Panama: Investing in tourism
Over the past decade, growth in Panama’s tourism sector has outpaced that of the wider economy, an impressive feat considering GDP has expanded an average of 7.4% between 2002 and 2011, according to the World Bank. As a significant generator of both revenue and employment, investment is being poured into the sector to ensure its long-term contribution to the economy.
From 2002 to 2011, tourism spending rose from $706.1m in 2002 to an estimated $2.9bn in 2011 – an average annual increase of 16.3% – according to the Panamanian Tourism Authority (ATP). In 2011 the country received more than 2m visitors, a record high.
Tourism spending represents 9.5% of GDP and is considered one of four key sectors for long-term economic growth, in addition to the financial services, logistics and agriculture sectors, according to the Strategic Government Plan 2010-14.
While agriculture is and will remain the primary employer in Panama, growth in the tourism industry has also helped create jobs. The tourism sector workforce has increased an average of 4% annually over the past decade, from 93,206 employees in 2002 to 130,710 in 2011, with 3.7% of the population now working either directly or indirectly for the tourism industry.
In 2011, investments to increase the number of beds totalled $452.8m, which saw the addition of 1356 rooms and 2316 beds. However, a large portion of the total was the result of one project: the Trump Ocean Club International Hotel and Tower in Panama City. The project, which began in 2007 and opened in July 2011, was the first in Central America for the Trump Organisation. It required a total investment of $379m, according to the ATP.
Panama City has received $433.4m in investments, comprising 95.7% of the national total. This is in part due to the fact that the main port of entry into the country is the Tocumen International Airport. In the first seven months of 2012, the capital’s airport saw an increase of 16.6% in the number of international arrivals, jumping from 748,233 in 2011 to 872,184. This rise indicates that more than 70% of international arrivals come through Panama City. In total, the country received 1.24m visitors between January and July 2012, an increase of 5.4% on the same period in 2011.
Signs of Panama’s expanding tourism market are also being witnessed in the flagship carrier, Copa Airlines (Compañía Panameña de Aviación), which continues to grow its fleet and service. Copa Airlines joined Star Alliance, one of the world’s largest airline networks, in June.
The airline expects to expand its supply routes by 23% in 2012, matching the airline’s rate of growth of 22% in 2011, according to Pedro Heilbron, the CEO of Copa Airlines. Speaking at Aviation Week in Washington DC in early October, Heilbron also forecast continued strong growth in 2013, albeit at a slower pace of between 10% and 15%. The airline is adding 37 Boeing 737-800s to its current fleet of 80 aircraft.
The progress of Copa Airlines and the increasing capacity of Tocumen Airport will certainly help in the overall growth of the sector, while the continued emergence of Panama as a financial and logistics centre in Latin America should dovetail well with expanding tourism.
Though Panama City will likely retain its place as the country’s main tourism destination, there is potential for growth in coastal areas, such as Bocas del Toro, the Las Perlas Archipelago and Chiriquí.