The private sector has called on the government to take measures to stimulate the arrival of more tourists and prevent the oversupply that exists in sectors such as the hotel industry from harming the economy.
Although steps have been taken, such as the agreement between the Tourism Authority of Panama and Copa Airlines and Air Panama to promote the country on its flights, the private sector is calling for more changes in the policy of encouraging this and other economic activities, at a time when the supply of services linked to tourism, far exceeds demand.
While occupancy rates and average prices continue to fall, the Panamanian hotel market is preparing to increase its supply by another 1,200 rooms at the end of the year.
The Panamanian Association of Hotels (Apatel) reports that in recent years there has been a 209% increase in the number of rooms available in the country, in contrast to demand which has only grown by 5% annually.
In Panama the increase in room supply has caused a price war between hotels trying to attract travelers and increase the occupancy rate which on average is not more than 60%.
Hotel occupancy in the country has been declining since 2011, when it stood at 68.6% dropping to 59.3% within the sector this year, according to figures from the Tourism Authority of Panama (ATP).
Although the number of tourists coming to Panama City continues to grow, there is still an oversupply of rooms, and in the last 3 years average occupancy has fallen by 10%.
The prevailing oversupply in the sector has begun to affect hotels, whose financial profits have been reduced by 20%. Currently the supply of rooms is 40 thousand, 8000 more than in and 2009 and although the number of tourists arriving in the country has not reduced, the percentage of unoccupied hotel rooms has reached 45%. The Panamanian Chamber of Tourism recognizes that the situation is worrying and is demanding institutional action in order to increase occupancy by 2015.
If growth in the number of tourists doesn’t reach 25% per year, hotel occupancy will fall from the 74% seen in the first quarter of 2001, to just 50% over the coming years.
Panama is growing and so are the number of hotels, which in 2012 will be offering over 27 thousand rooms.
The warning comes from the Panamanian Association of Hotels (Apatel), whose president, Sara Pardo, noted of the sector that, "supply is growing faster than demand. "
Prices are expected to fall due to the over-supply caused by the $1.2 billion worth of investments planned over the next three years.
In capital city's province, there are currently 13,000 hotel rooms with a further 4,100 planned by the end of 2011. Though well received, the new rooms concerns businesses in the sector given that occupancy rates in the first half of 2010 were only 66%.