Getting around Panama City can be tricky at certain times of the day. There are several bus routes that essentially go along the city but the queues for these can be enormous during the rush hour (as many as 100 people). In addition, the buses tend to go to places you don't really want to visit.

The only other alternative is to travel by taxi and while these are numerous during busy periods taxi drivers are picky over where they take you: I have frequently spent between 20 minutes to more than an hour trying to flag one from Ancon to the El Cangrejo area. They also overcharge, especially if your grasp of Spanish is weak, and will not issue receipts so I suggest (a) agree a fare before you get in, and (b) if you need receipts, buy a receipt book from Office Depot or the Rey supermarkets. Taxis hovering outside big hotels will charge at least two to three times the 'normal rate' but they will provide receipts (usually). In summary, just be patient!

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We enjoyed dining at Manolo Caracol (casual, locally owned) and Astrid y Gaston (more formal, originated in Peru).

As for places to see, I recommend the Baha'i temple, walking in Soberania National Park, and visiting Miraflores Locks.

Astrid y Gaston: www.astridygaston.com
Bahai Organization: www.bahai.org
Miraflores locks: www.pancanal.com
Full trip report, with photos at www.travelmusings.net

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La Estancia is a hotel in Panama City. It's not amazing, but it's a good value, located away from downtown (a good thing), close to the national airport, the service is good, and there's a travel agency onsite.

www.bedandbreakfastpanama.com
Panama trip report, with photos, at www.travelmusings.net

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Canopy Lodge is located in Soberania National Park, a 30-minute drive from Panama City. It's a former radar/observation tower turned into a hotel catering to birdwatchers. I recommend it because it's an opportunity to stay in a tower in the middle of the rainforest, and the views are amazing. I'm not into birdwatching, but I understand that this place is the ne plus ultra for those who are into it.

www.canopytower.com
Full Panama trip report, with photos, at www.travelmusings.net

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