Panama City sits at the Pacific entrance of the Panama Canal, where a dense modern skyline meets a historic quarter and tropical forest. The city is the country's political, banking and commercial hub, and its different faces are spread across distinct districts rather than clustered in one centre.
For a visitor, the practical choice comes down to two poles: the atmospheric old quarter, Casco Viejo, on its peninsula, and the modern high-rise city with its malls and bay views. This guide covers which areas to base yourself in, who each one suits, and how the accommodation tiers differ. It does not recommend individual properties.
Best areas to stay in Panama City
1. Casco Viejo (Old Quarter)
Casco Viejo is the city's historic district, rebuilt on a peninsula after the original settlement was destroyed. Its streets mix Spanish colonial buildings with French and Antillean townhouses dating from the canal construction era. It is the most atmospheric base in the city and puts you within walking distance of plazas, cafés and waterfront views.
It suits first-time visitors who want character and walkability, as well as budget travellers, since the old quarter holds both hostel-style and mid-range accommodation. Note that some rooms sit above bars and can be loud, and that the district is on a peninsula, so you will generally need a taxi to reach the modern city and the canal sights.
2. The modern city and bayfront
The more modern parts of Panama City are defined by high-rise buildings forming a dense skyline, with shopping and business districts along the bay. This is where you find large hotels, malls and upscale dining, with views over Panama Bay.
It suits travellers who prefer modern comforts, business visitors and those who want to be close to shopping and restaurants. It connects easily to the rest of the city by road, though it is a different experience from the historic quarter and less suited to those who want to explore on foot.
3. Balboa and the canal area
Balboa lies within the greater metropolitan area and was formerly part of the Panama Canal Zone, whose administration was headquartered there. Port facilities in the Balboa area handle shipping, and the surrounding zone includes green space and canal-related sites.
It suits visitors whose main interest is the canal and the surrounding nature, including the Metropolitan Nature Park and the marine exhibitions centre at the Pacific entrance. It is quieter and more spread out than the city centre, so a base here works best if you have transport or plan to use taxis.
Where to stay on a budget, mid-range or splurge
- Budget: Hostel-style accommodation, largely concentrated in Casco Viejo, with dorm beds and simple private rooms. Shared kitchens, free breakfast or coffee and communal areas are common, and some places can arrange onward sailing trips to Colombia.
- Mid-range: Comfortable private rooms and small inns, including restored historic buildings in Casco Viejo, often with air conditioning, Wi-Fi and shared or private kitchen facilities.
- Splurge: Large luxury high-rise hotels and small boutique properties, with on-site restaurants and bars, pools, and in some cases apartment-style rooms with kitchens and rooftop terraces.
Best area for a first visit
For a first visit, base yourself in Casco Viejo. It gives you the historic architecture, plazas and waterfront in one walkable district, and it offers accommodation across the budget and mid-range tiers. From there you can take taxis to the modern city and the canal sights while staying somewhere with a clear sense of place.
Frequently asked questions
When is the best time to visit Panama City?
The dry season runs from December through April and the wet season from May through November. Temperatures stay fairly constant year-round, averaging around 27 °C.
Is Casco Viejo noisy?
It can be. Some rooms sit above bars and are loud, so if you are sensitive to noise, ask for a room away from the street or bar areas.
How do I get between the historic quarter and the modern city?
Casco Viejo occupies a peninsula, so the modern city, the bayfront and the canal area are generally reached by taxi rather than on foot.
Can I arrange onward travel to Colombia from Panama City?
Some hostels in the city provide information on sailing boat departures between Panama and Cartagena in Colombia.
Compare live prices for the area you choose using the booking tools on this page.