Cunard Line, an operator of ocean liners and cruise ships, has signed a contract to manage The Watergate Hotel in Washington and immediately will begin redecorating and refurbishing the property, hotel officials said yesterday.

The Watergate's owner, British Coal Board Pension Funds, chose Cunard from eight hotel-management firms that bid for the contract. No information was available on the value of the contract or the extent of the planned renovations.

Earlier reports that the Virginia Avenue hotel was considering a change in management prompted speculation that the Watergate might lose one of its best known employes, chef Jean-Louis Palladin. Palladin has said that, if he were to stay at the hotel, the restaurant would need refurbishing that would cost about $500,000.

Palladin could not be reached for comment yesterday.

Paul M. G. Astbury, managing director of the Watergate, said Cunard wants to keep the important things, "like people."

Cunard officials could not be reached for comment.

The change in management and the refurbishment should not mean an increase in prices in the short term, Astbury said.

The hotel's average room rate is now about $160 a night, and its occupancy rate is about 65 percent, according to officials.

Cunard, which operates the Queen Elizabeth II ocean liner, owns the Ritz and Stafford hotels in London and two Caribbean resorts.