For fair, formal competition on equal terms for tourism in Panama

Panama City, Republic of Panama

To the general public, stakeholders in the tourism sector, and the media:

In light of recent statements seeking to distort the debate over the regulation of lodging activities in our country, the Panamanian Hotel Association (APATEL) considers it a civic and professional duty to address the public with transparency, responsibility, and respect for the truth.

We categorically reject any suggestion that our association is the author or drafter of rates, resolutions, or regulatory measures. To claim that APATEL has drafted these provisions is not only false and irresponsible, but also disrespectful toward Panama's state institutions and government authorities, who hold the power to regulate, oversee, and establish public policy. Our role is to serve as a technical and constructive counterpart that watches over the sustainability of the national tourism industry, while always respecting the current legal framework.

We wish to be emphatic: we have no interest whatsoever in fueling a sterile confrontation between digital platforms and hotels. We recognize that global tourism is evolving, that technology is an integral part of that transformation, and that short-term lodging plays a valid role in addressing the lack of infrastructure in remote areas of our country. In fact, the tourism incentives law itself was conceived precisely to stimulate investment and bring development to areas outside Panama City, where building and operating poses a significant logistical and capital challenge.

For this reason, resorting to the argument that there are large incentives for the hotel industry in order to justify not regulating this activity, or claiming that the intent is to tax small business owners, is an irrelevant argument that diverts attention from the real debate. We firmly believe in the free market and private enterprise, but free enterprise can only generate well-being when it operates under clear rules and under conditions of equality for all competitors. Free competition should not be confused with selective deregulation. Nor will we tolerate baseless attacks against our association, and we reserve the right to take appropriate action should they continue.

The marked disparity in rates seen in the market today does not stem solely from differences in business efficiency; it also reflects unequal competition resulting from a lack of regulation and oversight. While formal hotel establishments pay taxes, maintain payrolls with wages and benefits, contribute to the Social Security Fund, and comply with safety requirements, certifications, liability insurance, and health inspections, listings that operate outside these obligations can have lower costs. This lack of equivalent conditions allows them to offer rates below what a formal hotel can sustain, while also affecting government revenue and raising concerns about visitor protection.

In this sense, presenting formalization as an attempt to run over small entrepreneurs is demagoguery that distracts from the underlying issue. The reality is that this sector includes both families who "share" a room in their home and large-scale real estate investment schemes and operators with multiple properties functioning as de facto lodging businesses, without assuming the corresponding tax, labor, and civil responsibilities. Regulating is not about stifling entrepreneurship; it is about providing legal certainty, protecting consumers, and ensuring fairer conditions for everyone.

Panama's hotel industry has historically been a pillar of job creation, investment, and our country's international standing. We are not asking for privileges, nor do we intend to hold back progress; we defend fairness, formality, and compliance with the rules so that tourism can continue to be an engine of progress for all Panamanians.

Sincerely,

Panamanian Hotel Association (APATEL)

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TrustedPanamaStays comments:

This letter was sent to La Estrella de Panamá by the president of APATEL on October 2, 2026, after Airbnb published its own open letter to the Government containing many falsehoods. It's understandable that APATEL, as the representative of all hotels and lodgings legally registered with the ATP, uses cautious, formal language and does not mention Airbnb by name.

We can speak more plainly.

1) Airbnb.com makes billions promoting short-term rentals (STRs) that operate "outside the law" — or, more plainly, illegally. These listings enjoy complete anonymity on the platform, since Airbnb intentionally publishes them under made-up titles that no one outside the platform can identify, and it hides the location of the listing, showing maps that display the property away from its actual location. We don't know exactly how many of these listings are registered and pay taxes as Panamanian law requires, but we can say with certainty that the vast majority are illegal.

According to updated data from market analysis firms such as AirDNA, the digital tourism supply is concentrated mainly in three major regions of the country:

1. Panama Province (including Panama City): Accounts for the largest share of listings, with more than 3,800 active listings. Panama City alone records around 2,600 active properties on Airbnb.
2. West Panama Province: The second-largest area by volume, with close to 1,540 listings (driven strongly by beach destinations such as Coronado).
3. Chiriquí Province: Adds up to approximately 1,040 active properties, with Boquete leading as the preferred mountain destination.

In just the 9 largest Panamanian markets, AirDNA counts 8,301 listings on platforms like Airbnb, and there are many more that aren't advertised on these platforms but rather on social media, particularly Facebook and Instagram, or on their own websites. In total, it is estimated that there are around 12,000 short-term lodging listings in Panama.

Only a small fraction of these are legally registered with the ATP.

Our directory , which is based on public ATP data and includes only legally registered lodgings, shows only 1,232 verified listings nationwide to date — approximately 10% of the total. In other words, around 90% of listings are unregistered, do not pay taxes, and often use public services such as urban sanitation, water, electricity, and propane gas for their commercial activities at rates intended for Panamanian families rather than for businesses generating profits from these resources. Evading taxes means they do not contribute to the construction and maintenance of precisely the public infrastructure that allows them to make money. In addition to not giving back a share of these benefits to the community, they have much lower management and compliance costs than legal lodgings, creating significant unfair competition.

These costs are not limited to the 10% ITBMS (sales) tax. Legal businesses also pay income tax and must keep orderly accounting records and issue invoices. This generally requires the services of a certified public accountant (CPA), which is not free.

There are also compliance costs, such as purchasing and maintaining safety measures like smoke and carbon monoxide alarms, fire extinguishers, and more. These additional costs (excluding income tax) are estimated at around 5%, raising total costs between ITBMS and compliance to more than 15%.

And the costs don't end there. The discounts for retirees that hotels must offer (on average 41.4% off the regular rate) and which, unfairly, they must pay for out of their own pocket, are another expense that illegal operators avoid along with taxes, creating a strong disparity in favor of clandestine lodgings.

Naturally, Carlos Muñoz, Airbnb's representative, doesn't talk about any of this. His role is not to acknowledge the ugly reality, but to defend the billions in profits his company makes by promoting illegal lodgings.

There are two bills that tackle the problem from different angles. Bill 301, in Article 6, empowers the DGI to agree with platforms like Airbnb on mechanisms to collect the tax at the time of payment, so that hosts stop evading what they have been evading for years. And Bill 713, in Article 30, sets an ITBMS rate for unregistered rentals that brings their cost closer to that of regular lodgings and hotels. This is not about charging more, but about leveling the cost of doing business and establishing a fair playing field.

When Muñoz speaks of "a discriminatory tax whose rate was drafted by the sector's competitor, which the State is turning into law," he knows perfectly well that this is a blatant distortion of the facts.

Those of us who work legally in tourism know perfectly well that the ITBMS the lodging charges the tourist as a tax substitute is only one part of what influences the price that must be charged to the guest in order to cover investment, staff fees and salaries, and outside services such as accounting, social security, and maintenance.

Muñoz offers "four concrete recommendations:

1) Eliminate Article 30 of Bill 713 and establish a single 10% ITBMS rate for all different types of lodging,

2) Pass Bill 301, aimed at regulating short-term lodging, which has already been discussed with the sector,

3) Adopt OECD standards to strengthen enforcement of ITBMS payment; and 4) Create a technical working group with the sector in order to build solutions to develop Panama's tourism industry as a whole, taking into account all the different stakeholders."

Article 30 of Bill 713 amends the Fiscal Code: it keeps the 10% ITBMS rate for hotels and other public tourist lodging establishments "duly registered or authorized," and applies a 15% rate to short-term rentals of houses, apartments, rooms, and other residential properties, whether managed directly or through digital platforms. This proposal starts from the premise that authorities are unable to identify all clandestine lodgings or force them to bear the compliance costs that registered lodgings must sustain.

Requiring clandestine operators, through the digital platforms they use, to pay a fee similar to (in fact, still lower than) the compliance costs borne by hotels and other regular lodgings, is not "discrimination" but rather a small step toward fairness.

There is no "discrimination," because clandestine owners can simply come out of hiding and illegality by registering and legalizing their activity, thereby leaving the group of the "discriminated against" and paying the 10% rate like any hotel. Once Bill 301 is passed, that path will also be open to those who currently cannot register.

The author owns a small aparthotel duly registered with the ATP. He is a member of the Chamber of Commerce and Tourism and of APATEL, but does not necessarily represent the official positions of these associations.