The good life in Panama—exploring cool urban neighborhoods, unwinding on secluded Caribbean beaches—comes relatively cheap. The surprise is that it comes cheaper than in Costa Rica, the former bargain-lover’s paradise just to the north. Restaurants serve up a savory mélange of flavors from around the world, as befits Panama’s role as a trade crossroads. And round-trip flights from the United States can go for less than $250. No wonder this slim, beach-lined isthmus is the new destination for so many value-minded adventurers.

A WORTHY CITY
Panama City is no mere hub to pass through on your way to the beach; it’s an up-and-coming commercial center rich in colonial history. Visit the revitalized Casco Viejo neighborhood, a blend of chic shops and 17th-century buildings. Despite the city’s sophisticated core, the rain forest is only a cab ride away—and the rest of the country is within easy striking distance.

A PLAN, A CANAL
To understand this booming city, go to the pulse: the Panama Canal. Connecting the Pacific and Atlantic, the 50-mile waterway changed international commerce forever when it opened in 1914. Even today, many freightliners are built to fit exactly in the canal’s locks.

The massive Miraflores Locks, one of the canal’s three sets of locks, is a few miles from downtown. You can watch ships move from open ocean into the canal over lunch at the newly redone Miraflores Museum & Visitors Center.

While the section of canal near Panama City is very industrialized, internal stretches follow some spectacular terrain. More than 400,000 acres of dense rain forest on both sides of the canal were left entirely untouched, in part to thwart land attacks.

Take to the rails for an easy way to see this remote wilderness. The Panama Canal Railway thunders along just feet away from walls of thick jungle. Then it leaves the canal’s banks to venture out on a narrow trestle into the middle of 164-square-mile Lake Gatun (which accounts for nearly half the canal’s length). The hour-long ride between Panama City and its Pacific counterpart, Colon, gives you a scope of the entire canal (panarail.com; $22 each way).

CASCO VIEJO
Back in Panama City, take a stroll through this picturesque and decidedly bohemian neighborhood. For great seafood and people-watching, get an outdoor table at Casablanca, on the famed Plaza Bolivar. After dinner you have two options: Enjoy a quiet mojito at Ego, a romantic bar just across the square, or take a short walk to Plaza Herrera to visit La Casona de las Brujas, an art deco bank turned nightclub. Inside, artists from around the world exhibit their work.

SOBERANÍA
You only need to travel 20 miles past the city streets to be engulfed in rain forest. Indeed, most of Panama’s 950 winged species live this close to the city. Many can be found in Soberanía National Park, a 48,000-acre expanse of preserved forest that’s famous among birders around the globe.

Unless you’re an experienced ornithologist, you should hire a guide to explore the park. Ancon Expeditions, the ecotourism branch of Panama’s highly respected conservation group, runs informative day trips from its Rio Charges Field Station (anconexpeditions.com), a 40-minute cab ride from downtown Panama City.

After four-wheeling it into the park, you head out on foot. Your guide will help spot orange-chinned parakeets, red-capped and golden-collared manakins and keel-billed toucans.

One of the best birding spots in the park is a Cold War–era radar tower that has been transformed into a 12-room hotel with a birdwatchers’ viewing platform. Nonguests may visit the Canopy Tower for lunch if they reserve ahead. Serious birders should consider staying over. Where else can you sip your morning coffee while watching swallowtail kites cruise over a rolling sea of green jungle?

BOCAS DEL TORO
Even if you base yourself in Panama City, you’re going to want some beach time. An $80 round-trip flight west on Air Panama will take you to Bocas del Toro, a tropical archipelago near the Costa Rican border with idyllic white-sand beaches and superb snorkeling.

From the main towns, called Bocas del Toro and Bastimentos, you can take a water taxi almost anywhere in the region for only a few bucks, and most of the boat operators speak English. On your way to one of the remote keys in Bastimentos International Marine Park, you can kick back, open a Panama beer and watch tropical islands—and the occasional dolphin—slip by.

The more popular destinations have small open-air restaurants where you can grab lunch. Or you can venture farther afield to deserted islands like Cayo Zapatilla Norte and Cayo Zapatilla Sur. Load up on provisions at the Bocas del Toro market and hire a boat. When the driver drops you off, arrange a time for retrieval (bring cash and pay when your boat returns). Then relax with your feet in the warm water, snorkel over the reefs or just take a nap.

On the way back, as you travel the park’s 27,000 watery acres, ask the driver to show you Almirante lagoon, where interconnected waterways cut through the largest and most unspoiled saltwater mangrove forest in Panama. The lagoon is also home to the archipelago’s luxurious over-the-water digs, the Punta Caracol Acqua-Lodge. For a more affordable night above the waves, ask around Bocas del Toro or Bastimentos, where rustic above-water cabins can be had for $50 per night.

Before leaving Bocas, take a water taxi out to Bastimentos to relax in the sun on sublime Red Frog Beach. And on your evening flight back to Panama City, admire the range of terrain packed into this country’s thin squiggle of land: beach-lined coast, oceans of rain forest, the historic canal and a modern, high-rise city. In a week, you can see it all—and go home with more money in your pocket than you’d expected (along with a little sand).

STAY

RCI-AFFILIATED RESORTS IN PANAMA INCLUDE:

CORONADO GOLF & BEACH RESORT, Chame
GAMBOA RAINFOREST RESORT AT PANAMA CANAL, Gamboa
ROYAL DECÁMERON FARALLÓN, Costa Blanca

For more information, visit RCI.com or call
Weeks: 800-338-7777
Points: 877-968-7476

NON-RCI-AFFILIATED HOTELS:

BRISTOL PANAMA HOTEL
Avenida Aquilino de la Guardia,
Panama City; 011-507-264-0000;
thebristol.com; doubles from $335

B&B LA ESTANCIA
35 Calle Amelia Denis
de Icaza, Panama City;
011-507-314-1581;
bedandbreakfastpanama.com;
doubles from $75

CANOPY TOWER
Soberanía National Park;
800-930-3397;
canopytower.com;
doubles from $132

RED FROG BUNGALOWS
Red Frog Beach, Bastimentos,
Bocas del Toro; 408-868-4060;
redfrogbungalows.com;
doubles from $280
(meals included)

BOCAS INN
Isla Colon, Bocas del Toro;
011-507-269-9415;
anconexpeditions.com;
doubles from $80

PUNTA CARACOL ACQUA-LODGE
Punta Caracol, Bocas del Toro;
011-507-6612-1088;
puntacaracol.com;
doubles from $344

NOTE: Information may have changed since publication. Please confirm key details before planning your trip.