Dubai, investing billions of dollars in tourist attractions, bought the Queen Elizabeth 2 cruise ship from Cunard Line for $100-million (U.S.) 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 said yesterday.

Dubai, the second-largest of seven sheikhdoms that make up the UAE, 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. Since its launch by Queen Elizabeth II, the QE2 has completed more than five million miles at sea. She was the victim of a bomb hoax and ransom demand in 1972 and hit rocks off Vineyard Sound near the U.S. in 1992.
The Palm Jumeirah is one of three artificial islands in the Persian Gulf which will add 520 kilometres of coastline to Dubai and are being built by Istithmar's sister company Nakheel PJSC.

Istithmar has acquired properties in London and New York, including the Mandarin Oriental New York Hotel, 280 Park Ave., 450 Lexington Ave. and the Knickerbocker Hotel at 6 Times Square.

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.