Cruise liner The Queen Elizabeth 2 (QE2), purchased by Dubai for $100m in 2007, is set to become a luxury hotel in the Far East in a deal arranged by Drydocks World, part of the government-owned investment company Dubai World.

It will end a five-year saga during which the iconic ship has sat, mostly unused, at Dubai’s Port Rashid since its purchase by Dubai World.

The ship is set to be operated as a 500-room hotel by a consortium of investors including Drydocks World and the Singapore-based Oceanic Group. Khamis Buamim, chairman of Drydocks World, will also be chairman of the new company operating the hotel, although he adds that ownership of the QE2 will remain in Dubai.

It will now be moved to Dubai Drydocks to ensure it is ready for the journey to Asia where it will be overhauled. “The QE2 is not being scrapped, quite the opposite,” says Daniel Chui, managing director of Oceanic Group. “We will lavish many millions of dollars on this magnificent ship to restore her to the splendour of glory days.”

Buamim says the ship is expected to open as a moored hotel in an as yet undecided Asian port in January 2014. He also said there are plans to open QE2-branded coffee shops, the first of which would be in Dubai.

When Dubai first bought the QE2 in 2008, it was expected to be moored on the Palm Jumeirah as a floating hotel and tourist attraction. As a result of the financial crisis and Dubai World’s $25bn debt restructuring, that plan fell by the wayside. It was briefly resurrected last year by Sultan bin Sulayem, the former chairman of Dubai World and at the time head of Istithmar, a Dubai World subsidiary that held the QE2. Shortly afterwards, however, the government removed Istithmar’s board and replaced it with the board of Dubai World, which is headed by Emirates Airlines boss Sheikh Ahmed bin Saeed al-Maktoum.