3 Best Hotels in Portobelo, The Canal and Central Panama

This private retreat across the bay from Portobelo offers a splendid mix of ocean views, tropical nature, abundant art, friendly service, and fine dining. Accommodations are in four small houses with colorful decor that includes the work of local artisans, as well as such modern amenities as an LCD TV, iPod dock, and Wi-Fi. The houses surround a pool and a bright gazebo that serves as restaurant, gallery, and lounge. The cuisine is a fusion of Caribbean and Continental flavors, with a menu that changes daily, and accommodates guest needs. Large families, or small groups desiring privacy can rent the Casa Grande, up the hill, which has three suites, a full kitchen, and a dining–living room. Basic spa services are available, as are excursions to nearby beaches or colonial fortresses, and fishing, kayaking, hiking, snorkeling, and scuba diving. Folk dancing performances can be arranged, as can the chance to sculpt or paint with a local artisan; the property's wood workshop makes beautiful furniture for the hotel as well as to sell. The restaurant is open to the public for lunch (with reservations only) and day passes are available for nonguests ($120).

This dive resort owned by Scuba Panama, the country's biggest dive company, has decent rooms in a lovely coastal setting at very low rates, making it a good option for budget travelers who can do without a lot of service. Accommodations range from dorm rooms to bungalows; the second-floor "single" rooms—small but colorful, with ocean views and narrow balconies—are comfortable enough, but spring for a cabaña (bungalow), which costs just $10 more, and offers much more space and privacy. Large trees shade the ample grounds, and there's a gazebo atop some boulders over the water. The resort has a full dive center and inexpensive trips like snorkeling to Isla Mogotes. The tiny, open-air restaurant serves breakfast and a limited menu, but there's better food down the road.