Riding its burgeoning economic strength, Panama has seen a recent proliferation of new hotels and holiday experiences. This year, which marks the centenary of the first transit through the Panama Canal, also brought a new metro line to improve transport in the traffic-clogged capital while on the city's Amador Causeway, Frank Gehry's ravishing Biodiversity Museum, which celebrates the country's unique wildlife, has just announced its "pre-opening" timetable (Fridays, Saturdays and Sundays; $22/£15; 00 507 830 6700; biomuseopanama.org). New flights from European airlines are making it easier and a little cheaper to get there, too.
Touted as the eighth wonder of the world, the Panama Canal remains a great attraction: a visit to the Miraflores Lock visitors' centre (00 507 276 8325; visitcanaldepanama.com; entry US$3/£2) provides the awe-inspiring sight of huge container ships manoeuvring through a narrow chamber with millimetric precision, while the museum charts the challenges and counts the human losses of building the canal. On Saturday evenings in August (6pm), the centre marks the canal's centenary with free concerts, historical pageantry and fireworks. You can get a real feel for the canal on a cruise. Virgin Holidays (0333 1227097; virginholidaycruises.co.uk) offers a 17-night voyage aboard the Island Princess from Los Angeles to Fort Lauderdale via the canal, departing 10 November from £1,699pp, including flights from Heathrow.
Beyond the canal and the glitzy thrills of Panama City, the main charms of this sinuous isthmus, only 80km across at its narrowest point, are natural ones. Bocas del Toro, an archipelago within a marine reserve off the Caribbean coast near Costa Rica, has been dubbed the new Galápagos for its varied wildlife which includes manatees and turtles. On the eastern side of the canal, the idyllic San Blas Islands stretch in a long chain to Colombia, providing a chance to experience the culture of the Guna Yala, one of Panama's seven indigenous groups. On the Pacific coast, a string of more conventional resorts are growing up along "The Riviera" beside largely white-sand beaches and warm water, a couple of hours' drive west of Panama City; they will soon be served by flights to the newly refurbished Río Hato international airport. The all-inclusive five-star Hotel Riu (00 507 907 0900; riu.com) has just opened at Playa Blanca with double rooms from US$113 (£75).
In pictures: Panama
In pictures: Panama
The Casco Viejo: a medley of narrow streets, small squares and colonial buildings where you'll find the city's coolest new bars and restaurants (AP)
Hot tropic: the idyllic San Blas islands (Getty)
Panama City's skyline
Viewpoint: the Grace hotel
Boquete's economy depends heavily on the coffee-growing sector (Getty)
Great divide: a ship passes through the canal
A very different habitat, the Chiriquí Highlands, dominates the country's western end. It's the place to go for trekking and kayaking, and for birders it holds the promise of spotting the blue-green plumage of the rare and beautiful quetzal. In contrast, the steamy jungles of the Darién Gap, on the frontier with Colombia and home of the Emberá people, are still considered dangerous due to the activities of Colombian guerrillas and drug-runners, although adventure tours do visit the area. The Foreign Office warns against venturing "beyond a line drawn from Punta Carreto in the Comarca de San Blas on the Atlantic coast, through Yaviza in the eastern Darién province, to Punta Piña on the Pacific coast" (bit.ly/FCOAdvice).
In general, the best time to visit tropical Panama is during the dry season between December and April, although the Bocas del Toro Islands often see low rainfall in August and September. Sunvil Traveller (020 8568 4499; sunvil.co.uk) offers trips to Panama: a 14-night fly-drive itinerary, including international flights with Iberia via Madrid, internal flights, car-hire, accommodation and some meals, costs from £2,985pp. Other specialist tour operators offering Panama include Journey Latin America (020 3582 8959; journeylatinamerica.co.uk), Original Travel (020 3627 3140; originaltravel.co.uk), Last Frontiers (01296 653000; last frontiers.com) and Tucan Travel (0800 804 8435; tucantravel.com).
For more options, contact the Latin American Travel Association (01622 209832; lata.org).
Panama has few noteworthy mainland beaches. Offshore, though, there are 1,500 islands which are increasingly accessible and provide excellent diving and snorkelling.
For some years, Bocas del Toro has been a noted backpacker destination. Now, its hostels are being joined by boutique-style accommodation. Expect white sand aplenty, rainforests and great snorkelling among the protected coral. Try Palmar Tent Lodge (00 507 6880 8640; palmartentlodge.com; tents from $50/£31) for a quirky retreat.
East of the Canal, the San Blas islands provide a different take on a tropical paradise. Visitors stay in accommodation owned by the Guna Yala people and take canoe trips to snorkel off the many uninhabited islands. Most easily accessible is Aguja or "Needle Island" whose rustic cabins (00 507 6718 0173) start at $80 (£55) per person. San Blas experience (00 507 6159 4047 sanblasexperience.com) is run by a Guna couple and offers tours from $147 (£92) overnight.
Back to nature
The Gamboa Rainforest Resort Hotel (00 507 314 5000; gamboaresort.com; doubles from $175/£109), is well-placed for excursions into Soberanía National Park and to Monkey Island on Gatún Lake. It also has an aerial tramway through the rainforest canopy ($40/ £27pp) and offers night safaris ($25/£17 pp) on which you might spot the secretive sloth or the world's largest rodent, the capybara.
Between July and October, humpback whales can be seen surfacing off several of the Pacific Islands (Taboga is the closest to Panama City). Whale Watching Panama (00 507 6758 7600; whalewatchingpanama.com) runs several boat tours, starting at $50pp (£35).
However, the feather in Panama's hat is its birdlife. Naturetrek (01962 733051; naturetrek.co.uk) has a nine-day birdwatching holiday which is based in Soberanía National Park. Departing 2 November, it costs £2,195pp with flights, transfers, tours and accommodation included.
Cooler temperatures and lush, cloud-forest vegetation are the distinguishing features of this part of western Panama.
The picturesque town of Boquete makes a good base for exploring the highlands, in particular the hiking trails: the most challenging and rewarding of them leads to Volcán Barú (Panama's highest peak at almost 3,500m) with views across both the Pacific and Atlantic oceans.
Other pursuits for those of a more adrenalin-seeking bent include a four-hour tour by zipline taking you above the forest canopy (00 507 6450 2599; boquetetreetrek.com; $65/£40). Or you could try white-water rafting or kayaking in the fast-flowing waters of the Chiriquí river (00 507 720 284; boqueteoutdooradventures.com).
Boquete's economy depends heavily on the coffee-growing sector, and several local coffee producers offer tours of their farms: Café Ruiz's three-hour trip (00 507 720 1000; caferuiz-boquete.com) costs $30 (£20).
Home to 1.5m people, Panama City is actually three cities in one. The modern centre is a forest of skyscrapers, where gambling in hotel casinos, shopping in one of the many malls and dining out are all on the menu.
Just a short drive eastwards, in the direction of the airport, is Panama Viejo (00 507 226 8915; panamaviejo.org; admission is $6/£4). The evocative remains of the country's original capital are scattered among beautiful trees. Founded by the Spaniards in 1519, it was sacked and burnt by the British pirate, Henry Morgan, in 1671.
Its replacement, the Casco Viejo, occupies a promontory on the western side of the bay. Its beguiling medley of narrow streets, small squares and colonial buildings is where you'll find the city's coolest new bars and restaurants, such as Donde José at Avenida Central and Calle A (00 507 262 1682; open evenings Wednesday to Saturday) where the innovative tasting menu, including wine, costs $90 (£60).
Distinctive new accommodation includes the American Trade Hotel (00 507 211 2000; acehotel.com/panama; doubles from $239/£149), Casa del Horno (see Where to Stay) and Tantalo Hotel (00 507 262 4030; tantalohotel.com; B&B from $129/£81). Barefoot Panama (00 507 6780 3010; barefootpanama.com) offers bespoke walking tours.
Where to stay
Occupying part of Panama City's eye-catching "Twist Tower" is the new Grace Panama (00 507 280 6400; gracehotels.com) with doubles from $155 (£100), room only. In the increasingly trendy Casco Viejo, new boutique offerings include the meticulously-restored Casa del Horno (00 507 212 0052), where double rooms with breakfast start at $250 (£160).
Outside the capital, the places with the widest choice of accommodation are Bocas del Toro and Boquete, with a mix of large resort hotels, hostels and guesthouses. The Boquete Garden Inn (00 507 720 2376; boquetegardeninn.com) has B&B from $109 (£75). On the Atlantic coast of the isthmus, near Portobelo National Park, El Otro Lado (above; 00 507 202 01 11; www.elotrolado.com.pa/weben) is a beautifully designed and remote retreat with B&B from $490 (£306).
There are no direct flights from the UK but Air France (0871 663 3777; airfrance.co.uk); KLM (0871 231 000; klm.com); and Iberia (0870 609 0500; iberia.com) all fly via their respective hubs. Alternatively, American Airlines (0844 499 7300; americanairlines.co.uk) and Delta Airlines (0871 22 11 222; delta.com) offer flights that entail a stopover in the US.
The Pan-American Highway links Panama City with the western end of the country. A bus from Panama City to Boquete takes eight hours and costs $18 (£12). Alternatively, fly to David for $100 (£65). Air Panama's internal flights (00 507 316900; airpanama.com) also serve Bocas del Toro and the San Blas Islands. For more, see: visitpanama.com (00 507 526 7000).Reuse content