Dubai Scales Back QE2 Hotel Conversion Plans

by Amanda Banks, Tax-News.com, London

10 July 2012

The investment arm of DP World, Istithmar, has confirmed that it has opted for less ambitious plans for the conversion of the Queen Elizabeth II (QE2) vessel into a floating hotel.

The QE2, launched in 1967, was decommissioned and sold by British cruise operator Cunard to Istithmar in 2007 for USD100m, but plans for a substantial conversion into a 1,000-room hotel were shelved when the global financial crisis hit and DP World required substantial state financial support to stay afloat.

With the exception of one function since 2007, the QE2 has largely sat unused in Port Rashid, Dubai. Only now has Istithmar confirmed that it will forge ahead with its conversion. However, under more modest plans, there will now be a total of just 300 hotel rooms. In addition, the ship will no longer be moved upon completion to Palm Jumeirah where the government famously used land reclamation methods to form an artificial archipelago in the shape of a palm tree. Instead the QE2 will remain in the substantially more affordable location of Port Rashid.

Announcing Istithmar's decision, Chairman Ahmed bin Sulayem, said: "There have been many grand ideas. There were plans of renovating it in such a way that it becomes something totally different to what it used to be but we realized soon that a lot of people like the ship as it was."

"The vessel is truly iconic and has a huge following around the world. Our vision is to enhance the facilities on board but retain the very strong sense of history that is a fundamental part of her attraction," he added.

Istithmar hopes to develop the vessel into a commercially viable hotel within eighteen months, and reportedly will seek to sell the asset within three to six years of its launch.

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