor centers and posts across the country need to be in real condition to receive tourists and offer consistent service.” [Translated from Spanish]
Through Promtur, Panama is legally mandated to allocate $20 million for international promotion. Funding for the coming year, however, is not yet fully guaranteed. Concepcion praised the current strategy of the International Promotion Fund but called for a reinforcement of all campaigns.
Path Forward Relies on Diversification and Quality
The hotel association sees a multi-pronged strategy as essential for recovery. Strengthening the domestic tourism campaign “Tripea lo tuyo” is one priority, credited with supporting hotels in the country’s interior that rely on local travelers. Another critical focus is the meetings, incentives, conferences, and exhibitions (MICE) segment, which has historically provided stable, high-volume bookings for Panama City’s major hotels.
Concepcion emphasized the need to intensify promotion of Panama as a leisure vacation destination. The country must market its diverse offerings more effectively, from beach and eco-tourism to aquatic adventures and cultural heritage sites. Success depends on moving beyond a reputation primarily for business travel and canal tourism.
A fundamental challenge remains service quality. Concepcion identified staffing as a critical issue that cannot be overlooked. Ensuring consistent, professional service for visitors across all touchpoints is vital for generating positive reviews and repeat visits. Improving the Hotel Occupancy Rate is not just about marketing, but about delivering a superior experience once tourists arrive.
The sector now looks to 2026 with cautious optimism. The growth in total tourist arrivals provides a foundation. Capturing a larger share of those visitors for the formal hotel industry, particularly as air traffic through hubs like Punta Cana increases, is the central challenge. Industry leaders agree that closing the gap with regional competitors will require coordinated national strategy, sustained investment in promotion, and a relentless focus on the visitor experience.