In the News from Panama

Panama Extends Deal for Cruise Companies

The Panama government has confirmed that it will extend an incentive program designed to encourage cruise companies to homeport ships in Panama City. While not surprising, the move serves as a reminder that the cruise industry is poised to take off in Panama when the pandemic ends.

The incentive program offers to reimburse companies for Panama Canal transit fees for ships that use Panama as the base for the trips. While the transit fees will represent millions in lost revenue, the government expects the cruise industry to provide a major spark for local businesses. ships  

When a cruise ship homeports in Panama City, passengers spend an average of two days in the city, according to coverage in Seatrade Cruise News. One homeport call by a 2,500-passenger ship generates a direct economic injection of $1.75 million for the country, based on the average spending per person of $232, according to Panama’s Office of the Comptroller General. Cruise companies would also provide their ships in Panama, generating more revenue for the country.

Cruise ships will be a key driver in powering the return of the economy, Minister of Commerce and Industries Ramón Martínez. 

Passengers will “go shopping, taste the exquisite Panamanian and international food and stay in our hotels, among other activities, which will boost the economy and create jobs,” Martínez told reporters.

In addition to all the money the cruise companies and their passengers will spend in the city, the cruise industry will also provide a tremendous boost to the Panama property market, when the world returns to normal. Each trip is a living advertisement for the city. From our experience, many of those visitors turn into future property buyers.

Before the pandemic, the market was ready to take off. The new cruise terminal is set to open on Perico Island off the Amador Causeway, which will draw thousands of visitors to the city every year. The new cruise terminal will be able to handle two ships of up to 380 meters/1,247 feet each. 

Panama’s Sustainable Tourism Master Plan highlights the untapped value of cruise ships, both large and small, including the importance of homeporting, Panama Tourism Authority Administrator Iván Eskildsen told Seatrade Cruise News. The small ship market is only starting to discover Panama, he said.

“For this subcategory, Panama is an exotic, unknown, uncrowded, and authentic destination, and it allows the exploration of our coasts in greater detail and, therefore, distributes the [economic] impacts to more destinations,” he said.

Last year, Norwegian Cruise Lines was the first company to take advantage of the incentive deal. As part of the deal, NCL passengers will fly through Tocumen International Airport, including a two-day stay in the country, and Panama will reimburse up to $18 million over three years. But the economic impact of those visits will far exceed the fees, according to Panama Tourism Authority officials.