There may be a global financial crisis going on, but if Panama’s real estate asking prices are any indicator, that memo never made it to Panama.

During the Panama real estate boom of 2005-2007, crowds of investors were playing fast and loose with money like a sailor on shore leave.  Real estate prices rose impossibly fast, even the most remote parts of Panama.  The speculators were coming from everywhere; big biz Panamanians, law firms, hedge funds, foreign developers. Even a few celebrities got into the gold rush.  There were times when, on any given weekend on the Pacific beaches near Panama City, one could count half a dozen helicopters thwapping by, presumably transporting high-dollar prospectors able to afford an eagle´s view.

That brings us to the stark reality of 2010.  Panama´s real estate market is still waking up to a hangover caused by some regrettable decisions made during the over confidence of the go-go years.  Prospective buyers are still coming to Panama, but are stunned by the high asking prices, particularly when compared to the post-bubble prices of retirement spots in South Florida.  It seems that sellers in Panama are still clinging on to the inflated prices of the glory days.  As a result, Panama´s real estate market is stuck, much like a mule halfway across a river…afraid to forge ahead, but too stubborn to go back.

The majority of inquiries I receive for Panama real estate are seeking low prices.  To those searching for a beach bungalow with ocean views for under $150k, I regret to inform you that your chances of encountering that in Panama are about the same as finding El Dorado.   Why not?  Well, the short answer is that the real estate market here just hasn’t mature enough yet in order for the bubble to have burst.  Supply for any finished construction near beaches is very limited, as are beach projects with small lots sub-divided.

But don’t lose heart just yet!  I do believe there are some exceptional values in Panama real estate. But this assumes you have realistic expectations, plenty of patience and also know where and how to search.  For those willing to seek out properties off the beaten path, here are a 5 areas where I think you may still be able to find deals.

WARNING: don´t expect country club living or a nearby Starbucks in these areas just yet.

BEACHES

1. Pixvae, Veraguas
Located on the Pacific Coast in the province of Veraguas, this remote beach town is prime for long-term growth. With green rolling hills, Isla Coiba and a half dozen other small islands nearby, this area is certain to become a tourist attraction soon.  At around 6 hours driving from Panama City, access to this region is still a challenge.  Finding small parcels of affordable land near this or any beach in Panama can be difficult to impossible, but I like this area because there are so many hills with nice views within just a mile or two of the coast.  Roads to these properties may be non-existent today, but this is where I’d suggest exploring for deals.

With Isla Coiba nearby,  which is a UNESCO World Heritage site and quite possibly Panama’s greatest potential tourist attraction, I would wager that the access to this region improves before the end of President Ricardo Martinelli’s administration.  If you are looking for a long-term investment, this whole coast is a must-see.

2. Pocri, Los Santos

Pocri is on the Azuero Peninsula, about 4 hours from Panama City on excellent roads. I refer to this town as a ¨Poor Man´s Pedasi¨, in reference to this beach side town´s more popular neighbor to the South, where my family and I operate a B&B.  Located about 15 minutes South of Las Tablas and 15 north of Pedasi, Pocri has the convenience of being near enough to civilization, touristy beaches and shopping, yet without crazy asking prices or tons of expats. The town itself is very charming and just seconds from a very good highway. The nearby beach is a 5 minute drive from downtown Pocri and is quite nice. The fishing is fantastic and the very lovely Isla Iguana National Park is just offshore.  I’m frankly surprised that this town hasn’t taken off yet.

Pocri has charming houses as in Pedasi, but at far lower prices

This town offers a nice balance between the calm and quiet of country living near the ocean, without feeling isolated. With lots of tourists already going to Pedasi and Venao, Pocri won’t stay a secret forever. For now, it’s hard to find any gringos around the area, and so prices for houses have remained within reason. I have a friend selling a small house in Pocri on a large lot for under $100k.

3. Torio, Veraguas
The Western coast of the Azuero Peninsula bears little resemblance to the Eastern side.  This area is far more green, has thankfully been deforested far less and has a more severe landscape. In many ways it reminds one of Hawaii, with emerald ridges plunging down to the sea.  Playa Torio is one of several beach villages on this side of the peninsula with stunning westerly views, long, lovely beaches and fantastic sunsets. Isla Gobernadora feels so close you could touch it and fishing is also quite good.

views from Torio to Isla Gobernadora are stunning

Access to this side of the Azuero from the Eastern side of the peninsula is still limited, but several roads are planned which should change that in the future.  In the meantime, this area has the long, pristine beaches that are becoming increasingly difficult to find in Panama…or anywhere else. This region has so many steep hills near the beach, intrepid investsors have a good shot of finding an ocean view at a reasonable price.

MOUNTAINS

4. Santa Fe, Veraguas
Located just over an hour North from Santigo, Panama’s 4th largest City, Santa Fe’s cool climate has begun to attract expats to the area. It borders the Santa Fe National Park, an area known for orchids, green hilltops and waterfalls. Some are calling it “the Boquete of the future”, referring to the popular retirement spot in the hills of Chiriqui.  The interesting thing about Santa Fe is that it may someday be well connected to Caribbean beaches of Calovebora via a country road that heads over the mountains and down to the coast.  The road needs some major work, but has been a hot topic in recent years. I personally have not been to the beaches of Calovebora, but they look fantastic in photos.

5. Penonome, Cocle
Penonome, which is just over 2 hours from Panama City, is already popular with thrifty expats seeking slightly cooler climes.  For deals, I like the small towns like La Pintada which head up the mountain toward the relatively unexplored Omar Torrijos National Park. This area has many of the charms of Santa Fe and is still fairly close to the highway. My gut says that eventually Panama will have a proper regional airport somewhere around Penonome or Aguadulce that would super-connect this central region with Panama City and David.

SUMMARY

I hope this article provides hope to those seeking their dream property on a limited budget.  If you are willing to be patient, kick plenty of tires and make some sacrifices to save a buck, I DO believe Panama still has some low price options out there.

The Panama Tourism Authority and Aeroperlas held a joint press conference this past Friday to inaugurate the flights to Pedasi.  ATP head Salome Shamah was in attendance, along with Pedasi area investors and Aeroperlas executives.  Rolando Pereira of Aeroperlas Airline gave a short presentation about the history of the airline and his belief in and reasons for supporting the Pedasi route.  He was followed by Mr. Shamah, who spoke of the importance for the public and private sector to work in conjunction to advance the connectivity of the country and foster tourism in remote parts of Panama.

Mr. Shamah ended the speech with a passionate plea to the private sector to not squander the natural resources of the Azuero Peninsula, such as Isla Iguana National Park.  Nereida Moscoso, owner of Hostal Doña Maria in Pedasi spoke on behalf of Pedasi area business owners about Pedasi as a destination.  A folkloric music and dance group, complete with Panama’s famous “polleras” gave a performance as the audience moved to the Aeroperlas hangar to see the specific plane that is going to be used for the charter.  Later that day, the locals in Pedasi held a celebration at the airport with music, flowers and fanfare as the inaugural flight of passengers landed.

A folkloric group, Shamah, and the team that helped support the flight

The flight was an initiative that began with Pedasi area investors. The group made a proposal to the ATP and Aeroperlas. Both agreed to assist with a subsidized flight to the area. The ATP offered matching funds for promotion of the flight and Aeroperlas agreed to run the flight on an experimental basis, pending a percentage of the tickets were pre-purchased by Pedasi businesses. Adolfo Linares and the Panama Chamber of Commerce also played a role in acting as the proxy on the agreement while the Pedasi Chamber of Commerce remains pending formalization.

Flights depart Fridays and Mondays from the Albrook Airport in Panama City.

12:31pm — Departs Albrook
1:26pm — Arrives Pedasi

1:41pm — Departs Pedasi
2:36pm — Arrives Albrook

COST:
Approximately $155 round trip, depending on gas tax

Among those businesses who have helped sponsor the flight:

Pedasi Fishing
Casita Margarita
Azuero Villas
Villa Esplenderosa
Villa Camilla
Costa Pedasi
Tedd Tennis, an area real estate agent
Kirk Johnston of Cafe Limon

The flight can be booked online at www.Aeroperlas.com. Be sure to remember that the flight runs only on Fridays and Mondays when searching dates.

Today I had a very positive meeting with Salome Shamah, Panama’s new Minister of Tourism (ATP).  Also in attendance were Adolfo Linares (head of Panama Chamber of Commerce), Rolando Pereira (Aeroperlas) and Jose Goldner (Pedasi area investor).  The subject of the sit-down was to discuss the need for a subsidized flight route to Pedasi.  So far, we’ve had a tough time garnering unconditional support from Azuero area investors to help back the effort.

The Azuero Investors group have in hand a deal that would see them sharing the financial losses with Aeroperlas of a 12-seat, Friday/Monday flight to Pedasi for a trial period of six months.  The flights are scheduled to begin in February and can be purchased now online at www.aeroperlas.com.  Going into the meeting, it was our hope to make the deal for Azuero investors a no-brainer via some guaranteed financial and/or marketing support from the Panama Tourism Authority.

I was pleasantly surprised at Mr. Shama’s openness to assist Pedasi during the meeting.  After a significant amount of back and forth between the various parties, the ATP agreed not only to provide promotion for the flight, but also to assist with a portion of the subsidy required to get the route off the ground.   We left the meeting with a tentative deal and some respective to-do items to complete.  I was shocked!

It is my hope as a travel agent and hotelier in Panama that this may be the beginning of something far bigger than Pedasi alone.  Panama has a network of airstrips throughout the country that are not being utlized.  Take a look at these flight maps of neighboring Colombia and Costa Rica.  It is my firm belief that for Panama to truly compete as a top-tier vacation destination, the powers that be need to connect its central provinces with rest of the country.  Some of Panama’s finest tourism raw materials are located in the mountains of Cocle, East and Western Azuero and the Pacific beaches of Veraguas.  Currently, it is so difficult to access these regions that very few tourists are lucky enough to wander there.

Colombia Flights

Colombia has a very thorough domestic flight network

Costa Rica Flights

Costa Rica has an impressive number of domestic routes to remote tourism destinations

Panama Flights Today

Panama’s current domestic routes ignore the entire center of the country

Panama Domestic Flights, Year 2012?

If Panama could connect the country’s “heartland” via an expanded network of domestic routes, it would open up exciting new destinations for travelers, business people and residents

Adolfo Linares of the Panama Chamber of Commerce (and law firm Tapia, Linares & Alfaro) was also been very helpful in offering support to promote the region through the Chamber and also assist the budding Pedasi Chamber in getting organized.  I’d like to thank both Adolfo and Salome for being instrumental in getting this project moving, as well as Rolando Pereiria of Aeroperlas for his patience throughout this process.

Now its up to the Azuero Investors to raise the capital to launch the flight and ensure that prospective visitors know that it’s available. This could be the tipping point for the Eastern Azuero’s tourism growth and moreover, a pilot program that can be mirrored throughout Panama. If all goes to plan, I believe that this effort can serve as a demonstration of private and public enterprise working together, as well as foreign and local business community organizing for the common good.

—-

Salome Shamah photo borrowed from Panama-Guide.com

I asked a few friends and fellow bloggers for their predictions for Panama in 2010.   Here’s a compilation of their opinions, which are as varied and colorful as my uncle Doc’s 8 kids.

Sam Taliferro, Real Estate Developer & Blogger
PrimaPanama

I foresee relatively strong employment, political stability and higher International profile.  I see light at the end of the tunnel regarding the state of corruption in Panama. Recent legal actions against past administration will send a clear message to all levels of current and future government officials. Canal traffic will continue to slow due to the world economy placing additional risk and higher costs to Panama borrowings to pay for the expansion.

Panama will see significantly higher costs of goods and services due to recent minimum wage increases and inflation of the U.S. dollar. Hotel occupancy levels will continue to deteriorate in the city as more product come on line and the world economy continues to slow.

The U.S. government will continue to apply pressure to Panama regarding the FTA agreement by demanding more bank transparency. Panama will be forced to compromise, but will maintain a strong IBC structure through their S.A. (Society Anonymous).  Multinationals companies will still look to expand into Latin America and Panama will lead the way due to infrastructure and location.

Apartment prices will continue to experience downward pressure as more product comes on line. Many speculators will walk as long term credit is not available for high price per square meter apartments. Bottom feeders will have a field day.

Most of the residential communities marketing to foreign nationals will see continued slow sales due to the housing bubble bust in the first world along with the poor economy. Only those with no bank burdens will survive. Project success in this climate will depend on creative marketing.

Although Panama tourism in general will slow due to the deteriorating world economy, Chiriqui province will see increased visitors (real tourism) due to new flights making the connection from Tocumen International to David. Nowhere to go but up!

Evan Forbes, Blogger
EyeonPanama.com

Socially:

Casco Viejo overtakes Calle Uruguay as Panama’s best nightlife district.  Calle Uruguay is overpriced and tough to get laid, for free that is.  Everyone wants to pretend like they are in Miami, and it is getting old.  Prive, Guru, and Gallery are always dead.  Casco Viejo on the other hand, is gaining steam with places like Relic, Mojitos and Havana Panama Salsa Bar (bad-ass by the way).  If you throw in a solid electronic venue you’re set.

The smart phone “App” craze hits Panama.  Digicel has made Blackberry’s ubiquitous in Panama.  Not just in Multi-plaza, but Albrook Mall. Expect smart phones to BOOM in 2010, just wait until Panamanians get their hands on the affordable IPhone plan.

Economically:

Rental Marketing continuing to soften – Casey, you predicted this in your 2008 article, but rental prices will continue to soften.  It will take some time to reach the rental market equilibrium due to zero property taxes on new construction, dirty money in the property market, and no creditable statistics to balance the market. But expect to see those $1,100 apartments I showed you to rent be listed for $850 by the end of 2010.

The rise of Panama’s middle class — Wages have gone up considerable over the last couple of years.  My canopy tour operator friend in Colon says there has been a noticeable increase from people living in Panama (locals, other Latinos, and Westerners).  In addition, Doug, a guy who lives in Pedasi, says he rents his beach house out to Panamanian young surfers guys.   2010 will see the continued rise of Panama’s emerging middle class and the tourism is starting to notice.

Politically:

Public Transportation –  Martinelli is making the improvement of Panama City public transportation a central issue to his presidency.  He has already create more one way streets and traffic lights.  This should make a minor impact.  However, 2010 will see new and improve public buses and the start of the Metro line.   Prediction:  traffic will be just as bad in 2010, but the foundation for an mass transit overhaul is being laid.

Rise of Protectionism — Panama has more and more companies moving to the Isthmus.  However, these multi-nationals are hiring cleaning ladies and security guards to meet their local hiring quota.   Expect 2010 to see a rise in nationalistic protectionism because the economic prosperity will not be tangibly felt by many locals.

Matt Landau, Blogger & Small Hotelier
The Panama Report

Distinctions between legit and illegit real estate projects will become evident. The majority of the country’s projects will either come to fruition or fade into oblivion and those that do materialize will see their true construction quality exposed in 2010.  One building in Panama City will falter structurally in 2010 and result in major catastrophe leading to a complete retrospection of safety and construction codes. This will be bad for investment progress and drive prices down further than they are already set to fall in 2010.  Of all neighborhoods in the capital, Punta Paitilla will be see the biggest drop in price/m2 and Casco Viejo will remain the most stable.

Ricardo Martinelli will continue on the warpath eradicating corruption and the amount of public figures exposed in 2010 will be stifling. His team (most particularly the tourism institute and commerce ministry) will enlist the insight of in-country expatriates in an effort to make Panama a more attractive place to foreigners. While both crime and unemployment will go up in 2010, the income gap will go slightly down, which is to say, the rich will stay rich while the poor becomes slightly less poor. That and Bosco Vallerino will not finish out his term as Panama mayor.

Panama’s soccer starlet Nelson Barahona – recently transferred to Medellin, Colombia – will have a breakout season and receive an offer from a second-tier team in Europe, becoming the country’s best futbol export since Jorge Dely Valdés. 2010’s rainy season will be unusually dry and Tiger Woods will invest in a large chunk of coastal land in the Azuero Peninsula.

Panama will experience a new (albeit small) natural disaster in 2010 – such as earthquake, hurricane, or tsunami – prior thought to be impossible. The effects won’t be drastic but it will change people’s perceptions about the country as a safe haven from Mother Nature. Panama’s new anti-drug naval air stations will prove immensely successful and the amount of drugs seized in 2010 will nearly double the (already insane) number detained in 2009. Panama will continue positive growth and the city of Colon will experience some kind of revolutionary event in 2010 that forces the government to give it some serious tender love and affection. Shopping and gambling will become two of the newest, most stable industries and of all name brands, Panama’s Trump Tower will prove itself the nicest completed project in the country.

Rob Riviera, Blogger
RobRiviera.com

I’ve been asked to make a prediction on what twenty-ten will bring for Panama and its interests. To tell you the truth, I’m not quite sure what will happen, but I can tell you what might happen: President Martinelli will continue to be the (space) cowboy he’s proved to be, and eventually will piss off someone with as much power as he. I will watch the fireworks from the sidelines of my LCD TV which costs half now than when I bought it a year ago (the thought still stings). The local news will become my new favorite TV show, since “Lost” is almost over and I’m a sucker for reality TV.  We will see more and more foreigners checking out the country and (Mc)lovin’ it, while Casco continues its metamorphosis into a beautiful touristy butterfly, pooping out the “evil vermin” and relocating them in the process, smelly cocoon and all. I know this because the kind ghetto lady who cooks plantains in the corner of Plaza Herrera told me so.

I won’t be able to recognize Bocas del Toro because it’ll look like an episode of “Wild On” with gringos who can’t dance included, and Pedasi will be in 2010 what Bocas was back in 2004: newly-discovered and at the peak of its underground status before it starts morphing too (mind you, I did not say “go to hell” because I like what’s happening there. Shout-out to Casita Margarita!). Come to think of it, all of the touristy areas in Panama (Bocas, Casco, Boquete, Pedasi, Colon) will or already are morphing. The Mighty Morphin’ Panarangers. Watch out for the Cholozord!

I can’t predict this, but I want to think that things will continue to get better. I hope people continue to be open to the possibility of having open minds. Things are different now than they were four years ago and that, dear reader, is progress I can get behind on and make sweet lovin’ to. Just when I start losing faith in my fellow Panamanians something happens that recharges my nationality battery and I predict I will keep feeling like the fight is worth it.

Oh, and Bosco gets the boot in 12 months or less unless he stops a terrorist attack, Jack Bauer style. In which case, better for me and my reality TV.

Carlos Berguido, Attorney
KBK Law Firm

I think Panama’s economy should benefit from a moderate expansion due mostly to the canal expansion and other public works. Tourism will also keep on being a very important factor, though I doubt we will see any significant growth there. Port activity will remain so, while the airport will continue to grow. Banking will definitely get more conservative, as was last year’s case, but in general, I agree the economy should grow.

Politically, I see some turbulence ahead, as the new government has proven very capable at creating enemies, and fronts. They seem to be acting in haste, and as a result, they are making many mistakes that will (or should) be capitalized by a smart opposition. The government’s popularity stands to drop, and it seems they are very keen on fixing that front with populist measures that will have a cost, both economic and socially, when those measures are withdrawn, as fiscal situation deteriorates after the spectacular improvement brought on by the real estate and investment boom.

Okke Ornstein, Blogger & Journalist
The Isthmian

Rising Crime and Violence

There’s no comprehensive policy or strategy to fight crime or its causes and the police efforts are a total joke (checkpoints, “war on drugs” and other such nonsense). Government takes populist approach of mano dura, which is counterproductive. Look for gangs to professionalize, i.e. learn from their counterparts in El Salvador and Guatemala or even Brazil, and stay ahead of the police. As crime offers bigger rewards, police will cross over, like in Mexico. Turf wars between rivaling gangs and cartels, and Panama as the back office of black globalization. This process is already ongoing.

New Leftist Party

With the PRD in shambles and with it its fake progressiveness, there’s ample space on the left to start a new political group, and I think FRENADESO will do that this year. If member organization SUNTRACS throws its weight behind it, it will quickly have enough members to become a viable political force. There’ll be lots of infighting though, because the Panamanian left is disorganized, some groups may not want to include the “leftists” coming from a dysfunctional PRD, and unlike in Venezuela and Bolivia for example, there has been little ideological development in Panama (SUNTRACS only a few years ago featured Lenin and Comandante Castro prominently on its website). This thing should be fun to watch, if only for the rabiblancos shitting their pants.

Economic Mayhem

Forget all the hype about 5% economic growth and investment grade and other such crap dished out by Capital Financiero and the Latin American Business Chronicle. They said the same about Peru and of course it didn’t happen. The screwed up bond issue of last month is a sign of what’s coming in Panama; Martinelli promised a myriad of very expensive infrastructure projects while the state is mired in debt, can’t raise more money and isn’t even able to provide acceptable levels of public service (migración, judicial system, road maintenance, seguro social, etc.). Increasing taxes and fees and such will help a bit but not enough. Good luck with the MetroBus and the extension of the Cinta Coimera and the cleaning of the bay and the highway along the Atlantic coast and the Canal expansion and other such grandiose schemes that will, as the hype has it, solve all our problems once and for all.

The common denominator in all the above is Lack Of Vision. Like Matt wrote in a recent piece about tourism, it’s a little bit of everything resulting in mediocrity, but this goes for almost every sector of society all the way up to our President99 who doesn’t get much further than “we’re open for business”. Duh. This won’t change in 2010, no matter how much we write about it, because ruling elites (be they dictatorships or oligarchies) do not tolerate real talent near them that might threaten their rule, and SuperMartinelli is no exception.

Consequently, if there is any economic progress (or any other progress for that matter) to report it will come from global trends that Martinelli & Co have no control over, such as corporations from the north offshoring operations to jurisdictions where it’s more economical for them to operate. Some of that will come to Panama, despite our government’s inability to make up its mind if we should compete on quality workforce, infrastructure, cheap labor, easy immigration etc. (true to form, they’ll try to have a little bit of everything and end up with nothing, or, as the Russians say, “chase two rabbits and catch none”. The BIG challenge of 2010 will be for individuals and small businesses to hedge against economic downturn and government bungling/reduced legitimacy of the State.

On a more positive note, I also predict that after the majestic failure of the “Biggest Christmas Party of the World”, Bosco the Clown will launch a new initiative to create the “Biggest Easter Bunny of the World” on the Cinta Coimera and, during the live televised inauguration ceremony, will be hit by one of the parachuted giant easter eggs when that shute, made by his family company under a highly controversial contract, failed to open. There was nothing they could do any more at the Santo Tomas Hospital when he arrived there.

A small group of area investors and business owners in the sleepy beach town of Pedasi have banded together to help foster tourism growth in the region.  The group is attempting to raise funds through the local Chamber of Commerce to help subsidize a limited flight route through regional airline Aeroperlas.  Under the proposed plan, the flight would run Fridays and Mondays for a test period of six months. and the Pedasi investment community would be required to absorb part of the cost of unsold seats.

Located on Southeast tip of the Azuero Peninsula, this remote region is the center of Panama’s folklore and tradition. Known for many festivals, including the famous Carnavales celebrations and the picturesque traditional formal women’s dress La Pollera.  Pedasi is a quaint seaside village with charming Spanish Colonial architecture.  Attractions include great weather, unexplored Pacific beaches and Isla Iguana National Park.  This island is just 15 minutes offshore and offers white sand beaches, turquoise waters and excellent snorkeling.  The region is known for world-class tuna fishing, scuba diving and great surfing in nearby Playa Venao.   There are a handful of small Pedasi hotels and B&Bs in the area, but tourism is still still in its infancy.

According to Aeroperlas, the first flights may run as soon as early February and can be booked online at their website. If you are interested in contributing to the opening of the flight, email casey@costaricapages.com.

With another tourism forum on the horizon (see end of article), I thought it was time for me to review my notes of the annual AMCHAM tourism forum, which was held in September of this year.  Nancy Hannah, the chair of the tourism committee at Panama’s AMCHAM, put together another successful and well attended tourism forum in Panama City.  The event took place at the Miramar hotel.  This was the fourth such event that I have attended and as somebody who has worked in tourism in Costa Rica for over a decade and in Panama for six years, my expectations for the event and perspective on its value are likely different than from other attendees.  That being said, here were my impressions of the forum.

A First Look At The New Tourism Minister

I went to get a peek at and hear from the new ATP (formerly IPAT) head, Salome Shamah. He brought along an entourage, including an associate who spoke about the infamous “tourism masterplan” and other goals for the new ATP team.  It was more or less the same shtick we’d heard for five years from the previous administration, so nothing huge to report there.

What WAS notable is that Mr. Shamah was gracious and interested enough to stick around the forum for several hours after he spoke. That’s something former Minister Blades only did in his final year in office.  I had another encounter with Mr. Shamah a few weeks later in Pedasi which was quite positive and merits a separate article. It is clear that “Salo” is a no-nonsense sort of guy, but perhaps a bit over-confident given that he has zero tourism experience. I am hopeful that he is a step forward from the prior administration.  He’s proven to be a very competent marketing/pr guy, as evinced by his winning campaign slogan for President Martinelli, “Los Locos Somos.”

An Array of Guest Speakers

Boquete developer and super-blogger Sam Taliaferro offered his qualified opinion on what President Martinelli can do to achieve his bold goal for Panama to become “The World’s #1 Place to Do Business”. Sam spoke about the need to foster small business growth (YES!) and create an environment that will attract entrepreneurs who can assist the organic growth of Panama’s “interior” provinces.  He also hammered on his belief (one that was hotly contested by former Tourism head Ruben Blades) that residential tourism is a necessary part of a sustainable tourism plan.

Glen Jampol, operator of the famed Hotel Finca Rosa Blanca in Costa Rica talked about best practices in sustainable hotel operation.  It was highly informative and I hope eye opening to tourism operators in Panama who are not yet keen on “going green”.  I really appreciated Glen’s attendance.  I suggested him as a speaker to Nancy as my agency in Costa Rica works with his hotel. I admire his efforts as a true pioneer in the green tourism movement.

Adrian Benedetti, the new Director of National Parks for the National Environment Authority (ANAM), cited the abysmal fact that less than 3% of tourists are currently visiting Panama’s ill-maintained national parks.  His goal is to increase the appeal of the country’s 82 protected areas. First on that list is Volcán Barú in Chiriqui, home of the country´s highest peak. I was thrilled to hear about this initiative.

KC Hardin, owner of Arco Investments, a company focused on the development of Panama’s historical Casco Antiguo district, gave a passionate plea for protecting Casco Viejo with a sustainable development plan.  He stressed the importance of creating a growth model that does not to cordon off nor shut out the “human heritage” that makes Casco so special.

Fidel Reyes, a hotel consultant, gave one of the more odd speeches of the day, citing statics that categorically prove that Panama tourism is growing faster than any region on earth, recession be damned!  I thought his creative use of stats to prove his beliefs was impressive, but I disagreed with about 98% of his points.

Province Reports

In a change to the usual format, there were then “area reports” from a select group of professionals who operate in each area.  Renee Kimball of the Tranquilo Bay resort in Bocas del Toro spoke on the community efforts to clean up some beaches and educate boatmen to be better informed tour guides.  Donny Estrada of Crown Land gave an emotion-filled chat about the community building efforts that their group is spear heading in the little known Caribbean coast of the Veraguas province.  Pedro Fabrega, owner of the Los Mandarinos hotel in El Valle Anton, spoke about the Cocle tourism cluster, a respectably organized effort among area business owners to co-promote their related businesses. A friend of mine, Ivan Morales, was unfortunately unable to deliver the Azuero Report due to illness.  Ivan is a Mexican born architect who works for a New York design firm tasked with building a beach estate near Pedasi for the Prince of Lichtenstein.

Final Observations & Suggestions

• New Format, Please! — I am personally worn out by the extremely long and tedious “awards show” format that has changed very little in six years. I think it would be far more valuable to those inside the tourism community if the format were changed to involve more interaction, more Q&A. Rather than having a few tourism “gurus” speak down to the audience, I want to hear what all those who are actually operating in the industry have to say. It would be FANTASTIC if a government official would even have one breakout session that’s simply a town hall Q&A.  Imagine that!?
• Workshop It — Dividing up the afternoon into multiple workshops would allow for even more speakers, moderators and attendees could then pick and choose which they wish to attend. This would make the day far less tedious and would allow for a lot more interesting and intimate discussions.
• Service, Shmervice — New ATP head Solome Shamah seems like a sharp guy, but his comment along the lines of “Panama’s service sector isn’t as bad as you all say, look at how great our banking and Canal services are!” won my “what planet are YOU on?” moment of the day.  Fidel Reyes won a close second with his repeated “Recession, what recession?” mantra.
• Lots of Back Slapping — The general mood and tone I got from the event was that Panama has already arrived and the war is won. It felt like an awards ceremony where we were all supposed to applaud our 5th place finish. I’m a little frustrated that there wasn’t more honest discussion about how far Panama has to go and the tough decisions we need to make to get there.
• Thank You Nancy — I thank Nancy Hannah for slugging out the planning and promotion of this forum every year and her undaunted belief in the future of Panama tourism, even when some of us aren’t so positive.

The AMCHAM forum has been so successful that other tourism forums are springing up.  Panama’s local small business chamber is holding one on November 24th.  Here is their press release below.  I hope that increased interest and discussion regarding the future direction of Panama tourism is trend that continues.

Tourism: the First Force for Development

The Panamanian Association of Business Executives, announced the launch of the XIV annual Tourism Forum -FOTUR 09 “Tourism: the First Force for Development” to be held on November 24 at the Miraflores Visitors Center of the Panama Canal Authority.

Tourism has evolved, its influence remains strong in the income and projection that our country has been receiving internationally through the years, the aim of this forum is to highlight how tourism is an economic activity in the short run which may become the main force for development.

The XIV Forum wishes to provide the tools necessary to make the tourism sector, working together with state, mark a positive difference in the economic reality that our country faces.

Among the topics being discussed in this activity are: Colon from cruise port to an international destination, the first 100 years of success of the Panama Canal, airport infrastructure for tourism development, legal security for investment in tourism, sustainable tourism development and Panama 2014: America’s Tourism Capital.

During the conference the chairman of the Committee on Tourism, Alberto Quiros Jaén, said there will be free transfer from the coastal strip to the Miraflores Visitor Center, courtesy of Adventuras 2000.

CONTACT: Yrisbeth Solano  ysolano@apede.org
Coordinadora de Comisiones
Departamento de Relaciones con los Socios
Asociación Panameña de Ejecutivos de Empresa (APEDE)

I have compared Panama to Dubai several times in previous articles, rarely intending flattery. After attending the annual AMCHAM Tourism Forum a few weeks ago (report on the way!), it became clear to me that there are two distinctive theories competing for the future direction of Panama tourism. On one hand, there’s what I call the “dressed up Cancun/Dubai” approach and on the other is a Panamanian twist on Costa Rica’s eco/boutique/sustainable model.  I count myself in the latter camp, but I worry that I may be grossly out numbered and out gunned.

Even as Dubai’s once-heralded economy teeters on the brink of disaster, Panamanian President Ricardo Martinelli echoed the “Panama as Dubai” notion when he rang the opening bell on Wall Street just last week!

Dubai/Cancun
—
Both areas experienced hyper growth, with development characterized by large scale, high density and often over-the-top design concepts.  Short-term rises in prices were applauded as the signals for success, rather than a focus on long-term, sustainable growth.  Environmental and cultural heritage were of little concern during the planning of these booms.  These were to be closed off destinations for the elite, far removed from the locals and with minimal interest in the preservation of anything indigenous.  The design and sensibility is to be modern, flashy, and always looking to the future, not beholden to any sense of history.  Business, shopping, and upscale activities like golf and sport fishing were to be among the draws.  Dubai even went so far as to create an INDOOR ski resort (see image above)! Don’t believe these two places are hurting? Jump on Travelocity or similar and check out the massive hotel discounts!

Pros:
—
Attracts big money first
Fosters meteoric growth
Can create a destination rapidly

Cons:
—
Destroys nature, culture
Tends to spark and fade quickly
Can result in a boom/bust

Costa Rica/Boutique/Eco
—
Costa Rica has done a fair job of creating and enforcing laws that discouraged mega projects, encouraged boutique hotels and multiple destinations surrounding well-managed national parks.  This attracted eco-minded tourists who appreciated the cultural and environmental differences, rather than expecting and imposing their own cultural norms. Low density development laws, particularly along the coastline, resulted in relatively low profile, low impact beach growth.  This has permitted Costa Rica to earn the reputation of being an eco-friendly destination and enjoy a longer period of sustained popularity than is typical of newfound tourism destinations, which tend to go in and out of vogue, particularly if they fall victim to the dreaded Fourth Phase of tourism, as referenced later in this article.

Pros
—
Celebrates natural, cultural history
Maintains proximity between locals and tourists
Permits a longer period of growth and popularity
Property values in remote or eco-sensitive area have slower growth, but maintain value

Cons
—
Slower growth
Frustrating to many developers and business owners
Some tourists do not see the value; it’s not for everybody
Attracts big money last

I have spent a decade working in tourism in Costa Rica.  The country isn’t perfect, but it would be difficult to argue that Panama’s tourism sector can even compare in terms of public image, annual revenue or tourism infrastructure. I cannot claim to be an expert on Dubai, so I enlisted the opinion of a University classmate and fraternity brother (go Sigma Chi!) who is a native of Dubai for his opinion. Here’s what he wrote:

I had no I idea Panama was so similar to Dubai. I don’t know how much you have heard about Dubai but the recession has hit us REALLY badly here. The property market has taken a beating. Prices are down 50-60% in a space of a year.  Many real estate companies have gone bust.  Projects worth billions have been canceled. That has had a domino effect on construction companies, contracting companies, building materials suppliers, advertising companies, etc.  The main problem that Dubai had was that in the last 5-6 years the real estate market was going insane. I am talking about prices doubling every year. There were a few main reasons for that:

1) No regulations in regards to grey money coming into the country. As a result a lot of questionable cash was brought into Dubai.  A lot of money laundering that could not be deposited anywhere else was brought here to buy property (Russian mafia, drug money, etc).

2) Dubai promised investors a 3 year visa renewable until the time the property was in their name. So, people from a lot of the neighboring countries with political/social/religious unrest choose to invest in Dubai so that they would have a safe haven. Interestingly, they canceled this and other incentives around the same time as the recession hit (talk about a double whammy!).

3) No capital gains tax. You could buy an apartment and sell it for a 10% profit the next day and not pay any tax on it. Short-term investors were paying 10% down for a property and selling it the next month for 5% more of the original price (effectively getting a 50% return overnight). All of this TAX FREE, generating no income for the Dubai government.

Until the recession, Dubai has been successful for a few key reasons:

1) Tax free income

2) ONLY safe modern place to live from Africa to East Asia.  So a lot of companies use Dubai as a base for their operations and employees prefer to live here than the neighboring countries.  So it is THE business hub of the region like what Panama is trying to do in their region.

3) Tourist traffic has gone through the roof because of all the ridiculous attractions like indoor ski slope, world biggest mall, world’s biggest building, etc.

4) Top notch infrastructure (airport/roads/seaport)

Dubai was on fire until the recession hit.  The leadership kept saying that nothing can affect Dubai.  Boy have they been wrong! If I were to be the ruler and do it all over again, I would focus on SUSTAINABLE GROWTH.  While it is okay to have some degree of speculators, it is better to have a gradual growth model. To achieve that, I would ensure:

1) Criminals Stay Home — The harboring of “grey money” does very for the long-term growth of a country.

2) Limit Speculators — Introduce some kind of short-term capital gains tax so that people would not just “flip” properties so easily.  By the time the property got into the hands of the end user it would have been bought and sold several times and the price would be 100-200% more since everyone took their profit.  This would keep out the speculators.

3) Attract Foreigner Residents — Keep the residency rule to attract investors and rich people from the less stable neighboring countries. In fact I would go ahead an offer a permanent residency to people who invest certain amount of money here.

Eerie how similar my Dubai amigo’s ideas for “if I could do it all over again” pertain to Panama TODAY.  Tourism and overall national development requires a long-term vision and leadership that is willing to forego short-term gain for long term sustainability.  There is plenty of documentation regarding those destinations who have fallen victim to the dreaded “Fourth Phase” of tourism.  Here is how these phases are described on the UNESCO world heritage website:

Phase I
A remote and exotic spot offers peaceful rest and relaxation and provides an escape for the rich who live in isolation from the resident population.

Phase II
Tourism promotion attracts persons of middle income who come as much for the rest and relaxation, as to imitate the rich.  More and more hotel accommodation and tourist facilities are built to attract and accommodate more and more tourists.  This transforms the original character of the place from « escape paradise » to a series of urban developments with several consequences:
•     The local residents become tourism employees, in many cases foregoing agriculture and earn more than ever before;
•    The rich tourists move on elsewhere;
•    The growth in tourist population makes interaction between tourist and resident population inevitable, leading to a variety of social consequences, seen mostly as negative;
•     Increased tourist accommodation capacity leads to excess supply over demand and deterioration in product and price.

Phase III
The country resorts to mass tourism, attracting persons of lower standards of social behavior and economic power.  This leads to the socio-environmental degradation of the tourist destination.

Phase IV
As the place sinks under the weight of social friction and solid waste, all tourists exit, leaving behind derelict tourism facilities, littered beaches and countryside and a resident population that cannot return to its old way of life.

CONCLUSION:
Cancun is a failure.  I believe Dubai’s master plan will soon prove to be a fantastic failure.  Panama needs to learn from their mistakes and not seek to imitate them. Making repeated comparisons to Dubai, all the way to the office of the Presidency, does not paint a positive picture for the vision that the powers that be have for the future of Panamanian tourism.  The leadership and local residents need to take notice of the failings of these other countries and destinations and demand that their leaders put the framework in place that allow for sustainable growth.  We foreigners can simply move away if it all goes badly, but Panamanians will need to deal with the aftermath if all does not go to plan.

YOU ARE GOING WHERE!?

When I decided to take a vacation to the unlikely destination of Medellin, Colombia, my friends back in the U.S. made the expected sarcastic comments, ranging from inferences that my trip involved finding Pablo Escobar to suspicions of my performing Internet marketing for the cartels.  Funny to the amigos perhaps, but overcoming these notions is a serious challenge that faces Colombian tourism.

Unfortunately, the notions that Medellin (and Colombia in general) is still a dangerous destination remain prevalent.  Colombia has a long way to go in order to overcome the reputation it earned from its anything goes, drug running past.  In recent years, the country has been making an impressive effort to do just that.  As a marketing guy, I appreciate the manner in which the national ad campaigns directly attack the average tourist’s worst fear with the tagline, “The only risk is you’ll want to stay.” Catchy slogan indeed, even if only partly true.

Having already visited the semi-touristy Cartegena back in 2003, I was looking for something off the beaten path on this trip.  Medellin has become famous among expats residing in Latin America, not only for the legendary beauty of its females, but also for the natural beauty of the landscape, the year-round, spring like weather, rich folklore and incredibly nice people.  With a few Copa miles to burn and a convenient direct flight from PTY, I decided Medellin was the spot.  (Scroll to the bottom of this post to see my trip photos!)

Arriving to Medellin from Panama City is easy.  The flight is just over an hour and offers some fantastic scenery along the way.  I knew upon exiting the aircraft that I was no longer in my Central American comfort zone.  The Medellin airport is a, brick and wood relic reminiscent of a funkadelic, 1970s ski lodge.  One has to pass through long lines and slow, military-style immigration and customs desks before finally making it to the street.  Once there, a bevy of buses, taxis and pedestrians move about like a furious ant colony.  After enduring a money changing process on par with transferring funds to an African republic, I took a shared taxi for the 40 minute ride into the upscale Poblado district.  The fare ran me the Colombian Peso equivalent of about $15, not a bad start!

The cool air was an instant reprieve from the heat of Panama City.  A winding country road leads from the airport to the city.  From my taxi window I observed a green landscape of pine trees and rolling hills with red brick houses dotting the hillside. Save for the occasional Spanish sign announcing a local disco, one could be fooled into thinking they were in some Northern U.S. State, or perhaps Spain?  Finally, after a series of death-defying maneuvers by my cabbie, we descended into the massive, red brick maze of construction that expands throughout the entire valley; I had arrived in Medellin.

The city of Medellin sits in a large, verdant valley at almost a mile above sea level.  With over 3.2 million inhabitants, the place somehow simultaneously possesses the qualities of a mid-size city at its center and the traits of a large country town at its outskirts.  The Medellin River runs through the City, as does the modern Metro system.  While designed at very different times and by distinct creators, both are beautiful and also reflect the juxtaposed elements that seem ever-present in Medellin: the town’s nature embracing, cowboy-loving past and the City’s art deco, fashion-forward, engineered future.

I wanted to “go native” as best I could on this extended trip, in part to really see if there was tourism budding in Colombia,  as well as to try out life in Colombia.  After 11 years in San Jose, Costa Rica and Panama City, I’m not sure I’m bold enough to move to a third Latin American city, but I have certainly had my thoughts.  To that end, I booked a private room at a hilarious hostel, The Pit Stop.  The place itself merits an entire article, but I’ll summarize by saying that between the on-site pub, the gaggle of Israelis and other assorted colorful characters, I was constantly amused.  Situated in a nice suburb between the shops of Poblado and the popular nightlife area known as Parque Lleras (or Zona Rosa), I found the accommodations to be quite, well…accommodating.  The hostel was jam packed every single night I was there and I felt lucky to compare notes with so many well-traveled and interested characters, even if I was a bit jealous of them and longing for my days as a more free-spirited wanderer.  If I were to do it again, I’d probably stay at one of the many other hostals in the area, like Black Sheep, Tiger Paw or Casa Kiwi, but at $22 per night, I was more than happy.

I spent days wandering the City via the very convenient metro system, which was cheap and easy to use and within walking distance of most points of interest. I toured a few museums, saw some historical buildings and monuments, then rode up the “metro-cable” (a gondola connected to the Metro system) up above one of the low rent barrios to see a Spanish donated modern library. I was pleasantly surprised with the cleanliness, organization and overall quality of urban planning that is often lacking in Costa Rica and Panama.  Modern buildings with neat landscaping, fancy crosswalks, and pleasant policemen had me thinking on more than one occasion, “where the heck AM I?!”

The only tourist activity in which I partook was paragliding.  This involves a half-day trip to a tour operator about an hour from the city center.  It’s well worth it.  The location is high in the hills above the north edge of the City, overlooking the town of Bello.  At $50, the cost was about 1/2 what something similar might run in Costa Rica.  From the one hour bus ride getting to the tiny mountain suburb, to the flight itself and the post-flight beer at a tiny shack overlooking the valley, the tour was excellent and highly professional.  A gringo travel buddy and I were the only adventurers that day, so we had the entire sky to ourselves as we circled the valley.  It was absolutely surreal to turn figure eights ABOVE the flight pattern of the small planes landing at the regional airstrip.  I’d do it again tomorrow.

The nightlife in Medellin is vibrant, varied and plenty of fun.  The famed Zona Rosa is street after street lined with outdoor cafes, bars and discos.  What I really enjoyed were the wide variety of smartly themed bars and restaurants; from Scottish whisky bars to Reggae and French bistros.  There was even something I’d never seen before: a girls-only bar that resembled a Barbie dollhouse.  WEIRD!  The overall cost for dining and dancing is slightly less than Panama City although hardly cheap.  There’s a local brewpub known as Tres Cordilleras (3 mountain ranges) that makes several tasty brews, although the wheat beer is hard on the intestines, if you know what I mean.  There are multiple hostels in and around the Parque Lleras, so the place almost has a college town vibe.  I was surprise to see that the very nice Tiger Paw hostel is run by a Clemson alum, so I wasn’t the only gringo crazy enough to consider staying more than a week.

I am fortunate to have stayed in contact with a few Colombian friends living in Panama and Costa Rica, so I called up a few of their friends and was shown an excellent night on the town on more than one occasion.  The people of Colombia are incredibly pleasant, friendly and understand the importance of good customer service.  I was again and again impressed by the etiquette, since that’s among the most common grievances in Panama. Despite promises to myself, I sucked down more than a few shots of the local fire water, Aguardiente and subsequently stumbled around the Zona Rosa like a sailor.

One particular night, an expat gringo blogger residing in Medellin took me to his favorite live salsa music venue, which was fantastic.  The locals can really dance and the shows were excellent.  I think something like that would go over great in Panama City and am shocked Ruben Blades himself doesn’t have a namesake joint somewhere.  Near the end of my trip I had a friend meeting up with me and so decided to upgrade to the nearby Holiday Inn Express, as there was a deal online for a $79/nt, very sweet suite right in the heart of Poblado.  It was pretty quiet there but I did see the occasional business traveler and tourist.

Overall impressions from my trip:

• Medellin is as a city is fairly clean, organized and has great transportation
• Service is good and people are generally very polite and friendly
• The women are very good looking, with many enhanced by cosmetic surgery
• Tourism in the region is still in diapers, but has huge potential
• Backpackers are already in the area and many cited Colombia as their favorite spot
• There is still a notable element of danger in the air, but it can be avoided
• Prostitution and sex tourism is huge in Medellin, making it hard for a newcomer to know which ladies (if any) are legit
• The weather is incredible
• There aren’t a whole lotta gringos visiting there…yet
• There is a great sense of pride in the local culture, history and folklore

I don’t think Panama nor Costa Rica has much to fear from Colombia as a near-peer competitor just yet, but the country has definite advantages in terms of work ethic, tidiness, a service-oriented culture and general politeness and friendliness.  All those things will allow for an easier cultural and economic transition to tourism.

If Colombia can push beyond its narco-associated past and enter the world community, I expect it to catch up very quickly.  Part of the benefit of being so isolated for so long is that the country has been cured in its own unique culture for decades, making its rich traditions and unique style even more noticeable and salient.  I think trendy, undaunted future travelers will take note as the country’s reputation for safety improves and its tourism infrastructure grows.  I’d guess that within the next 5-7 years, investors will be talking about Medellin as they were about Panama 3-4 years ago.

When I first came to Panama in 2004, I was impressed by the affordable the cost of living for such a cosmopolitan town.  I rented a spacious, fairly new, furnished, ocean-glimpse apartment in El Cangrejo with for $600 per month. In 2004, a beer at the neighborhood bar was $1.25 and dining out ran around $9 for an entree. Back then, there were plenty of pre-construction apartments for under $100,000. Sure I loved Panama, but I loved the those condo prices even more, and so snatched up one myself without thinking too much.

Since then, prices skyrocketed.  We can debate the reasons why: the U.S. real estate boom, news of the Canal Expansion, the success of neighboring Costa Rica or a glut of foreigners with fat pocketbooks, and a lot of hype.  Regardless of the potential causes, since somewhere around 2006 prices for beach land, entertainment, hotel rooms, and apartment rentals all went through the roof.
After selling my condo in late 2007 (at what I hope will be remembered as peak prices) I’ve been renting in Panama City.  While anxiously awaiting Panama’s inevitable real estate collapse, I’ve been both unwilling and unable to pay what I believe are crazy prices for city condos.  Thus, I’ve been forced to continue renting.  For the last year and a half, that’s unfortunately meant that I’ve paid grotesquely high rent to remain in the now-somehow-fashionable El Cangrejo area. I’ve been reluctant to wander too far from the region, as I do my best to avoid a nasty commute to my nearby office in El Carmen.  As an Irish-American cheapskate, it’s been extra painful to pay Manhattan-type rent to live in a so-so apartment in an average neighborhood.

FINALLY, while searching for apartments nearby this month, I have observed a trend that’s both astonishing and heart warming: RENT PRICES ARE PLUMMETING!  To any casual observer of financial news, this trend probably seems as surprising as the laws of gravity.  However, I am thrilled, because after 2 years of listening to all the Panama real estate “yay-saysers” reapeat like robots that Sir Isaac Newton’s laws do not apply here, I was starting to believe them. But alas, the rules of the universe, as well as Adam Smith’s invisible and, do indeed reach to lands so remote as Panama.

To give you an idea of what I’m seeing, go to any of these sites and take a look around:

www.encuentra24.com
www.compreoalquile.com
panama.en.craigslist.org/apa

What you’ll see if you do:

• There are a ton of units for rent in newly delivered buildings in San Francisco, El Cangrejo and El Carmen.
• 2BR units that may have rented for $1,700 to $2,000 a year ago are now asking for as little as $1,000 per month.
• Units that were posted as far as 90 days back are still listed and have been recently reduced.
• There are a LOT of units for rent from $1,500 to $2,500 per month.

I’m hoping that the following events occur next:

1. A bunch of apartments do not rent at the desired asking prices
2. Rent prices continue to decrease
3. Many units simply do not rent at all, forcing owners to sell
4. Selling prices fall to near-original purchase prices
5. Would-be buyers, turned off by previous pie-in-the-sky prices, return to Panama and snatch up the good deals they were seeking in the first place

I’m hoping that this is the first of several much-needed reality checks for Panama’s real estate sector. It’s time to get serious about the real value that Panama offers in today’s challenging market.  I hope that the local business owners and politicians are prepared to work hard to deliver greater value in order to attract investors.  It would also be great if Martinelli’s administration offers investors more benefits and tax breaks to encourage the absorption of this condo glut.  I am not encouraged by the move to banish “illegal hotels”, aka: short-term apartment rentals.  Do potential buyers need any more reasons to NOT buy?  Panama needs to do something very bold, very soon in order to avoid a Miami-type condo crisis.  To those who say, “but we’re not in a crisis YET!”  I can only respond with my favorite Robert Redford line in the movie Spy Game: “When did Noah build the Ark?  BEFORE the flood.”

By the way, who are these nut jobs posting rentals asking $8k per month?  Who would pay that in PANAMA?!  I can only hope that anybody with that type of salary would be smart enough to make a down payment and BUY a place.

I’ll let you know how my apartment hunt turns out soon…

Anybody else out there moved recently?

For the past 5 years, I have shouted to the rafters my beliefs on the vital role that tourism must play in Panama’s economic development.  When putting forth this concept here in Panama, I am often met with the following reactions:

• Blank stares
• Laughter
• Anger

Some of these reactions seem to stem from a common belief among locals that Panama is destined for greatness, with or without tourists.  Heck, even my long-time Panamanian girlfriend is quick to strike back during my touristic sermons with her own version of, “Tourists? We don’t need no stinkin’ tourists!”  I DO understand that with 100 years of U.S. occupation, Panama has a justifiable chip on its shoulder.  Perhaps I should be more culturally sensitive about what I perceive to be xenophobia, but that’s a different article.
A lot of folks here hold fast to the belief that since Panama has done fine without much attention to tourism, it’ll do just fine in continuing to ignore it.  Maybe they’re right, if only in the sense that Panama’s multi-pronged economy will likely be OK without fostering a pro-tourism environment.  BUUUUT, I argue that Panama could be far more than OK.  It could GREAT if the country’s new leadership takes measures to develop a cutting-edge tourism industry, focused on 4 simple concepts:

1. Culture – stress the incredibly rich and diverse culture of Panama
2. Eco-Friendliness – lower pollution, improve national parks and train quality nature guides
3. Low Impact – focus on smaller and more “boutique” hotels, rather than 1980’s style giants
4. Authenticity – don’t copy the architecture or style of Cancun or Miami…be PANAMA

Creating a Tourism Master Plan for Panama has to start with Panama defining success. Although former IPAT Minister and salsa legend Ruben Blades DID go about that task (with zero input from the private sector), the result was a convoluted and overly-expensive document that did little more than establish the Tourism Zones on a map with pretty colors. I’m curous to see whether this new administration uses it for anything more than a bird cage liner.

FIRST STEP: define the endgame!  Until we are clear on the local leadership’s tourism goals for the country, it’s hard to know whether we in the private sector are rowing in the same direction.  Were I Martinelli’s Tourism Czar, here would be my pitch for a vision of the “near-Perfect Panama”, achievable by the year 2020:

• A Shining Capital — A vibrant, healthy and safe Panama city with lots to see and do and great transportation
• Tourism Booming — A tourism industry that is thriving, with annual arrivals and average per-customer spend figures competing head to head with Costa Rica’s (dare I say the name!?).
• A More Eco-minded Nation — Fantastic national parks system, better eco-education among all citizens, public pride and rewards for being a clean and tidy town.
• More Prosperity in “The Interior” — Thanks to greater availability of jobs, products, services, health care and schools in remote parts.
• Rock solid financial and real estate sectors — I realize I’m asking for a lot here, but tourism can help stabilize these areas, especially if it helps to stem the bleeding from the inevitable real estate collapse in Panama City.

I have spent a decade in Costa Rica working in tourism and real estate.  I myself, along with dozens of business contacts have enjoyed the benefits of the intertwined nature of the two industries.  The tourism/real estate connection is pretty simple: first they visit, then they fall in love, and THEN they invest.

Despite this formula being well known, few in Panama seem to give a rats behind about the tourism portion of this equation.  I’ve said before and will say again that I believe that Panama was wrongheaded to put the real estate cart before the tourism horse.  Long and short, you’re supposed to build 100 condo towers AFTER the tourists decide they want to live here!  That’s how it worked in Florida, Hawaii, south of France and just about every other warm weather retirement destination on the planet.  The Dubai model that Panama seems intent to pursue, as  seen by their common pursuit to build the world’s guadiest swimming pool,  has already proven a disaster in the UAE.  Style is cheap and cannot compete with substance.  Tourists seeks SUBSTANCE, not brass and glass. Deliver that, then you’ll get real investors and not speculators.

So, what can more tourism do for Panama?

• Attract Future Business – Most business people come to a foreign country first as a tourist, and then decide it’s a place they’d like to do business.  In other cases, before taking a job or moving to a country, a person calls a friend who went there on vacation.  If that friend says, “oh man…it’s AWFUL”, you probably aren’t as bullish about dumping your money there.  See Mexico for muliple examples.

• Serve As A Way To Retain Talent – with so many multinationals eyeballing Latin America for new HQ’s, certainly “quality of life” is a factor for their top level employees. That means things to do and places to go.  Internal tourism in Panama has to improve in order to attract top level talent.
• Sell Those Condos! – The #1 challenge facing Panama in the immediate future is how to unload all those City condos. You need to GET the people here in order to permit them to fall in love with the country, AND THEN buy. Anybody in sales will tell you that it’s a numbers game.  Without the numbers, it’s hard to get the sales.  Get more folks here and increase the odds that the sellers, developers and banks might get out of this situation with their shirts on.
• Raise Rural Incomes – As mentioned above, prosperity in remote areas can increase dramatically and WITHOUT government handouts if tourists are visiting regularly. Tourists appreciate these off the beaten path areas that would otherwise be black holes for job seekers.  Eco and cultural tourism will permit some of these country folks stay near their beloved home provinces and have a shot at making a good living.  As it stands, anyone taking a quick tour of Panama’s interior will notice there’s a huge disparity in age.  You’ll find babies and grandparents, but few working age 20 or 30-somethings.  This can and MUST change.
• Preserve Nature, Culture, History – Tourism can serve as the ultimate time capsule for Panama’s great culture and history. Today’s tourist is well-traveled.  They don’t want another cookie cutter experience or tourist trap.  Panama has an incredible opportunity here if it takes the steps to preserve, celebrate and teach its culture to the outside world.
• Make Panama A Better Place To Live – One of the great things about spending half my time in Costa Rica is that on any given weekend, I can hop a plane to one of a dozen or more fantastic destinations, each unique in their own way.  If Panama can create multiple destinations in its many beach, mountain and jungle towns, it will mean a more interesting and rich experience for all those who live here.  Through stressing the value in preserving nature for direct profit through tourism, you also receive the benefit of a greener, cleaner country.

Sectors That Will Benefit From Increased Tourism

So, you don’t think tourism can benefit YOU and your biz?  Well, not unless you are somehow tied to any of the following:

1. Real Estate – more tourists = more sales and more rentals
2. Medical – more tourists = more “medical vacations” for plastic surgery, dentistry and other costly procedures
3. Free Zone – more tourists = more sales of duty free goods
4. Dining – more tourists = more fine dining
5. Banking – more tourists = more bank accounts opening
6. Entertainment – more tourists = more income at bars, restaurants, night clubs
7. Retail – more tourists = more sales of all types of retain items, especially souvenir items like Coffee, Panama Hats, Cigars

SUMMARY

Panama is a country whose labor force is already service-focused (if not yet service-minded).  Tourism is a logical next step and a perfect complement to and catalyst for its other industries.  I truly hope that President Martinelli and new tourism minister Salomon Shamah see the connection and take steps to make Panama a model for sustainable tourism.  It will be interesting to hear Mr. Shamah speak publicly at the upcoming AMCHAM Tourism Forum. For those of you interested it’s Thursday, September 10th at the Hotel Miramar in Panama City.  See more here.   Sam Taliferio of the famous Valle Escondido project in Boquete is a featured speaker and I’m intrigued to see how his speech on “What Panama Needs To Do To Become The World’s Best Place to do Biz” (a stated goal by Martinelli) is received as well.  There’s a very active thread on the subject on his forum.