(World Property Channel) According to STR Global, the Panama City hotel market reached total inventory of 10,180 daily available rooms in 2011, following another strong year of new hotel openings.
In the last seven years, Panama City rose as a strategic business hub between North and South America. Panama’s growing economy, boosted by the Panama Canal and free trade zone at Colon, helped attract investments and more visitors. International tourist arrivals, according latest figures from the World Tourism Organization, increased by 11.0 percent year to October 2011, driven by increased business trade and the ongoing construction work for the enlargement of the Panama Canal. The enlargement and further investments in infrastructure, real estate and tourism contributed positively to the local economy and particularly provided opportunities for new hotel developments.
Panama City performance
Since 2005, hotel supply has increased by 8.6 percent measured in a compound annual growth rate (CAGR). Interestingly, the high number of projects completed in the last two years, as seen in the graph below, resulted from a slowdown in the pace of development of the hotel projects, which were started before the global economic downturn.
Whilst demand growth remained in double digits in 2010 and 2011, it has been more difficult to absorb the new hotel supply leading to a decline in occupancy by 4.5 percent to 57.7 percent in 2011. The positive news is that average daily rate (ADR), reflecting the long-term growth over the last seven years, increased by 8.0 percent (CAGR) from PAB83.40 in 2005 to PAB 132.64 in 2011. As a result, over the same period, revenue per available room (RevPAR) increased by 5.9 percent (CAGR) to reach PAB 76.50 in 2011.
Panama City Year on Year change (%)
“Panama is currently accounting for more than half of the total pipeline in Central and South America at different stages of development”, commented Elizabeth Randall, managing director at STR Global. “Our data shows that in 2012 and 2013, Panama City will continue to grow its room supply by another 29.5 percent and 17.3 percent, respectively. Panama City’s long-term growth in relation with the activity surrounding the Panama Canal remains strong; however, the new hotel supply in the current environment will make it more difficult for hoteliers in the short term”.