Although the hotel industry believes that hostels are not an unfair competition, Panamanian authorities warned that due to the "health" of this economic sector, the emergence of new hostels are regulated, particularly in Panama City.

Minister of Tourism of Panama, Solomon Shamah, said that the hotel industry will not be promoted anymore in the City Capital.

Shamah, who recognized the benefits of this type of business, particularly for low-income tourists, informed that many hostels are already established in Panama City.

Competition

Sara Pardo, Executive Director of the Panamanian Association of Hotels (APATEL), warned that even though hostels provide lower rates for tourists, they do not guarantee safety, care and services, as hotels do.

However, Pardo explained that so long as these premises comply with the requirements established by the tourism authorities, they do not represent an unfair competition for big hotels, although its growth will be regulated from now, particularly in Panama City.

Shamah exemplified the cost difference by saying that there are hostels that charge $15, as opposed to a hotel that charge $100 for the same time.

There are 180 hostels throughout the country—61 in Panama City, 45 in Chiriquí, 22 in Bocas del Toro, 14 in Coclé, 14 in Los Santos, 12 in Colón, nine in Veraguas and the rest in Darién and Herrera—according to data provided by the Tourism Authority of Panama (ATP).  

The Tourism Authority of Panama is responsible for granting the legal permits for the hostel business. These permits are given to individuals or families with residences that have a minimum of three bedrooms, a maximum of nine rooms (adequate ventilation), bathrooms, reception area, living room, dining room, telephone available and rooms with.