By Asa Fitch
Dubai’s decision to turn the Queen Elizabeth 2 into a floating hotel has ended years of uncertainty about the fate of an asset snapped up at the height of the global economic boom.
Istithmar World, the investment arm of the state-owned Dubai World, purchased the vessel in 2007 for $100 million from the cruise operator Cunard. The original plan was to turn it into a luxury hotel docked off of the Palm Jumeirah, one of Dubai’s artificial palm-shaped islands and one of its most sought after locations.
Then the crisis intervened, and that plan was delayed and finally abandoned. As it sat idle in Dubai’s Port Rashid, presently a less glamorous site, the QE2 became a hulking reminder of the effect of the financial crisis on the emirate’s business empire.
Dubai World was unable to refinance large borrowings and only last year completed a $24.9 billion debt restructuring.
Rumors swirled that the QE2 would be sold off to raise cash. Reports suggested it might be sent to South Africa to serve as a hotel for the 2010 World Cup. Another report had the boat going to Japan to house tsunami survivors before heading to Macau for conversion into a floating casino.
Now it will be in Port Rashid for good. The 300-room hotel-ship is expected to open in 18 months, once renovations are complete. Port Rashid, where cruise ships dock when they pass through Dubai, is getting a makeover too. There will be new shops and a maritime museum, according to Sultan bin Sulayem, the chairman of Istithmar World.
“Wait 18 months,” he said. “You will not recognize this area. Take my word. This is Dubai.”
Copyright © 2012 Dow Jones & Company, Inc.