Panama City surprised me. I knew it was the capital of Central America’s southernmost country, and I knew it had the canal, but I didn’t expect quite how big, how modern, or how genuinely difficult to navigate it would be. It’s not a city with one obvious centre that you gravitate towards; it’s a sprawling collection of distinct neighbourhoods, each with a totally different feel, and choosing the wrong one can make your whole trip feel disjointed.
I only had a few days in Panama City before heading to Colombia via the (very eventful) San Blas boat trip, but I spent a lot of time on foot and made a few mistakes along the way that might save you some hassle.
Whether you’re on a backpacker budget, visiting for business, or just passing through, here’s a breakdown of the best areas to stay in Panama City, Panama.
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Quick answer: which area should you stay in?
- First-time visitor or backpacker: Casco Viejo
- Budget traveller who wants a social hostel: Perejil (specifically Mamallena Hostel)
- Mid-range, central, safe: El Cangrejo
- Business travel or luxury: Obarrio
- Quieter, residential, good value: San Francisco
Casco Viejo: best for first-time visitors and backpackers
Casco Viejo, or the historic centre of Panama City, is the neighbourhood most travellers gravitate towards, and for good reason. It’s the most beautiful part of the city: cobblestone streets, colourful colonial buildings, rooftop bars with views across the bay to the glass towers of the modern skyline. It’s also a UNESCO World Heritage Site, which tells you something about how well-preserved it is.
It’s the safest area in the city for travellers, well-lit and with a good level of foot traffic in the evenings, and it has the best selection of restaurants, cafes and things to do within walking distance. For anyone visiting Panama City for the first time, this is the easiest place to base yourself.
One important caveat: the safety of Casco Viejo applies specifically to within the neighbourhood itself. I walked from my hostel in Perejil to Casco Viejo to meet some friends, and by the time I arrived I was sweating, and not from the heat. The streets just outside the historic centre get sketchy quickly, so either stay within it or take an Uber between areas rather than walking.
Where to stay in Casco Viejo
For luxury, the American Trade Hotel and Sofitel Legend Casco Viejo are the standout options. The Sofitel in particular is a beautifully restored colonial building and one of the most iconic places to stay in the city. The Tantalo Hotel and Hotel La Compania are also frequently recommended in this area, although I didn’t hear this directly, so I can’t vouch for them myself.
For a budget option, search hostels within Casco Viejo itself rather than relying on the ones recommended by tour operators, which might prioritise convenience for their own logistics over your experience as a solo traveller. Selina Casco Viejo is a popular option for digital nomads and solo travellers who want a bit more comfort than a traditional hostel without paying luxury prices.
🇵🇦 More on Panama: Is it Safe to Travel Alone in Panama?
Perejil / Mamallena: best budget hostel base
This is where I stayed, and I want to be upfront about it: Perejil is not the most comfortable neighbourhood for solo female travellers. When Mamallena describes itself as “a real Panamanian neighbourhood,” that’s accurate, but it’s also travel-blog-code for “a bit rough around the edges.” I got catcalled regularly walking around during the day, and absolutely wouldn’t have wanted to be out there at night.
That said, Mamallena Hostel itself is genuinely great. It has a bar, an outdoor swimming pool, loads of communal spaces, hostel dogs (ask about Choco), and 24-hour reception, which matters more than you’d think when you’re rolling in off the overnight bus from Bocas del Toro at 5am. The dorm rooms are spacious, the beds are huge, and the air conditioning actually works, which is a bigger deal than it sounds because Panama City is relentlessly hot.
The hostel is also the main operator for San Blas boat trips, so if that’s on your itinerary, it makes logistical sense to stay here. Just know that you’re not really in either the modern city centre or Casco Viejo: it’s about a 20-minute walk to Casco Viejo (through streets you definitely don’t want to walk through at night), but Ubers in Panama City are quite cheap.
Dorm beds at Mamallena currently start from around $14 USD per night.
➡️ Search Mamallena Hostel on Booking.com
➡️ Search Perejil on Booking.com
Heading to the San Blas Islands from Panama? Read my honest review of San Blas Adventures.
El Cangrejo: best mid-range neighbourhood
El Cangrejo (which translates, brilliantly, as “The Crab”) is my pick for the sweet spot between location, safety, value, and atmosphere. It’s a lively, walkable neighbourhood lined with cafes, restaurants, and bars along Via Argentina, and it has a genuinely fun, local energy that Obarrio lacks.
It’s central enough that you’re close to Casco Viejo (a short Uber ride), the Panama Canal (easy taxi access to main roads), and Obarrio, without paying the premium of being inside either. There’s a metro line running through, making it easy to get around without racking up Uber costs.
For mid-range hotels with private rooms, air conditioning, and free wifi, El Cangrejo has a solid selection.
➡️ Search El Cangrejo on Booking.com
🇵🇦 More on Panama: The Best Beaches in Bocas del Toro, Panama
Obarrio: best for business travel and luxury
Obarrio is Panama City’s financial district, all glass towers, embassies, and high-end restaurants along Calle 50. If you’ve ever wanted to stay in a skyscraper with panoramic city views, this is your neighbourhood.
It’s one of the safer areas of the city and well-connected by metro and taxi, though it’s not particularly atmospheric for wandering around. Most people who stay here do so knowing they’ll spend their days elsewhere, using Obarrio as a comfortable, central base to come back to in the evenings.
Hotel Riu Plaza Panama is probably the most well-known option in this area: spacious rooms, multiple restaurants, an outdoor swimming pool and fitness centre, and those impressive high-rise views. For something a bit more boutique, the Bristol Panama is frequently recommended for its quieter, more residential atmosphere.
➡️ Search for Obarrio on Booking.com
San Francisco: best for a quieter stay
San Francisco is a slightly more residential neighbourhood east of the city centre, popular with expats and long-term visitors. It’s quieter than El Cangrejo and Obarrio, but still close enough to the city’s main attractions to be a convenient base.
It doesn’t have the same buzz as El Cangrejo or the historic charm of Casco Viejo, but if you want to feel like you’re living in the city rather than just passing through it, San Francisco gives you that. Parque Omar, essentially the city’s answer to Central Park, is here, which is great if you want somewhere to run or just escape the concrete for an hour.
It’s a solid mid-range option, generally with better value than Casco Viejo for private rooms.
➡️ Search San Francisco on Booking.com
Best Places to Stay by Attraction in Panama City
Where to stay near the Panama Canal
If visiting the Panama Canal is top of your list (and even if it wasn’t, go, it’s worth it, even if I did spend most of the time watching YouTube in my head), the most practical approach is to stay somewhere with easy access to main roads rather than deep inside a residential neighbourhood. The easiest way to get to the canal is by Uber or taxi: we paid around $4 split between three people, so it’s very manageable from anywhere central.
El Cangrejo or Perejil both work well for this. I’d avoid making Casco Viejo your base if the canal is your priority, as the traffic routing makes it slower to get there.
Where to stay near the airport
This is genuinely important information that most guides skip: Panama City has two international airports, and you need to make sure you know which one you’re flying from.
Tocumen International Airport (PTY) is the larger of the two and the one most international flights use. It’s around 30km from the city centre, a journey of roughly 25 to 30 minutes depending on traffic, costing around $30 by taxi. The Crowne Plaza Hotel sits right next to Tocumen and offers an airport shuttle, which makes it the most convenient option if you have a very early flight or a long layover.
Panamá Pacífico International Airport is smaller and on the other side of the city entirely, closer to the canal, so it’s actually useful for a day trip if you’re staying nearby for an early departure. (I made the mistake of mixing up airports in Medellín and nearly missed my flight. Do not be me.)
Planning your route through Central America? Get my Complete Guide to Central America here.
Practical tips for choosing where to stay in Panama City
Panama City’s traffic is notoriously bad during the day. Uber is the most convenient way to get around and prices are very reasonable (most journeys within the city cost $3 to $8), but factor in that what looks like a short distance on a map can take much longer than expected in practice.
Whichever neighbourhood you stay in, keep an eye on where you’re walking after dark. Even the safer areas of Panama City have pockets that are best avoided, and the areas immediately surrounding Casco Viejo are a good example of this.
The city is also very hot and very humid year-round, so air-conditioned rooms are less of a luxury and more of a necessity. Check this before you book, especially in budget accommodation.
Frequently Asked Questions: Where to Stay in Panama City, Panama
Is Casco Viejo safe to stay in?
Yes, within the neighbourhood itself it’s one of the safest areas in the city: well-lit, well-trafficked, and comfortable to walk around in the evenings. The caveat is that the streets immediately surrounding it drop off in safety quite quickly, so take an Uber rather than walking to other parts of the city after dark.
Is Panama City safe for solo female travellers?
It depends heavily on which neighbourhood you’re in. Casco Viejo and El Cangrejo are the most comfortable options. Areas like Perejil are fine during the day but not somewhere I’d want to walk around alone at night. For more detail, read the full guide to solo travel safety in Panama.
How do I get from Tocumen Airport to the city centre?
A taxi costs around $25 to $30 and takes roughly 25 to 30 minutes depending on traffic. You can also take the metro for much less, though it involves a bus connection from the airport first. Most hostels, including Mamallena, offer an airport pickup service if you book in advance.
How much does accommodation in Panama City cost?
Budget dorm beds start from around $15 to $30 per night. Mid-range private rooms in areas like El Cangrejo typically run $60 to $120. Luxury hotels in Casco Viejo and Obarrio start from around $150 and up. Panama City is generally more expensive than other Central American capitals, so it’s worth reading about the cost of living in Panama if you are budget-conscious.
Is it worth staying near the Panama Canal?
Not really. The area around the canal isn’t particularly interesting to be based in, and getting there by Uber from anywhere central is easy and cheap (we paid about $4 split between three of us). You’re better off staying in Casco Viejo or El Cangrejo and making a half-day trip of it.
Do I need to book accommodation in advance?
For budget hostels like Mamallena, yes, especially if you’re arriving off the overnight bus from Bocas del Toro or have a San Blas trip booked. These fill up fast on the backpacker circuit. For mid-range and luxury hotels there’s more supply, but booking a few days ahead gets you better rates. Peak season runs roughly December to April.
