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Hostels in Panama: Affordable Luxury for Travelers


Panama remains an enticing destination for travelers seeking a memorable vacation, offering a wealth of experiences that cater to various budgets. Contrary to popular belief, one need not be affluent to explore the beauty and charm of Panama. Increasingly, tourists are uncovering affordable ways to relish Panama's attractions, with hostels emerging as a budget-friendly accommodation option.

Hostels, characterized by their sociable atmosphere and communal facilities such as kitchens and lounges, provide travelers with comfortable lodging at a fraction of the cost of traditional hotels. Opting for hostel accommodation not only enables visitors to save money, allowing for more enriching experiences during their journey, but also fosters connections with fellow travelers. By mingling with like-minded individuals, tourists can enhance their vacation by sharing stories, tips, and adventures, thus adding depth and meaning to their exploration of Panama.

For those planning a visit to Panama City, the cosmopolitan capital of Central America, selecting the right hostel is key to a rewarding experience. Here, we highlight some of the best hostels in Panama City, offering both affordability and quality amenities to enhance your stay in this vibrant metropolis.

1. El Machico

If there is anything that a hotel can never match in a hostel, it is the friendly relationship that guests can foster with one another when staying in the hostel. El Machico is the quintessential embodiment of that kind of service.

Located at the center of Marbella, where a collection of cafes, cocktail salons, and international bars create a flashy atmosphere and stunning sea spectacle, El Machico is the paramount hostel in Panama City. The hostel is specifically designed to provide the ultimate comfort for all types of travelers in an enthusing atmosphere where every guest is treated as an integral part of the El Machico family.

The hostel offers private or shared rooms designed to give a guest the essential comfort and rest after a day or night of fun in Panama. The beds are equipped with power outlets to allow guests to charge their gadgets and gizmos used for recording their memorable experiences. It offers free luggage storage, Internet Stations, Wi-Fi around the villa and hot showers.

You don’t need to worry about breakfast because it is included in your accommodations. It has a completely equipped kitchen where you can prepare food for lunch or supper. You also need not worry about washing or drying clothes because there is a laundry service. Their 24-hour front desk personnel is multilingual so communication barriers are not a problem.

Staying in the hostel per se is also an opportunity for fun and enjoyment. Guests can take a dip in the pool, play billiards, table games, game consoles, watch television or movie projections at the pool or hold their own barbecue party within its premises.

El Machico, however, is especially known for the excursions that the hostel organizes for guests. In particular, the San Blas Tour is one of the most popular and sought after tours in Panama City. San Blas Island is a succession of over 300 miniature palm-fringed isles. The tour features an exploration of the beautiful and lovely islands of Guna Yala and the vivacious Guna culture.

One of the highlights of the tour is the trip to Chichime which is considered the best island in San Blas, which has four ornate cabins where guests can opt to stay while enjoying the island’s pleasant lagoon and a lovely beach.

Another optional place to stay in is Diablo Island which not only offers an exceptional coastline but provides snorkeling activities as well as a sea escapade in its famous shipwrecks.

Every island in the San Blas provides a uniquely beautiful view of the sea. You can opt to go island hopping to its over 300 islands to get a glimpse of their distinctive beauties. Among these islands, you can consider visiting the famous Perro Grande, Perro Chico, Hlerba, Zancudo, El Porvenir, Estrela, Iguana, Senidud, Anzuelo, Aguja, Cari, Soledad, Cayos Holandeses, Ina, Pelicano, Piscina Natural, and Naranjo Grande. Aside from enjoying the scenic views, you can also buy souvenirs and molas and enjoy authentic local dishes.

Your stay in El Machico can also be your gateway to another country, Colombia, the land of emeralds. You can spend sailing to Colombia and get a peek of its distinctive tropical beauty in the islands of Sapzurro, Turbo, Cartagena or Medellin.

In addition to its island tours, El Machico also organizes tours to explore other beauties of Panama. You can join a mountain bike adventure in ​Soberania, tour the city and the Panama canal, visit the Embera Village and experience their unspoiled way of life and culture, visit the Monkey Islands and Gatun Lake, enjoy the Portobelo or make a visit to Santa Catalina or Playa Morillo.

Contact Numbers: +507 203-9430 / +507 6473-5905

2. Luna’s Castle

Hailed as the “Hilton” of Panama’s Hostels, Luna’s Castle is a rasping, regal mansion that ingeniously combines Spanish majestic architecture with groovy relaxed backpacker ambiances and impeccable service. In terms of service, it parallels a luxurious hotel but as a hostel, it is a little waggish and very welcoming, which makes it the only hostel featured by Lonely Planet.

Set in the eminent Casco Viejo district, Luna’s Castle is a soothing yet posh hostel that provides tourists with a lavish view of Casco Viejo, a spectacular vista of the Panama bay and the ocean as well as the downtown skyline of Panama City.

Despite its cheap rates, Luna’s Castle affords all guests with a gorgeous ocean view in their dorm beds. The hostel also offers private rooms for one to three people. All rooms rope in free breakfast and free 24-hour Wi-fi internet. One you stay in the hostel, you are given a free map of Casco Viejo and Panama City. Guests are also provided free lockers, luggage storage, bikes, and book exchange. The communal kitchen, balcony, lounges and chill rooms allow guests to socialize. They can also play together on different table games and other activities.

Luna’s Castle is a hostel which became famous for its strategic location, Casco Viejo, the historic heart of Panama City and the oldest city on the Pacific coast of the Americas. It is especially distinguishable for its massive stone walls built from the ruins of Panama Vieja in 1671.

Casco Viejo is a marvel on its own where the past and the present converge. You will notice trees rising ramshackle stacks, gracefully renovated colonial manors next to decrepit rustic balconies while simultaneously housing vivacious bars and restaurants that hold a variety of entertainment such as live music, art exhibitions, and other events.

Casco Viejo today is especially known for its dining opportunities and nightlife that can accommodate all types of people from the tacky to the classy. Among the best recommended places included Casablanca on the verge of the picturesque Plaza Bolivar; Manolo Caracol at avenue Central, where you can taste the best seafood in Panama; Café Coca-Cola near Parque de Santa Ana that offers Panamanian cuisine; Relic Bar which is located just below Luna’s Castle, which offers the best party place; and Café Havana near Plaza de Independencia which is a trendy hangout for a quick swill or a twilight bite.

Luna’s Castle not only offers the best night out for tourists. It also arranges the most popular excursions that any visitor of Panama should not miss. The hostel organizes the regular tours that other hostels also provide including a tour to San Blas islands, boats to Colombia, Gatun Lake Rainforest Canal Excursion. However, the hostel also takes guests farther to the other equally famous tourist destination in the outskirts of Panama City including trips to Bocas Del Toro, Santa Catalina & Pacific Coast Beaches and Bouquet & Panama Highlands.
Contact Numbers: +507 262-1540

3. Zebulo Hostel

Built with a mission to give tourists the most memorable experience of Panama along with other like-minded travelers, this small and cozy hostel is ideal for passionate backpackers and travelers. This is epitomized by the hostel’s official live mascot and lucky charm dog named Zebulo, with whom guests can cuddle and play with.

Strategically located near the “Via Argentina” station, the hostel provides the perfect springboard to visit the different highlights of Panama City. Your tour of the city even gets easier with the help of their well-informed and multilingual staff that will give guests the secret travel tips to go around the city.

Spending the day or night in Panama City can truly be exhausting. Zebulo provides the absolute abode to calm down, loosen up and arrange your next destination. Despite being at the heart of the city, its green surroundings afford guests with the relaxing ambiance of nature.

Zebulo essentially offers four types of room accommodations. The private room with a private bathroom is prepared with semi-orthopedic cushion, soothing air conditioning. There is also a private room with double or twin beds where guests share a bathroom. A cheaper alternative to this is a private room with a shared bathroom with only fans. This provides guests with the natural tropical climate of the country. Finally, there are dorm rooms that are all equipped with air conditioning and lockers.

Among the amenities that guests can enjoy in Zebulo included 24-hour reception, group games or activities such as badminton, table tennis, and board games. Internet WI-Fi is available along with the hostel’s premises. Parking is provided to guests. Those who want to relax can also take a bath in the Jacuzzi. A la carte breakfast is provided. The hostel also holds BBQ nights where guests can eat, drink and bond.

As you perfect base in Panama, the hostel can arrange the most diverse tour opportunities for guests staying in Zebulo. You can take a tour of San Blas and see the most beautiful islets in Central America. You can arrange for a trekking expedition in Soberania National Park and visit the Monkey Island. You can take a bike city tour and visit the city highlights like Cinta Costera, Casco Antiguo, and Amador.

You can go for an exploration adventure to the secret and untouched natural beauties on Embeja Island. You can go on a sailing trip to Panama Bay in a delightful Monohull. And if you are a nature lover, you can take an adventure tour to Portobelo and go on a jungle trip, waterfall trek, bird watching, night caiman expeditions, horse-riding trail, snorkeling or Mangroves expedition.

Contact Numbers: +507 6328-5302
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4. Magnolia Inn

Located in the animated yet bygone neighborhood of Casco Viejo, Magnolia Inn features a French colonial manor characterized by calmative colors and gorgeous ornamentation. More than just the design of the mansion, its location provides guests with all conveniences of a modern lodging in a community where everything is just a walked away.

Magnolia Inn is both a boutique hotel and a hostel, which can immediately provide you a choice of where to stay. It can accommodate up to 50 guests. The hotel has 16 rooms while the deluxe hostel consists of 6 dorm rooms. Five of the hostel’s dorm rooms have bunk beds and air conditioning. The other one has a twin bed with no air-conditioning. All, however, gives an excellent level of coziness, sanitation and modern conveniences such as charging sockets, reading lights, and free Wi-Fi.

For larger groups of 12 people, they can book the “Ballroom”, which has 12 single beds, its own living room, and lockers. All guests get to share their modish social areas to relax and interact with fellow travelers. They can prepare their food in a fully equipped kitchen and munch their grub in the sunny dining room.

Magnolia Inn is ideal for group travelers such as university students, friends, small clubs, adventurers and others seeking cheap but comfortable accommodations. The hostel’s location is in the vicinity of commercial establishments, restaurants, rooftop bars and clubs such as Danilo’s Jazz Club and Rana Dorada.

Being in Casco Viejo, guests can simply walk or ride a bike to explore major attractions inside Panama’s old quarters such as the Presidential Palace, Iglesia de Santo Domingo, Casa Museo Endara, Parque Bolivar, Plaza de Francia, Plaza Herrera, National Theater, Metropolitan Cathedral, the Museo del Canal Interoceanico (inter-oceanic Canal Museum), National Theater, Las Bovedas, and many more.

Casco Viejo is also residence to the country’s progressively active art and social scene. Among the galleries and cultural places, you can wander through included the Diablo Rosso art gallery, National Institute of Culture Building History Museum of Panama, and Oro Moreno, among many others.

Contact Numbers: +507-202-0872 (Panama) / +1 786-375-9633 (USA)

5. Hostal Casa Areka

Panama City is known for its vibrant nightlife. If you want to experience nightspots then you might as well stay in a place right at the center of the city’s club scene. Hostal Casa Areka is a stone’s throw away from the throbbing Calle Uruguay, the most famous street that makes the night alive in Panama City.

This nocturnal street abounds with clubs, cocktail salons, and restaurants to enjoy the hours of darkness from dusk till dawn. Among the places, you can consider going included the Altabar, the Londoner Pub, and the Discoteca ASHE Bar.

The vivacity and energy in Calle Uruguay also permeate within the Casa Areka. The hostel features amenities where guests can continue their partying right inside the hostel premises. The focal point of the hostel is the astonishing pool area encircled by majestic palm trees where guests can relax or dive in its refreshing waters.

There is also a BBQ area where you can grill food, chill out and mingle. You can opt to play billiards while meeting others or simply relax or laze about in the common lounges. There is free internet Wi-Fi all over the entire hostel.

As a lodging place, the rest, comfort and convenience of guests is the hostel’s number one concern. The flophouse offers spacious deluxe rooms that have 4, 6 and 8-beds all fully air-conditioned. There are deluxe rooms with a private bath, a double deluxe room with one king-size double bed, a triple deluxe room with double bed and one single bed; and 4 Bed Deluxe Room with a double bed and two single beds. Accommodations come with breakfast, car parking, lockers, 24/7 reception, hot showers, and coffee or water.

Buying things, personal necessities or even souvenirs are also convenient when staying in Casa Areka. There it lies a 24-hour grocery store and two grand shopping malls across the street from the hostel. Public transportation is also conveniently accessible to take you to Panama’s most popular destinations such as Casco Viejo and the Panama Canal.

Contact Numbers: +507 399-0986

6. Loco Coco Loco

Popular for its youthful and cool ambiance, Loco Coco Loco is a hostel where you will feel like home, to provide guests with the greatest comfort and rest while on travel. At this hostel, everything is conveniently near. For one, it is merely 20 minutes from the airport. So once you land in Panama, you can immediately be on your way to exploring the city within an hour upon your arrival.

All the major tourist destinations within the Metropolitan city is within arm’s length. It is 5 minutes away from Via Argentina or the Panama Metro, from where you can reach all the corners of the city. Its location is also a few minutes away from Casco Viejo, where all bars and cultural places are located.

But if you are planning to go to the beach, it is only 1 hour from the closest beach escape of Taboga Island. Other beach day destinations from Panama City included Punta Chame, Isla Grande, Contadora Island, San Blas, Portobelo, and Isla Mamey.

Loco Coco Loco, which means “Crazy Coconut Crazy”, is located in a residential district at the front of the new Soho Mall in Calle 50. For the comfort of guests, it offers up to 18 beds mixed or female dorms. There are also private rooms for guests who want more space. It offers all the regular services of a hostel such as reception, social lounges, shared kitchen, and free internet Wi-Fi, among others.

It serves as a disheveled place where guests can have fun activities with friends while watching TV or movies, playing video games, billiards or pool or relax in its picturesque flower garden while lying on a hammock slung in a Zen space.

Contact Numbers: 507 830 0696 / +507 6788 4938

Choose Your Hostel in Panama Now!

Exploring the enchanting landscapes of Panama need not drain your wallet, particularly for young travelers on a budget. Panama City boasts numerous budget-friendly hostels offering comfortable and secure accommodations without the hefty price tags associated with hotels. 

Opting for these hostels allows you to allocate more of your travel budget towards enriching experiences rather than extravagant lodging expenses. With affordable hostel options in Panama City, you can embark on your journey feeling financially empowered, experiencing the richness of travel without the need for substantial wealth.


Panama continues to beckon travelers with its diverse attractions and experiences, catering to a range of budgets. Contrary to common misconceptions, one can explore the country's beauty without breaking the bank. Increasingly, tourists are discovering the affordability of Panama's offerings, with hostels emerging as a wallet-friendly accommodation choice.

Hostels, renowned for their sociable ambiance and shared facilities, provide comfortable lodging at a fraction of hotel costs. Opting for hostel accommodation not only frees up funds for immersive experiences but also fosters connections with fellow travelers, enriching the journey. In Panama City, the cosmopolitan capital, selecting the right hostel is crucial for a fulfilling stay.

Highlighted here are some of the top hostels in Panama City, each offering affordability without compromising on quality amenities. From El Machico's vibrant atmosphere to Luna's Castle's regal charm, travelers have a range of options to suit their preferences. Whether seeking a cultural immersion or beachside relaxation, Panama's budget-friendly hostels ensure that every traveler can explore its wonders without financial constraints.