Apollo Global Management is betting on a strong return of business conventions once the coronavirus pandemic subsides, a belief reflected in its recent deal with Las Vegas Sands, according to David Sambur, co-lead partner of private equity at the firm.
Announced earlier Wednesday, Sands said it will sell the real estate for the Venetian, Palazzo and the Sands Expo and Convention Center in Las Vegas to Vici Properties for $4 billion. Apollo Global is buying the operations for $2.25 billion.
“Some may say the convention business could be stronger in a post-Covid world as you have distributed workforces that spend less time together,” Sambur told CNBC’s Leslie Picker on “The Exchange.” “The business case for meeting once a year, twice a year, four times a year to get people together could actually be stronger.”
Travel overall has been hurt by the Covid pandemic, but there’s growing optimism around a recovery as vaccinations are deployed. However, many observers believe leisure travel will come roaring back well before corporate travel due partly to the ubiquity now of videoconferencing services like Zoom.
For example, a recent report from American Hotel & Lodging Association said “demand for business travel is not projected to return to 2019 levels until 2023.” Additionally, Bill Gates, billionaire co-founder of Microsoft, predicted last fall that more than 50% of business travel will go by the wayside post-pandemic as companies adopt a “very high threshold” for trips.
The entrance to the Sands Expo and Convention Center in Las Vegas, Nevada.
George Rose | Getty Images
But when it comes to large business conventions, specifically, the outlook may be different than a small group of employees flying to a city for a meeting or two. As Sambur noted, a growing number of companies are giving employees greater geographic flexibility for even after the Covid crisis ends, potentially increasing the desire to hold a few large gatherings a year while more work is otherwise done remotely.
“Traditionally business travel is correlated with corporate profits 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.
As the New York-based firm looked at the particulars of a deal with Sands, Sambur said it found reasons to have a positive outlook.
“The other thing we were able to do as part of our due diligence was really look at the business that’s on the books for the next three or four years because the convention business books out several years in advance,” he said. “We were able to speak to several customers and a get a sense of their travel plans, and based on that work, we were comfortable that people will return to going to conventions.”
Apollo Global is taking a more bullish view on the travel recovery overall, Sambur said, pointing to the firm’s investment in Expedia last year, among others. Sambur joined the online travel company’s board of directors.
“We’ve been amongst the most active in terms of expressing a view that once people are comfortable and feel safe enough to do, they’ll resume 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 Wednesday up nearly 1% at $50.41 apiece.