THINK of the Republic of Panama and the two words most likely to follow are “hats” and “canal”. The last thing you’d associate with this odd-shaped country at the very bottom of Central America is a Manhatten-esque skyline, sophisticated nightlife and luxury hotels and spas. But make the 14-hour journey to this isthmus and these are precisely what you’ll find, along with miles of pristine beaches, jungle and hills, all of which are easily reached from the capital.

Arriving in Panama City, you’d be forgiven for thinking you’d landed across the Atlantic in Miami. The streets are awash with brand-new cars, people are smartly dressed and shopping malls loom over superbly-maintained highways. Even the currency, known as the Balboa, is dollars.

The capital, situated in a bay on the Pacific coast, is a city of striking contrasts. Standing at one end is the modern financial and commercial district of El Cangrejo. Home to upmarket hotels, bars and restaurants, as well as numerous construction sites, the area is expanding at a staggering rate, a clear reflection of the fact that Panama is one of the fastest-growing financial centres of the Americas.

At the opposite end of the bay lies Casco Viejo, founded in 1673 and now a UNESCO World Heritage Site. In stark contrast to the grey towers of the El Cangrejo district, many of the lovingly-restored colonial buildings of Casco Antiguo are painted mouthwatering shades of green, pink and yellow.
Museums, ruins, shops and cafes abound. At night, it becomes a hot spot for wealthy locals, who head for sleek international joints, such as Indigo, a Moroccan-themed bar, restaurant and club.

Panama is, quite simply, a shopping heaven – in the oddly named “Colon Free Zone” you’ll find the world’s second largest duty-free area where you can buy just about anything you can think of, tax-free.

Whatever you do, don’t miss out on Panama City’s star attraction and major money-earner, the Canal. Built nearly a century ago as a safe short-cut for ships travelling between the Atlantic and Pacific oceans, it is a jaw-dropping feat of engineering on a barely-imaginable scale.

A short drive away is the Gamboa Rainforest Resort, a luxury hotel complex inside the Soberania National Park. Activities on offer include overnight wildlife safaris, aerial tram rides over the jungle canopy and a riverboat tour along the Chagres. Alternatively, you can marvel at the abundant foliage and wildlife from the comfort of a poolside lounger.

It’s not hard to understand why Panama has become the fastest-growing tourist destination in Latin America. The combination of the warmth of her people, the Colonial charm of the capital’s architecture and the sheer natural beauty of the countryside makes Panama an obvious choice for a fantastic holiday. Add to this an endless choice of outdoor activities, from jungle to beach to mountain, as well as an emerging cosmopolitan night-life scene and five-star hotels and resorts, and it’s clear that Panama is an unmissable destination.

For more information on Central America, go to KLM operates five flights a week between Amsterdam and Panama City; return tickets cost from €1002 (low season) and from €1125 (high season).
Panama’s Star on the Rise: Opening Soon

Nikki Beach Resort & Spa Playa Blanca, Farallon

This beach club, hotel and spa is set to become one of Central America's most stylish destinations. Nikki Beach – famous for its luxury resorts in Saint Tropez and Miami – has worked its sexy magic over a part of Panama’s Pacific coastline just over an hour's drive from the capital. Due to open in November 2009.

Buddha-Bar Hotel & Spa Panama, Panama City
Celebrate the start of 2010 in serious style at the opening night of Buddha-Bar Hotel & Spa. Discerning New Year’s Eve revellers can dine on Asian-fusion cuisine in the slickly-designed restaurant, party until dawn then sleep it off in an elegant, Asian-inspired suite.

Trump Ocean Club, Punta Pacifica, Panama City
Rumoured to be the largest real-estate investment in Latin America, this $400m development is located in the city's exclusive Punta Pacifica region. Set to feature everything you could ever need – think upscale offices, shops, restaurants, hotels, spa, beach and even casino – this staggering construction is due to open in August 2010.

Isla Saboga, Pearl Islands
If you favour environmentally-minded luxury over urban indulgence, be one of the first to check into El Encanto's boutique hotel, part of the eco-friendly Isla Saboga development. Situated on one of the Pearl Islands, just off the coast of Panama City, the resort aims to offer five-star comfort without negatively impacting the environment. Opening mid-2010.