New convention centre in Panama expected to provide significant boost to tourism

Buoyed by increasing connectivity and promotional efforts at the international level, Panama’s meetings, incentives, conventions and exhibitions (MICE) segment has seen stable growth in the past few years. Panama forms a key part of the MICE market in the Central American region, and the short-term outlook for the segment is promising. Expansion of MICE infrastructure, added capacity and growing hotel offerings all point to the sector’s further development, which authorities hope will be instrumental in raising hotel occupancy rates in the capital.

Rankings

According to the International Congress and Convention Association (ICCA), Panama registered an impressive leap in world rankings, climbing eight spots by number of association meetings, from 54th in 2012 to 46th in 2013. In that year, 61 meetings were held, 60 of them in Panama City. Similarly, the capital city climbed 10 spots on ICCA’s 2013 ranking of cities in Latin and North America, ahead of all other Central American cities. Panama’s strategic location in the heart of the Americas, its regional connectivity and the presence of one of the region’s largest international financial centres have contributed to the steady flow of business tourists to the capital and, more generally, to the development of the MICE segment. According to the Tourism Authority of Panama (Autoridad de Turismo de Panamá, ATP), business and convention tourists accounted for 9.6% and 1.5% of total tourists in 2014, respectively, representing small year-on-year increases of 0.1% and 0.5%.

From a business standpoint, Panama has plenty to offer. In 2014 the World Economic Forum named Panama the most competitive country in Central America. That same year Panama was named “best destination for business in Central America” at the World Travel Awards, with Tocumen Airport and Copa Airlines earning leading airport and leading airline awards, respectively, in the Mexico and Central America region.

Revenues

In 2013 the MICE segment generated an estimated $35m in direct revenues, up from $32.4m in 2012, and saw some 130,816 hotel nights booked, with visitors in this segment spending an estimated $300 a day on average, according to the ATP. Among the important events hosted that year were the 23rd Ibero-American Summit, the ninth meeting of the Business Council of Latin America and the International Spanish Language Congress. In 2014 Panama also hosted the three-day Herbalife Extravaganza event, which brought an estimated 7500 visitors to Panama City, and the sports event Ironman 70.3, which attracted some 1125 visitors.

The segment is expected to post continuous growth in the short term. In 2015 the country hosted the seventh Summit of the Americas, running from April 6-11, which attracted an estimated 12,000 visitors. The week-long summit agenda included a series of forums, such as the first Regional Meeting of University Deans, the Hemispheric Forum of Civil Society Organisations and Social Actors, the Youth of the Americas Forum and the CEO Summit of the Americas. The event is estimated to have generated $50m-80m in revenues and saw some 8000 hotel nights booked, filling 40% of the capital’s hotel room stock. To organise the event, Panama invested roughly $15m.

A series of international events are scheduled for the coming years, according to the ATP. “The Atlá ntico Pacífico (Atlapa) convention centre is completely full in 2016, and we have started booking dates for the new convention centre being built,” Nadgee Bonilla, director of the ATP’s department of tourism development and investment, told OBG. Events have been scheduled until 2019, when Panama is set to host the World Pediatric Congress, a five-day event to be held at the new Amador convention centre and expected to attract around 15,000 doctors, generating 75,000 hotel nights and an estimated $50m in revenues.

Institutional Support

Increased promotional efforts as a result of added institutional support have played a significant role in the expansion of the MICE market in recent years. In 2013 the establishment of the Destination Marketing Organisation (DMO), a public-private agency under the purview of the ATP and dedicated exclusively to the promotion of Panama as a MICE destination, provided significant institutional support to the segment. The DMO works not only as a marketing tool but also as a one-stop shop for event organisers, facilitating the organisation of large-scale events in the country and working in conjunction with the private sector to attract more international events. For 2015 the ATP has allocated $4m to develop the country as a MICE destination.

Infrastructure

The segment is also set to receive a major boost from the construction of a new convention centre in Panama City. According to the national trade and investment agency, Proinvex, the Amador Convention Centre will triple the capacity of Panama City’s existing facility, the Atlapa Convention entre. Representing an investment of roughly $194m, the Amador centre spans more than 81,000 sq metres and consists of four main areas: a 24,000-sq-metre exhibition centre, a 24,000-sq-metre banquet hall and restaurant area, a 14,000-sq-metre theatre and outdoor exhibitions spanning roughly 13,000 sq metres, all of which are connected by a central plaza.

Awarded in December 2012 to an international consortium of Panamanian, Spanish, and Puerto Rican companies – HPC-Contrata-P&V – the project was originally scheduled to be finished at the end of 2014, but at that time it was only 36% complete and work has since been suspended. Delays in construction, allegedly due to internal restructuring of the consortium, led the ATP to revisit the contract, and in March 2015 the ATP announced it had rescinded the arrangement with the original contractor and would be seeking a new contractor to finish the project. As of March 2015, three companies had expressed interest: Chinese contractor China Engineering, Brazilian contractor Odebrecht and Mexican contractor Ingenieros Civiles y Asociados. According to the ATP, the project is expected to be completed within one and a half years.

The new centre is being built at the Pacific entrance of the Panama Canal, close to the coastal beltway, giving it convenient access to the airport. The capital’s new Museum of Bio-diversity, designed by Frank Gehry and being constructed near the convention centre, will further add to its attractiveness. To facilitate access to the Amador centre, the government is doubling the capacity of the Amador causeway, which runs between the Paseo de las Banderas and the entrance to the Flamenco Island, by widening it from two to four lanes. The expansion also includes the development of paved areas for pedestrians and cyclists as well as parking lots. The tender for the expansion was awarded in late 2013 to Panamanian construction company Ininco for $66.6m, and completion of the project is scheduled for late 2016.

The Atlapa centre will remain an option for international events in Panama City. After the government tried to auction the centre three times in 2013 without finding a suitable bidder, in July 2014 the ATP announced it would not be selling the venue. Spanning about 8 ha, the centre has a total capacity of 10,500 people, 24 meeting rooms and a 2806-seat auditorium, and has played an important role in attracting international events, offering competitive packages including free usage between 2011 and 2014.

Panama City also has smaller venues, such as the Megapolis Convention Centre, which has a main salon of 3600 sq metres, a 4000-person capacity and another 2000 sq metres of common area. Megapolis is part of a larger complex that integrates the 240-room Radisson Decapolis Panama City hotel, the Hard Rock Hotel Panama, a casino, restaurants and a shopping centre with more than 200 stores.

The development of MICE infrastructure outside of the capital may be expected in the short term, as part of the current government’s efforts to diversify the country’s offerings beyond Panama City. Bonilla told OBG that the government had plans to build a new convention centre in Chiriquí Province, representing an investment of $30m, and another in Coclé.

Boosting Occupancy Rates

With hotel occupancy rates in Panama City on a downward trend since 2010, authorities are viewing the MICE segment as a strategic growth area to help raise these rates in the capital in the short term. “We need an emergency plan for the next 24 months,” Sara Pardo, president of the Panamanian Hotel Association, told local press in March 2015. “The MICE segment will enable the entry of more visitors, but this is not a long-term solution.” In a bid to boost marketing efforts, sector stakeholders have been lobbying the current government to increase the DMO’s institutional capacity, by granting the organisation independence from the ATP and providing it with its own budget. Efforts to boost hotel occupancy rates are likely to see an increase in promotional works for the MICE segment, which, coupled with improvements in connectivity and a consolidation of the MICE infrastructure, should see the segment become an increasingly important component of Panama’s tourism sector in the coming years.