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Sun 13 Jan 2013 09:50 AM

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Sold down the river?

Six years after being bought by Dubai World in a welter of international publicity, the future of the QE2 looks grim

Sold down the river?
The Queen Elizabeth 2 was bought in 2007 by Istithmar, the investment arm of the state-owned Dubai World, for a reported $100m

“Life begins at forty for the grand old dame of the ocean,” a Dubai TV reporter says repeatedly as she tries in vain not to fluff her lines. Standing at Port Rashid with the iconic Queen Elizabeth 2 ocean liner in the background — or QE2 as she is known to her millions of fans — British expatriates waved Union Jack flags and fireworks lit up the sky as one of the world’s most famous ships finally arrived in Dubai, exactly 40 years to the day from when she first went to sea on her preliminary trials on 26 November 1968.

Bought in 2007 by Istithmar, the investment arm of the state-owned Dubai World, for a reported $100m, it was billed as the latest great asset to join the roll-call of trophies the glamorous emirate had collected during the height of the boom years.

Jumping forward to 2013, the ocean liner has been left literally to bob away in the seas of the Gulf while it awaits its final fate. Several new projects and ideas have been suggested and quickly dropped over the last four years and the prized trophy asset has now became an anchor around Dubai’s neck as the emirate struggles to decide what to do with the much-loved ocean liner.

As the ship’s millions of fans woke up on Christmas Day for their annual overindulgence, reports mounted that Dubai had sold the cruise liner as scrap to a Chinese firm.

British media reports claimed a Chinese crew of 20 had boarded the ship and the QE2 was expected to go into dry dock in the Far East as part of a $20m deal.

The British ship’s legacy is not one to be dismissed lightly. Launched by Queen Elizabeth II on September 1967, she is the longest-serving ship in Cunard’s nearly 200-year history, has undertaken 25 world cruises, has crossed the Atlantic more than 800 times and has carried more than 2.5 million passengers.

Passengers have included kings and queens, prime ministers and presidents, astronauts and the Beatles, and during her many years of service, she survived a 95-foot wave during Hurricane Luis in 1995 and was converted to carry 3,000 troops to the Falklands War. But now it seems that the QE2 is set to celebrate her fiftieth anniversary in five years time in a Far Eastern scrap yard.

This is all in contrast to the high aspirations that existed back in 2008. “QE2 is without a doubt one of the wonders of the maritime world, and is easily the most famous serving liner in the world today. I am delighted we will be able to create a home for her on the newest wonder of the world, the Palm Jumeirah,” Sultan Ahmed Bin Sulayem, chairman of Dubai World, said at the time.

His words came less than a week after the Palm Jumeirah celebrated the launch of the Atlantis Hotel, with a spectacular $20m red carpet launch party, attended by hundreds of celebrities and spectacular fireworks. The arrival of the QE2 was seen by many as the last big party before the global financial crisis landed in Dubai. Shortly afterwards, its property market went into freefall and the true extent of the emirate’s debt mountain began to emerge.

Heavily indebted developer Nakheel — famous for the Palm-shaped man-made islands of Dubai’s coast — had planned to refurbish the ocean liner and she was to form the pinnacle of a palatial pier that would stretch 300 metres out from the trunk of Palm Jumeirah into the waters of the Arabian Gulf.

A grand entrance to the pier would provide the gateway to a luxury residential and hotel quarter, which would feature elegant apartments, a private club, bars and restaurants, retail, wellness centre and gardens, the press release gushed.

It was also revealed the iconic funnel would be removed and replaced with luxury penthouse apartments, while the engines were set to be replaced with a state-of-the-art Broadway-style theatre which would host productions from Cirque du Soleil, another of Dubai World’s trophy assets.

Reclamation for the pier was expected to finish by the end of 2008, with the entire project scheduled for completion in 2011. In hindsight, the warning signals were all there back in 2008.

Setting off from the Dubai International Marine Club at Mina Seyahi, the atmosphere on the 140-foot media yacht, the Dubai Magic, was electric. As an Emirates Airline A380 did a fly-past, a Nakheel executive whose job was to mastermind the grand plans for the Palm Jumeirah final retirement home for the ship admitted to Arabian Business that the company was unsure of the current state of the engines or the ship itself as he had not been on board to inspect her.

Highly informed sources we have spoken to in recent days show that not much has changed within the corridors of Dubai World and authorities are still unsure as to what to do with the ship, whose upkeep is rumoured to cost a million dollars a month.

One person who is not surprised by this is James Magee, co-founder of Dubai-based Global Event Management.

Having worked and lived in the emirate for over 25 years, Magee was involved in planning the 2011 New Year’s Eve party which took place onboard the QE2 and which was seen as the rebirth of the ship.

While none of the major celebrities who were scheduled to attend — such as Lindsay Lohan, Pamela Anderson or Shah Rukh Khan — made it up the red carpet, the event was a massive success and proved how much of an attraction the QE2 still was.

“Dubai was going to relaunch the QE2 and we did a marketing campaign that went out to the world… We got appointed to run the events going forward, which was very exciting… We sold ourselves as an event company that would go forward with the QE2 and it was very successful,” recalls Magee.

“I have been in Dubai for 26 years and I reached out to everyone I knew. I went to the AEO [Association of Events Organisers] and all the big congresses and associations and said the QE2 is back in action — come and play.

“It was a huge success. We had everything from weddings for billionaires in India and Russia, through to gala dinners and product launches and after parties,” he adds, before admitting that all the events later had to be scrapped.

“We got caught up in what can be described as the most ludicrous battle I have ever seen. I don’t know the facts, as you can never find out the full truth. It got caught up in a wrangle and a battle and no one wanted to take responsibility.

“The saddest thing is we had about 160 events confirmed and we did that by reaching to everyone,” he says, with a heavy heart.

Magee says the deadlines for progress at the QE2 started to run into problems around four to five months ago and all the events, mainly planned for the fourth quarter of 2012, were eventually scrapped. Sources have suggested the issue was the need for urgent repair work to be implemented in order to secure the necessary insurance and paperwork needed to win a maritime licence to stage events and operate the ship.

While various entities argued over who should foot the growing bill, Magee says the business plan he had put in place would have easily covered the maintenance costs and would have contributed to helping Dubai generate profit.

“The business plan we had more than paid for the maintenance and upkeep of the ship and it was probably going to contribute probably somewhere in the region of about $20m-a-year plus. These weren’t based on speculation but based on real event figures.”

In the midst of this, DP World issued its own statement and it seems Dubai also had other plans afoot.

During the summer it was announced the cruise liner would be reborn as a 300-room luxury floating hotel, part of plans to transform its current home at Port Rashid into the emirate’s newest tourist attraction.

The cruise terminal at Dubai’s Port Rashid was now set to become the liner’s permanent home and it will be converted into a 300-room luxury hotel, with the terminal developed to include a maritime museum. The refurbishment work was expected to take eighteen months to complete.

While neither Istithmar nor DP World, which runs Port Rashid, gave details on how much the redevelopment of QE2 and the shipping terminal would cost, or who would provide financing, the platitudes seemed to be the same and brought a distinct reminder of 2008.

“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,” Bin Sulayem, chairman of Istithmar World, said in a statement.

While DP World concedes that the plans for refurbishment of the port are still going ahead, it refused to deny reports that the QE2 was no longer part of the plans.

“Work on the new cruise terminal to cater for as many as seven cruise vessels at the same time is well underway, and we look forward to seeing the further development of Mina Rashid as a tourist destination, including the establishment of a Maritime Museum,” a UAE regional spokesperson from DP World, told Arabian Business in a statement, but declined to comment on the status of the QE2.

At the same time that Magee was taking bookings for over 160 events and DP World was planning its Port Rashid tourism plans, Dubai World was also in parallel talks with British investors about returning the ship to the UK.

In late 2011 it was reported that Dubai World had submitted a plan to station the QE2 on Merseyside as part of Liverpool Vision’s plans to rejuvenate the port area of the northern English city.

The secret talks were held between Dubai World and UK-based Out of Time Concepts, a company headed by John Chillingworth, a former chief engineer on the ship who acted as an advisor to Dubai World during its early plans for the QE2.

At the time, Liverpool Vision’s website included a picture of the QE2 berthed at the Pier Head, but it seems that the idea to bring the ship back to the UK has now switched its focus to London.

“At the beginning of December we had presented a joint venture proposal to Dubai World, as we knew they could not sell the ship for contractual reasons with Cunard,
her previous owner,” Chillingworth tells Arabian Business.

With up to $100m said to have been raised to invest in refurbishing the ship and bringing it back to a permanent location in the Thames in London, the plans received the backing
of prominent leaders such as London mayor Boris Johnson and chancellor
George Osborne.

“We have done our initial due diligence in London, which has taken over fourteen months and have a lot of support from local government, the government and regulatory authorities and believe there is a realistic achievability for final planning approval,” he says.

But Chillingworth claims, in a story that has echoes with Magee’s experience, that talks with Dubai World began to stall late last year and he was “advised the ship would be transferred to another ownership and would be sent to an undisclosed location in the
Far East.”

“We had seen various rumours that the ship could possibly be going to scrap and this decision by Dubai World fitted in with that rumour. We knew that Cunard had to approve any future use for the ship and there was a sale restriction until 2018… We realised that by allowing scrapping it would get around the sale restriction and would give Dubai a capital sum,” he adds.

However, Chillingworth and the UK investors have not given up hope yet. He has presented a revised proposal to Dubai World to allow the investors to buy the ship as scrap and hold onto it until they receive planning permission for their QE2 London project, which could take up to eighteen months to complete.

“Then if for any reason we did not receive planning permission our investors could recoup their costs from the return on recycling the ship.”

A spokesperson for the QE2 London investors says negotiations are still ongoing and they hope to be able to conclude the talks soon and bring the ship back to London after more than two years working on proposals with Dubai World. While London is still confident it can persuade Dubai World to agree to its plans, it seems Dubai is set to put an end to the whole debacle and rid itself of this costly drain on resources.

Arabian Business has learned from a well-placed source within Dubai World that the company is presently considering a number of options for the QE2, but that a return to the UK is highly unlikely and the scrapping rumours are much closer to the truth.

Several sources have claimed that captain William Cooper and his crew of around 40 left the ship earlier this year and that Asian merchants boarded the ship to inspect it. Cooper was hired in 2009 when plans emerged that the ship would sail to Cape Town’s Victoria and Albert Waterfront to serve as a floating hotel for the FIFA World Cup 2010. This plan was abruptly dropped at the last minute and the ship remained in Dubai. All attempts to contact Cooper have failed and calls to his mobile phone are not being answered. Our Dubai World source tells us the most likely destination, if the ship were to be scrapped, would be India, where the majority of such procedures take place.

Magee says the China angle could have arisen from the fact that investors from Hong Kong were also looking to acquire the ship and create their own QE2-centric tourist attraction. This, it seems, joins a long list of projects that remain on the drawing board.

“Let’s hope we are all wrong and there is a chance the QE2 will be saved,” he adds. “I don’t think Dubai World understand what an unforgiving disaster it will be if they sent it for scrap.”

“It would generate massive positive publicity for Dubai and also be good for her former owners and win support worldwide from QE2 fans — she is still the most famous ship in the world,” QE2 enthusiast and operator of ‘ — Keeping The Legend Alive’, Rob Lightbody, says of the QE2 London plans.

The only thing that is clear is that no final decision has yet been made. A call from Boris Johnson or David Cameron to Dubai may see the QE2 London proposals return to favour, but, at present, a final trip to a scrapping yard in India seems the most likely scenario to be taken by the officials at Dubai World, who are eager for a quick payment rather than a drawn-out business plan.

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