Dubai, investing billions of dollars in tourist attractions, bought the QE2 cruise ship from Cunard Line for $100 million and will convert the vessel into a hotel to be moored beside the emirate’s Palm Island.

The Dubai government-owned Istithmar PJSC investment firm will take delivery of the 40-year-old ship in November 2008. The QE2 will open as a hotel and museum the next year, Istithmar, based in Dubai, United Arab Emirates, said in an e-mail today.

Dubai, the second-largest of seven sheikhdoms that make up the U.A.E., is investing in tourism, real estate and financial companies to diversify away from oil. The largest visitor attraction under development is Dubailand, a $20 billion theme park and entertainment complex three times the size of Manhattan.

The QE2 had been Cunard’s flagship since the vessel’s maiden voyage to New York in 1969. She became known as the Great White Whale after being drafted as a troop transport in the Falklands War. Since its launch in 1967 by Queen Elizabeth II, the QE2 has completed more than 5 million miles at sea.

The Palm Jumeirah is one of three artificial islands in the Persian Gulf which will add 520 kilometers (322 miles) of coastline to Dubai and are being built by Istithmar’s sister company Nakheel PJSC, a unit of Dubai World.

Istithmar, one of several investment companies owned by the Dubai government, has acquired properties in London and New York, including the Mandarin Oriental New York Hotel, 280 Park Avenue, 450 Lexington Avenue and the Knickerbocker Hotel at 6 Times Square. Istithmar bought an approximately $1 billion stake in Standard Chartered Plc in October 2006.

U.A.E. companies have spent about $41 billion on acquisitions since January 2006, including Peninsular & Oriental Steam Navigation Co. for $7.7 billion, Doncasters Plc for $1.2 billion and John Laing Homes for $1 billion.

The QE2’s predecessor, the Queen Elizabeth, sailed the Atlantic from 1940 until 1968, when she was sold to a group of Philadelphia businessmen. C.Y.Tung Shipping bought her to become a floating university in 1969, and the ship was destroyed by arson in 1972 before the project was completed.

source: Bloomberg

Tags : cunard, qe2 liner, istithmar, dubai