Apollo Global Management is betting on a strong return in business conventions once the coronavirus pandemic has subsided. This is reflected in the recent agreement with Las Vegas Sands, said David Sambur, co-lead partner for private equity at the firm.
Sands announced Wednesday that it will sell the properties for the Venetian, Palazzo and Sands Expo and Convention Center in Las Vegas for $ 4 billion to Vici Properties. Apollo Global buys the business for $ 2.25 billion.
“Some may say that the convention business could be stronger in a post-Covid world because you have distributed workers who spend less time together,” Sambur told CNBC’s Leslie Picker on The Exchange. “The business model of meeting once a year, twice a year, and four times a year to bring people together could actually be stronger.”
Overall travel has been impacted by the Covid pandemic, but optimism about a recovery grows when vaccinations are used. However, many observers believe that vacation travel will return well before business travel, in part due to the ubiquity of video conferencing services like Zoom.
For example, a recent report by the American Hotel & Lodging Association states, “Demand for business travel is not expected to return to 2019 levels until 2023.” Additionally, Microsoft co-founder Bill Gates predicted last fall that more than 50% of post-pandemic business travel will be left by the wayside as companies set a “very high threshold” for travel.
The entrance to the Sands Expo and Convention Center in Las Vegas, Nevada.
George Rose | Getty Images
However, especially with conventions for large corporations, the outlook may be different than a small group of employees flying into a city for a meeting or two. As Sambur noted, more and more companies are offering their employees greater geographical flexibility, even after the Covid crisis has ended, which may increase the desire to hold a few large meetings per year while otherwise doing more work remotely.
“Traditionally, business travel has been correlated with corporate earnings and the stock market, both of which … do reasonably well,” added Sambur, who took over his current position at Apollo Global in September 2019.
When the New York-based company looked into the details of a deal with Sands, Sambur said it had found reasons to have a positive outlook.
“The other thing we could do as part of our due diligence was to look at the deal that will be on the books for the next three or four years because the convention deal is published several years in advance,” he said. “We were able to speak to several customers and get an idea of their travel plans. Because of this work, we were happy to see people returning to congresses.”
Apollo Global is more optimistic about the recovery in travel overall, Sambur said, citing the company’s investment in Expedia last year, among other things. Sambur is a member of the online travel company’s board of directors.
“We have been among the most active in advocating the belief that once people are comfortable and safe enough, go back to their previous behaviors,” he said.
Also on Wednesday, Apollo Global announced a $ 3.3 billion deal to take artisan Michaels private.
Apollo Global shares closed nearly 1% on Wednesday at $ 50.41 apiece.
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