Apollo Global Management is betting on a strong return of business conventions once the coronavirus pandemic subsides, a belief reflected in the recent deal with Las Vegas Sands, said David Sambur, co-lead partner of private equity at the company.
Announced earlier Wednesday, Sands said it will sell properties for the Venetian, Palazzo and Sands Expo and Convention Center in Las Vegas to Vici Properties for $ 4 billion. Apollo Global will purchase the business for $ 2.25 billion.
“Some might say that the convention business could be stronger in a post-Covid world, as you’ve divided up staff who spend less time together,” Sambur told CNBC’s Leslie Picker in “The Exchange.” “The business case of meeting once a year, twice a year, four times a year to bring people together could be stronger.”
Travel in general has been hurt by the Covid pandemic, but optimism about a recovery is growing now that vaccinations are deployed. However, many observers believe that leisure travel will roar well before business travel, in part due to the ubiquity of video conferencing services like Zoom.
For example, a recent report from the American Hotel & Lodging Association said, “Business travel demand is not expected to return to 2019 levels until 2023.” In addition, Bill Gates, billionaire co-founder of Microsoft, predicted last fall that more than 50% of post-pandemic business travel will be excluded as companies have a “very high barrier” to travel.
The entrance to the Sands Expo and Convention Center in Las Vegas, Nevada.
George Rose | Getty images
But especially when it comes to large corporate conferences, the outlook can be different than a small group of employees flying into a city for a few meetings. As Sambur noted, a growing number of companies are giving employees more geographic flexibility, even after the Covid crisis is over, potentially increasing the desire to hold a few large meetings a year while more work is done remotely otherwise.
“Traditionally, business travel has been correlated with corporate earnings and the stock market, both of which … are doing quite well,” added Sambur, who took over his current position at Apollo Global in September 2019.
While the New York-based company looked into the details of a deal with Sands, Sambur said it found reasons to take a positive outlook.
“The other thing we could do as part of our due diligence was really look at the company that’s on the books for the next three or four years because the convention company is booking several years in advance,” he said. “We were able to talk to different clients and get an idea of their travel plans, and based on that work, we felt at ease that people would be attending conventions again.”
Apollo Global has a more optimistic view of travel recovery in general, Sambur said, noting the company’s investment in Expedia, among others, last year. Sambur joined the board of directors of the online travel company.
“We were one of the most active in terms of voicing the opinion that once people are comfortable and feel safe enough to do so, they will resume their past behaviors,” he said.
Also Wednesday, Apollo Global announced a $ 3.3 billion deal to take arts and crafts retailer Michaels private.
Shares of Apollo Global closed up nearly 1% on Wednesday at $ 50.41 each.