The figure would not be alarming for a country that received 2 million tourists last year; however, the number of rooms has expanded by 62% over the last three years.
From 2010 to 2012, 6,200 new rooms were built across the country, of which 72%, approximately 4,500, were in the capital city. While the demand from tourist arrivals grew 6% in 2012, the supply from hotels did so at a much faster rate of 41%.
Jaime Campuzano, hotel manager at El Panama, projects that this year hotel occupancy will not exceed 55%.
Annette Cárdenas, president of the Panama Chamber of Tourism (CAMTUR), predicts that occupancy levels will plummet in the second half of the year, when the majority of the rooms planned for 2013 will enter the market.
Although Cárdenas prefers not to refer to it as a "price war," Campuzano did not hesitate to say that they have already noted a reduction in rates, in some cases reaching a 20% decrease.
In this case, it is the clients who would come out winning, while the destination and companies would be hardest hit, as Cárdenas pointed out, because the quality of service provided would not be on par with the prices.
Besides a "price war", the construction of new lodging establishments, 65 from 2011 to 2012, aggravated a problem that hotel owners had already been facing: the lack of qualified personnel.
The revolving door phenomenon or "personnel cannibalism" has reached unprecedented levels in the industry. This has spurred an increase in business operating costs, as they have to pay high salaries in order to lure the services of those employees with previous work experience. Kenia Peña, the manager of Grand International Hotel, which began operations this past February, said that given the lack of experienced workers, they have had to hire staff with only the most basic skills and knowledge. She indicated that it is difficult to find workers to fill operational roles in the hotel, especially for the laundry room, because the demand for labor is high but the supply is low.
Convention tourism is seen as one of the alternatives on the short term to raise occupancy rates at hotels in the capital city. The Panama Tourism Authority (ATP) noted that this year they will be organizing events that will bring in a significant flow of visitors to the country. For example, next May the IX World Missionary Movement Congress will attract 5,900 attendees. Approximately 30 hotels will be used by the different delegations, mostly Peruvians, Colombians and Americans.
Ernesto Orillac, Deputy Administer of the ATP, said that Panama is now seen as an international destination to host congresses and conventions. He stated that in the 2011 ranking by the International Congress and Convention Association (ICCA), Panama City climbed nine positions compared to 2011, coming in at No. 16 among the Latin American capitals that hosted the most events.
Tourism operators affirm that it is important to increase the number of available seats on airlines flying to Panama. Since tourists arrive by air, they argue, if there are no flights available they will select another destination for their vacation. Orillac added that on the horizon is an agreement to bring in new charter flights, mainly from Brazil, a market Panama is strongly investing in so as to increase visitor arrivals.
More direct flights are also expected to arrive from Ecuador and Chile.
New hotel zone along Argentina Road
The panorama along Argentina Road is taking an 180 degree turn. Known as a shopping and restaurant area, it is now turning into a hotel strip that in the coming years will have five key players. Near the Andrés Bello park, two hotels are already in operation: the Grand International Hotel, with 118 rooms, and The Saba Hotel, with 49. The manager of the Grand International Hotel, Kenia Peña, indicates that they will be focused on the corporate market, while Tomás Martínez, manager of Saba Hotel, said they plan to enter the boutique category, as they offer more personalized attention.
A Howard Johnson, which will have 100 rooms, is also being built in the area. The hotel, built with a $12 million investment, should be opening its doors between May and June. Two other projects are scheduled for construction in the area, though they have not yet broken ground.