Posted: 7/5/20 | July 5th, 2020

Panama City is known as the shipping and financial hub of Central America — but there’s much more to it than that.

Panama City is a bustling, lively city with a vibrant nightlife, tons of history, and delicious food. It’s a good hub to base yourself in for a few days while you plan your next steps.

Since it’s not as cheap as other cities in the region, you’ll want to save money by booking yourself a hostel while you’re here. They’re the most cost-effective (and fun) way to enjoy the city.

However, there are a lot of things to consider when selecting a hostel. The top four in Panama City are:

  1. Location – Panama City is huge, and it can take some time to get around. Pick a place that is central to the sites you want to see and nightlife you want to enjoy. (All the hostels listed here are in central locations.)
  2. Price – In Panama City, you really get what you pay for, so if you go with a really cheap place, you’re probably going to get a hostel that is small and cramped and doesn’t offer great service.
  3. Amenities – Every hostel in town offers free Wi-Fi, and most have a free breakfast, but if you want more than that, be sure to do your research to find the one that best meets your needs!
  4. Staff – All the hostels listed here have amazing staff who are super friendly and knowledgeable. Even if you don’t end up staying at one of the places listed below, be sure to look up reviews to ensure that you end up somewhere where the staff is helpful and friendly. They can make or break a hostel!

To help you plan your trip, here is my list of the hostels in Panama City that I like the most. If you don’t want to read the longer list below, the following hostels are the best in each category:

Best Hostel for Budget Travelers: Hostal Casa Areka
Best Hostel for Families: Magnolia Inn Casa Viejo
Best Hostel for Solo Female Travelers: El Machio
Best Hostel for Digital Nomads: Selina Casco Viejo
Best Hostel for Partying: Hostal Casa Areka
Best Overall Hostel: Luna’s Castle Hostel

Want more specifics for each hostel? Here’s my comprehensive list of the best hostels in Panama City:

Price Legend (per night)

  • $ = Under $15 USD
  • $$ = $15-20 USD
  • $$$ = Over $20 USD


1. Magnolia Inn Casco Viejo

This boutique hostel is located in Casco Viejo, the city’s beautiful Old Town. It’s clean and quiet, making it a good choice for families or travelers looking for some downtime. The hostel is an old French colonial mansion and balances historic charm with modern amenities (like AC, Wi-Fi, and hot showers). The beds are basic and don’t have curtains, but the mattresses are thick and comfy. There are also a few common areas where you can relax and hang out or watch TV. Since it’s quiet, I’d suggest staying here if you want to get a good night’s sleep. There are several social hostels nearby where you can grab a drink and hang out, so you can enjoy being social before returning to your quiet hostel.

Magnolia Inn Casco Viejo at a glance:

  • $$
  • Central location in the Old Town
  • Clean and quiet
  • Beautiful interior

Beds from $16 USD a night, rooms from $116 USD.

—> Book your stay at Magnolia Inn Casco Viejo!

2. Hostal Casa Areka

This energetic hostel has a pool, outdoor Wi-Fi, space to barbecue, and a spacious kitchen for cooking your own meals. It’s also surrounded by bars and restaurants, making it a good choice for those who want to party. There are lots of common areas to relax in. The beds are pretty basic (no curtains for privacy) but are comfortable enough. The dorms also only have eight beds (or fewer), so you’re never crammed in with other people, and there are female-only dorms too. Only some of the showers have hot water, however, but it is the cheapest hostel in town.

Hostal Casa Areka at a glance:

  • $
  • Swimming pool
  • Super affordable
  • Free breakfast

Beds from $9 USD a night, rooms from $35 USD.

—> Book your stay at Hostal Casa Areka!

3. El Machio

This is a social hostel where it’s really easy to meet people, since they have a pool and a small bar, play movies outside, and organize tons of tours (including affordable trips to the San Blas Islands). The beds aren’t the best, but the dorms have lockers to keep your items safe and there’s hot water in the showers. They also have female-only dorms. Breakfast is included, there’s a spacious kitchen for cooking, and the surrounding neighborhood is quite safe too.

El Machio at a glance:

  • $
  • Social atmosphere makes it easy to meet people
  • Free brekafast
  • Female-only dorms for added privacy and security

Beds from $13 USD a night, rooms from $50 USD.

—> Book your stay at El Machio!

4. Luna’s Castle Hostel

This is my favorite hostel in Panama City. Housed in an old colonial mansion overlooking the ocean, it’s a cool backpacker hostel with a laid-back vibe. Free breakfast is included, there’s a bar on-site for having fun, the showers have hot water, and the staff go above and beyond: they organize walking tours and other fun activities to ensure that you have an amazing visit and meet cool people during your stay. There are only large dorms (10 or 12 beds), but the beds have curtains and the mattresses are comfy. It’s lively, social, and an institution on the Gringo Trail through Central America.

Luna’s Castle Hostel at a glance:

  • $$
  • Free breakfast
  • Easy to meet people
  • Beautiful location by the ocean

Beds from $16 USD a night.

—> Book your stay at Luna’s Castle Hostel!

5. Zebulo Hostel

Zebulo has lots of free perks, including free breakfast, free coffee and tea, and a jacuzzi on-site. While the dorm beds are basic (squeaky metal bunks with no curtains), they’re comfortable enough and not crowded (capped at nine beds). It also has the cheapest private rooms in the city; however, there’s no hot water. The staff also organize tons of tours, such as trips to Colombia and the San Blas Islands. They also host lots of weekly events (like BBQ nights). It’s a laid-back hostel that makes it easy to meet people and enjoy all the city has to offer.

Zebulo Hostel at a glance:

  • $
  • Affordable private rooms
  • Lots of free perks
  • Tons of tours and activities

Beds from $10 USD a night, rooms from $22 USD.

—> Book your stay at Zebulo Hostel!

6. Selina Casco Viejo

Located in the picturesque Old Town (in yet another historic colonial building), Selina is new hostel. It’s a chic, upscale spot that’s popular with solo travelers and digital nomads. There’s a spacious outdoor patio for hanging out and lots of bars nearby. The beds are comfy, and the showers have hot water (which is a nice perk, since many cheaper hostels in the city don’t have hot water). There’s AC to keep you cool, a co-working space, a pool table, and lots of common areas for chilling out.

Selina Casco Viejo at a glance:

  • $
  • Lots of common areas to hangout in
  • Social atmosphere
  • Central location in the Old Town

Beds from $14 USD a night, $36 USD.

—> Book your stay at Selina Casco Viejo!


Whether you’re looking to party or just want to relax and enjoy your trip alone, you’ll be able to find an affordable hostel in Panama City that won’t disappoint you!

Book Your Trip to Panama: Logistical Tips and Tricks

Book Your Flight
Use Skyscanner or Momondo to find a cheap flight. They are my two favorite search engines because they search websites and airlines around the globe so you always know no stone is left unturned. Start with Skyscanner first though because they have the biggest reach!

Book Your Accommodation
You can book your hostel with Hostelworld as they have the biggest inventory and best deals. If you want to stay somewhere other than a hostel, use as they consistently return the cheapest rates for guesthouses and cheap hotels.

Don’t Forget Travel Insurance
Travel insurance will protect you against illness, injury, theft, and cancellations. It’s comprehensive protection in case anything goes wrong. I never go on a trip without it as I’ve had to use it many times in the past. My favorite companies that offer the best service and value are:

  • World Nomads (for everyone below 70)
  • Insure My Trip (for those over 70)
  • Medjet (for additional repatriation coverage)

Looking for the Best Companies to Save Money With?
Check out my resource page for the best companies to use when you travel. I list all the ones I use to save money when I’m on the road. They will save you money when you travel too.

Want More Information on Panama?
Be sure to visit our robust destination guide on Panama for even more planning tips!

Photo credits: 2 – Magnolia Inn Casco Viejo, 3 – Hostal Casa Areka, 4 – El Machio, 5 – Luna’s Castle Hostel, 6 – Zebulo Hostel, 7 – Selina Casco Viejo

Central America
05.07.2020 / Central America / hostels / panama
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