Tuesday, January 26, 2010

RMS Queen Elizabeth 2 (the QE2) will not be sailing to Cape Town, South Africa. Cape Town has refused the vessel permission to berth for use by owner Dubai World as a floating hotel.

The Transnet National Ports Authority said that the famed vessel is much too large for Cape Town and that the facilites for the ship do not exist. Dubai World had hoped the ocean liner could serve as a hotel to accommodate football fans attending the World Cup and had previously told the Associated Press that Cape Town was among several possible destinations. No others have been named.

Transnet National Ports Authority port manager Sanjay Govan commented that “It’s the length of stay that was an issue … They wanted to stay much longer than just the World Cup. You have to sacrifice a normal cargo-working berth for such an operation. You wouldn’t do that for such a long time.” Dubai World has confirmed the trip to South Africa is off. South Africa’s Protea Hotels were thought to have won a contract to perform the management of the hotel during its stay in Cape Town. Dubai World also considered private terminals but met the same issue.

Dubai World’s investment arm Istithmar World paid Cunard US$100 million for the British liner in 2007. Since then it has been moored off Dubai’s Port Rashid, having arrived in the emirate in 2008. Original plans were to create a luxury floating hotel for tourists that would be moored beside an artificial island in the shape of a palm tree, but this idea was cancelled in the wake of global market uncertainty.

State-owned conglomerate Dubai World is currently in severe financial difficulties. The firm is seeking an extra six months to pay at least US$22 million in debts and the government has supported a six month delay as the first step towards a restructuring plan. Dubai World’s main units Nakheel and Limitless are the most indebted companies. World markets and media reacted sharply to the revelations on November 25 last year.

Dubai World is rumoured to need to sell assets, including the Queen Elizabeth 2. The company has refused to confirm or deny this, only stating that “There are a number of options being considered for the QE2. Istithmar World is considering which option will best maximise value of the vessel.”

The same year as the Queen Elizabeth 2 the conglomerate also obtained Barneys New York, a luxury retailer based in the United States. Istithmar World paid US$942.3 million for the company. Istithmar World chief executive David Jackson resigned last week; he presided over the acquirements. In December a New York foreclosure auction sold off the W Hotel Union Square for US$2 million, which was owned by Istithmar World.