A truly boutique hotel, Canal House (Avenida A and Calle 5 Oeste, tel. 228-1907 or 228-8683, toll-free U.S./Canada tel. 888/593-5023, www.canalhousepanama.com, starts at US$231 s/d including breakfast) is by far the best place to stay in Casco Viejo. In fact, it offers some of the handsomest accommodations in the country.

A four-story, 4,000-square-foot house built in 1893 and beautifully restored in 2005, it has just two suites and one guest room. The opulent furnishings manage to be both contemporary and in keeping with the colonial feel of the building. As its name suggests, the Canal House pays homage to the Panama Canal, down to the books in the library and the photos on the walls.

The master suite is the Miraflores (US$373), which features a huge bedroom with a king-size bed and walk-in closet, a sitting/dining area, a wraparound balcony, and a spiral staircase that leads to a loft study with a daybed, desk, and library. The Gatun Suite (US$297), on the top floor, has a king-size bed and a separate sitting room. The Pedro Miguel Room (US$231) is dramatically smaller, little bigger than its queen-size bed, but guests have access to the same common areas and services as other guests.

All three accommodations feature high-gloss hardwood floors, plasma-screen TVs with cable TV, free wireless Internet, iPod docking stations, a loaner cell phone, and French doors that open onto wrought-iron balconies with fascinating views of the surrounding neighborhood. (Be sure to check out the view from the roof.) The management promises round-the-clock attentive service. The entire house can be rented for US$880 and accommodate up to 10 people, which can be a good deal for families or groups of friends. This place books up well in advance, especially the least-expensive room (Pedro Miguel).