Evaluation of revenue management application in Nigerian hotels. The WritePass Journal

Evaluation of revenue management application in Nigerian hotels. Abstract Evaluation of revenue management application in Nigerian hotels. Abstract1.0  Introduction1.1  Aim1.2   RESEARCH OBJECTIVES AND QUESTIONSResearch questions:  Limitations  FinanceAuthenticity of informationTime constraintsResearch OutlineLITERATURE REVIEW ON REVENUEMANAGEMENTRevenue ManagementDefinitionPurpose of Yield ManagementRM ToolsPricing strategiesDisplacement analysisInventory controlForecastingDemand forecastingBIBLIOGRAPHYRelated Abstract This thesis has provided a structured literature review which gives a broader definitions of the major concepts in revenue management in terms of the applications and the long term relationship with customers. It then explores the extent to which revenue management is been applied in the Nigerian hospitality sector. The aim of this thesis is to analyze revenue management application in some selected hotels in Nigeria, Nigeria is made up of 36 states including the Federal Capital Territory. Three hotels will be selected from the 36 states adding up to a total of 108 hotels to which questionnaires will be sent, the result will give how RM is been applied in line with the manipulation techniques involved, above that, from the research, it will conduct a development plan for other hotels under utilising the full strength of RM tools. The goal of this thesis is to improve the profitability of the room capacity with the tools of revenue management being explored, The theoretical data for this thesis will be collected from the selected hotels, hospitality management literatures, and Internet. In addition, other important information sources will be from the author’s personal experience and a result from the questionnaires rolled out to gain a reliable and comprehensive information of the RM adoption. 1.0  Introduction This chapter gives an introduction to RM, following literatures by Orkin, (1990), Jones and Val, (1993), Karaesmen and van Ryzin, (2004), Kimes, (2000, 1998), Rothstein (1971, 1975), Bitran and Caldentey, (2003), and Weatherford, (2003). We start with an elaborated explanation of revenue management, the history and its origin (Rothstein (1971, 1975), Bitran and Caldentey, (2003), and Weatherford, (2003)). Afterwards, a conceptual framework for understanding the objectives of revenue management, the business platform on which RM can be adopted (Kimes, 1989), the way the system works and finally, this thesis will conclude by giving an outline of the remaining chapters of the thesis. We here trace the history of revenue management as practiced in the hospitality industry in an effort to illustrate what Jones and Lockwood, (1998), said about RM, they said that Revenue management is a well researched and explored manipulation technique for maximising revenue. Unfortunately, revenue management practice in Nigeria is little known, for example, it has been a commonplace to sell a room twice a day if the opportunity arise, increasing the revenue generated directly leading to RM application indirectly, this form the bisis of this dissertation and it is a gap this research is seeking to fill by exploring the extent to which RM is practised in Nigerian hotels directly and not been blind folded by an indirect approach of the application of Revenue Management. RM can be define as a management tool or technique which is currently being utilized by an increasing number of international chain of hotels and independently owned hotels in order to maximize the effective use of their available room capacity and ensure a boost financially, (Salmon, 1990). Furthermore, Jones and Lockwood, (1998), researched and concluded that RM is not entirely a new capacity manipulation tactic in the world, and most hoteliers practice some form of RM, such as the adjusting of room rates to temper fluctuations between peak and off-peak seasons, mid-week, and weekend rates. This Research, therefore, examines the use and application of RM in the hotel industry in Nigeria and aims to demonstrate its application towards effectively maximizing room revenue and profit maximization. For the sake of this thesis, a comprehensive literature review based on secondary sources in order to explore RM application will be established as a guide to the fieldwork and the areas of interest will be extracted from the literature review. Above others, these areas and issues will be investigated through the method of collecting primary data. Furthermore, all collected documentations will be made available in order to validate the information given during these interviews. This thesis is a very satisfying and challenging process since it focuses on the gap which has never been researched in the hospitality industry in Nigeria. Nevertheless, it is a valuable learning experience which will be cherished by revenue managers in Nigeria in order to enhance the revenue generated in their respective hotel(s). This thesis seek to give a proper understanding of revenue management tools including; Overbooking, Inventory control, displacement analysis pricing and lastly forecasting method, their impacts on the corporate performance in terms of customer satisfaction and loyalty leading to customer retention will be of secondary concern. 1.1  Aim This thesis seeks to explore the extent to which revenue management is being practised in Nigerian hotel in terms of the usage of RM tools which is afore mentioned. This will be achieved by exploring three hotels from each 36 states in Nigeria, some which will be from an international chain of hotels and others an independently owned hotels. Questionnaires will be rolled out to these selected hotels in other to have a generic perception towards the adoption of RM following the literature by Vinod (2004) in that the value of revenue management is assessed in the hotel industry. 1.2   RESEARCH OBJECTIVES AND QUESTIONS Every seller is faced with fundamental decisions, juxtaposing this, a BBQ restaurant selling chicken and chips should be able to decide on which period to make her maximum sale, the price to give and when to reduce the price. A cinema ticket or stadium ticket must be sold within a certain period, therefore, the manager must decide when to start selling tickets, what the asking price should be, and when to drop price if necessary. In the Hotel industry, it is similar; hotel managers should know when to drop prices on rooms, when to stop selling rooms, when to increase the prices of rooms. Following these examples, the Nigerian hotels’ operations led us to the objectives of the thesis: To explore the extent to which revenue management is applied. To seek the awareness of RM within the Nigerian hotels. Research questions: How is revenue managed in Nigerian hotels? To what extent do Nigerian hotels consider Customer loyalty, customer satisfaction and customer retention a priority?   Limitations   For the sake of this thesis, only three hotels will be explored from each of the 36 states in Nigeria, because there are several unregistered hotels and there is no proper list of all the hotels in Nigeria. However, some of the hotels are part of international chain of hotels operating on an international level while some are independently owned. Furthermore, we have limited the research to RM application and from the survey, the sensitive areas as regards to customer loyalty, satisfaction and long term retention will be explored, in other words, the loyalty, retention and satisfaction will be our secondary aim. Nonetheless, there may of course be other operations or practices within these hotels that affect revenue but our research is focused on the five RM tools been employed as afore mentioned. The followings under listed are the possible limitation this thesis might face. Finance One of the major problems for the research is finance, the financial aspect in terms of travelling to Nigeria to schedule   and execute an interview with the managers of the selected hotels and therefore, questionnaires will be sent via the wireless network (internet) using kwicksurvey; an internet based questionnaire software. Authenticity of information Secondly, Some of the managers to fill the questionnaires might accept the purpose of the study and fill, but some might be offended by it and feel it is a time wasting process and give a biased information. Time constraints Lastly, the risk for the study of not been able to find the information it needs at the allowed time. Finding the information may take more time than the limited time given (time constraints). Research Outline Chapter one will set a solid foundation for this thesis, therefore, the research   will continue by presenting a comprehensive literature review as far as revenue management is concerned in Chapter Two. A concise description and critical understanding of RM background will be the aim of the literature review (Chapter two). Furthermore, an overview of the literature within the following RM tools including; overbooking, displacement analysis, price control, inventory control (length of stay restriction) and as they lead to customer management will be given in order to set the base and create an understating of how these tools influence revenue generated. Chapter Two concludes with a brief structured analysis of the literature review presented. Chapter three will seek to explore and examine the aim of the research process and how the fieldwork will be conducted. Research limitations will be presented, the fieldwork and how information will be handled. This chapter describes what happens in all the stages on the fieldwork.   (Before, during, and after the fieldwork). In Chapter Four we present a generic practice within the studied hotels and give a short generic presentation of the hotels participating and describe how RM tools are used in terms of the followings; overbooking, displacement analysis, price control, inventory control (length of stay restriction). Concluding the chapter with a description of how the respondents recognize the external environment followed by their perception on revenue management and their practices of RM techniques. In Chapter Five, the empirical findings will be evaluated and analysed in a way that it can be linked with the literature overview presented in Chapter Two. This will be done through a critical analysis. These analyses will illustrate the effectiveness of RM application in Nigerian hotels and how it is been adopted, therefore, Chapter Six will be based on the analysis of revenue management tactics. Chapter Six gives the implication of our main findings and conclusions, as this will be based on the entire research carried out, Furthermore, suggestions of areas which is felt to be further developed after critical evaluation of RM application in Nigeria is made following Choi and Mattila (2004)’s investigation on the impact of revenue management as regards to customers’ perceptions on fairness. LITERATURE REVIEW ON REVENUEMANAGEMENT Revenue ManagementDefinition In this chapter, RM literature will be explored, following all the five application tools afore mentioned. In the literature, Burgess and Bryant, (2001) said, many authors are conversant with the use of interchanging the term revenue management (RM) with yield management (YM). Some consider YM only to be related with revenue derived from accommodation whereas RM may encompass all areas of hotel revenue Therefore, it is important to highlight the term YM and clarify its meaning for the purpose of this thesis. Many definitions are available on YM. Jones and Val, (1993) said, yield is calculated by taking revenue realized and dividing it by revenue potential. However, RM is often associated with the following definition by Kimes, (2000, p. 121) â€Å"The application of information systems and pricing strategies to allocate the right capacity to the right customer at the right place at the right time.† further assessment conducted by Mitchell (1992) states that revenue management is the process of controlling room availability by opening, closing and restricting different room rates based on forecast demand in order to maximise room revenue. Jauncey et al. concluded through an analysis of literatures, came up with the term â€Å"best fit† definition for RM, which is â€Å"An integrated, continuous and systematic approach to maximizing room revenue through the manipulation of room rates in response to forecasted patterns of demand.† Jauncey et al., (1995, p. 25) and a description of RM, according to Jones and Val (1993), is to apply basic economic principles to pricing and to control the supply of rooms for the purpose of maximizing room revenue. Which means that in order to have an effective RM technique in place one would need to understand the basic economics of supply and demand so that the right price could be set in order to increase room revenue for the company, following what kimes (1998a) said about selling the right product to the right customer at the right time and the right place. Nevertheless, some conditions for the application of revenue management must predominate according to kimes (2000). These conditions include; Capacity must be relatively fixed, RM tactics is primarily designed for a capacity constrained firms but firms not having this capacity constraints can make use of inventory as a buffer dealing with fluctuations in demand. Service should be perishable, service ends when ends. Service could be sold well in advance of cunsumption, to maximize room revenue, some sort of reservation system which allows inventory bookings to be received well in advance should be put in place. The cost of a sale should be relatively low, this simply means the cost of putting a guest in another unoccupied room is relatively lower than building another room. Demand should flunctuate substancially, peak and off peak seasons, festive periods are all examples of demand fluctuations. Market could be segmented e.g Leisure travellers and business travellers. When looking at the literature from a historical perspective, it was the airline industry that has been credited with the development and refinement of RM following the deregulation of the U.S. airline industry in the 1970s, Kimes, (1989a), and McMahon-Beattie et al., (1999). This deregulation resulted in a heavy competition within the airline industry and led to a price cutting war. Nevertheless, from the literatures of Rothstein (1971, 1975), Bitran and Caldentey, (2003), and Weatherford, (2003), managing inventory became an important part of running a successful business in the early 1970s. As a result of this competitive circumstances, McMahon-Beattie et al., (1999) said, the adoption of RM began in the hotel industry in the middle of the 1980s as the industry was faced with excess capacity, severe short-term liquidity problem and increasing business failure rates. Purpose of Yield Management Jones and Hamilton (1992) among others said, RM in the hotel industry tries to maximize the available guest room rates when room demand exceeds available room and to maximize occupancy when available room exceeds room demands, even at the expense of the average room rate. Nevertheless, some authors like Jauncey et al., (1995), McMahon-Beattie et al.,(1999), Siguaw et al., (2001) all agree that the purpose of RM is the maximization of room revenue through the manipulation of room rates in a structured fashion, so as to take into account forecasted patterns of demand. It is a technique that attempts to maximize profits by using information about buying behaviour and sales to create pricing and inventory controls, Lee-Ross and Johns, (1997). Why RM. Donaghy et. al., (1995), and Kimes, (1989b) just to mention a few, has examined RM applications and studied its definition, researchers like Donaghy and McMahon, (1995), Fitzsimmons and Fitzsimmons, (1998), Hiemstra, (1999), Kimes, (1989a, b, 1997), Yeoman and Watson, (1997), looked at the critical factors that are likely to influence the application and implementation of RM and finally, the ethical issues in terms of customer satisfaction, retention and loyalty over a long period of time can be seen in the following literatures, Cross, (1992, 1997), Jauncey et al., (1995), Kimes, (1994), and Lieberman, (1993). Cross, (1997) added that within one year of the adoption of RM, Delta airline generated $300 million increment, $500 million annually was recorded annually by American airline, over $100 million is annually generated by   Marriott jr Hotels and $2 million gained in the first two weeks, following the adoption of RM techniques at the Canadian Broadcasting Corporation. RM Tools Pricing strategies First and foremost, RM tools are intertwined, one tool depends on the other to function effectively. Pricing strategies used to be a decision by the overall managers before, but in recent years, that schedule has been given to a revenue manager but the principle of differential pricing is said not to be attributed to the immergence of RM by Donaghy, et al (1995). Hotel managers have long been using various pricing strategies to maximize their profits by bringing the seasonal demand for rooms and capacity limitations into a balance (Choi and Cho, 2000), even before the deregulation in the airline industry that gave birth to RM in the 1970’s. Differential pricing strategies including; price discrimination, off peak pricing and demand based pricing may change the reference price and reference transaction which could cause customers to feel the current transaction is unfair and the customer could even perceive such differential pricing as price gorging. (Whirtz et al (2003; pg 220 )), A stochastic or probabilistic demand seemed justified on the basis that consumers ‘arrive’ at random times before consumption. From the pricing perspective, though, a theoretical structure was needed to explain how demand is shaped or why it would follow a particular pattern across time. Otherwise, there was no assurance that the past is able to predict the future [Bernstein, 1996; Ng, 2004]. Accordingly, despite tremendous computing power available today, pricing based on demand forecasts faces the same old problem in conventional probability theory, where, according to Bernstein [1996: 334], ‘the raw material of the model is the data of the past’. Some research studies have attempted to shed some light on the behaviour of the advance buyer. The literature is scant, dominated by marketing, and not commonly brought into revenue management research. For example, Desiraju and Shugan [1999] evaluated strategic pricing in advance selling and found that yiel d management strategies such as discounting, overbooking and limiting early sales work best when price-insensitive customers buy later than price-sensitive customers. Shugan and Xie [2000] showed that due to the state dependency of service utility, buyers are uncertain in advance and become certain at consumption time while sellers remain uncertain of buyer states at consumption time because of information asymmetry. They suggest that advance selling overcomes the informational disadvantage of sellers and it is therefore a strategy to increase profit. Xie and Shugan [2001] studied when advance selling improves profits and how advance prices should be set. They have also investigated the optimality of advance selling, investigating selling in a variety of situations, buyer risk aversion, second period arrivals, limited capacity, yield management and other advance selling issues. Png [1989], on the other hand, showed that costless reservations in advance is a profitable pricing strate gy as it induces truth revelation on the type of valuation that the consumer has for the service (which is private information). If the consumer has a high valuation i.e. ability to consume, s/he will use the reservation and pay a higher price. If not, the consumer will not use it. In another paper, Png [1991] compared the strategies of charging consumers a lower price for advance sales and attaching a price premium at the date of consumption versus charging them a premium and promising a refund should consumption prices be lower than what was purchased. Despite these models that aim to capture primitive advance demand behaviour, there has not been much effort to integrate them into a unified framework, nor have there been any attempts to bridge the behavioural aspects of demand with revenue management research. Models of the former capture individual consumer behaviour (or homogeneous consumer segments) and it was difficult to see how that could be aggregated and applied to revenue management that mostly dealt Overbooking, cancellations and no-shows Overbooking, is simply defined as a concept of accepting more reservations than the physical available capacity with the knowledge that some bookings will end up as a no-show, or cancellations furthermore, this serve as a hedge against early check outs, this is said in the literature that overbooking is one of the oldest form of RM tactics Karaesmen and van Ryzin, (2004). Overbooking is actually not a bad concept, but if not managed well, it could lead to overselling. Overselling happens when the number of arrivals exceeds the available room capacity.   Authors have examined how hotels could secure themselves in other to avoid no-shows or cancellations by guests, through appropriate reservation policies, (Alstrup et al., (1986), Belobaba, (1989), Hersh and Ladany, (1978), Lieberman and Yechiali, (1978), Rothstein, (1971, 1974, 1985), Thompson, (1961), and Toh, (1985)) airlines. Under this strategy, the seller deliberately oversells capacity if high-paying consumers show up, even when capacity is already fully booked. The seller then cancels the sale to some low-paying customers while providing them with appropriate compensation. We derive a new rule to optimally allocate capacity to consumers when overselling is used, and show that overselling helps limit the potential yield and spoilage losses. Yield loss is reduced because the seller can capture more high-paying customers by compensating low-paying customers who give up their right to the product. Displacement analysis Displacement analysis has been a very challenging exercise for function room analysis. It is challenging to determine what to negotiate when considering booking a group with a significant lead time, because when compression does hit it is possible that more money could have been made by waiting and taking the last-minute groups that are willing to pay higher prices. But that requires hotels taking significant risks and gambles The concept of displacement is defined by Abbort and Lewry, (1991) is said to be â€Å"those prospective customers who are unable to obtain a higher rate because the rooms have already been booked by customers paying lower rate.†Ã‚   Furthermore, Biyalogorsky, (1999) added that displacement concept is â€Å"selling at a low price, and losing a better price later†. Displacement analysis is divided in to two parts, including; Primary displacement and Secondary displacement. Primary displacement is also known as the direct displacement, and these are those prospective guest who are willing to increase the room rate themselves just to get booked for a particular date of arrival but could not be booked due to the fact that the available rooms are already been booked by guests with lower rates. Secondly, the secondary displacement which is also known as indirect displacement and are said to be those subsequent rooms lost due to primary displacement. Example of this displacement analysis can be seen in appendix 1. Inventory control 1 The Mechanics of Inventory Control Distribution and Central Reservation Systems Traditional revenue management is intimately related with distribution and central reservation systems. Distribution and central reservation systems represent a broad and fascinating topic in their own right. An excellent high-level account of airline planning, marketing, and distribution activities and their relation to operations research can be found in Smith et al. (2001). Here   we provide only sufficient background information to facilitate discussion of the main topic of this paper, revenue management. Forecasting Forecasting is an important strategy of RM in any organisation adopting its techniques; but it is particularly critical in hotel revenue management because of the direct influence forecasts have on the available room booking limits that determine hotel profits. Not surprisingly, forecasting is concurrent with the literature on overbooking because overbooking calculations depend on predictions of ultimate demand, cancellations, and no-shows. Demand forecasting Jauncey et al., (1995), Pak and Piersma, (2002), Kime, (1999), 2003), all agreed that forecasting is one of the key principles of revenue management. Jauncey et al., (1995), Donaghy et al., (1995, 1997), juxtaposed the effectiveness of a good RM system by adding that it should be able to predict demand conditions and fluctuations by analyzing reservation patterns, arrival, departures and a score of other demand characteristics. Recently, the following literatures by Anderson and Blair, (2004), Desiraju and Shugan, (1999) suggested that revenue management systems with forecasting algorithms are expensive to implement in real terms. Lahoti, (2002) added by saying that, a typical RM system costs between $1 million to $3 million and takes more than two years to implement. Moreover, research has proven and showed that these complex and sophisticated revenue management systems are not liable to mislead, deceive, or disappoint. In fact, Ng et al., (1999) added that, using the data of the pa st and sales department using present day information, conflicts often occur, and many revenue management tactics should employ some level of human intervention, in other words, making use of RM as a guide but human intervention is still relevant. Forecasting has four limitations, following the literatures by c.f. Chase, 1999; Lieberman, 1993; Relihan, 1989; Boyd, 2004; Desiraju and Shugan, 1999. Firstly, A proposition upon which forecasting is based or from which a forecasting conclusion is drawn, should be based on fundamental concepts of consumer behaviour, (Chase, 1999; Lieberman, 1993, Relihan, 1989).   It will be of great importance to bring to revenue managers attention according to Carry, (2004) revenue manipulation and maximisation using forecast method. Consequently, this may not be a good indicator of the subsequent or present bookings, and cannot be determined by using only RM system by studying historical pattern of demand, because the reason why consumers act or react the way they do is just as important as how they are behaving. Secondly, forecasting tactic at its best when adopted is still a combination segments that could, if possible, be desegregated for higher revenue. Thirdly, demand records are subject t o many factors, including the pricing strategies of the existing competitors at that time. We can only assume and predict based on the historical data. Finally, demand can be influenced, not merely be known. As early as 1951, Schumpeter, (1951), Liebhafsky, (1968) said that wants cannot be taken as independent and consumers could be taught by producers to want new things. Figure 1 duration price fixed variable predictable Quadrant 1MoviesStadiums and arenasConvention centres Quadrant 2HotelsAirlinesRental cars Cruise lines unpredictable Quadrant 3RestaurantsGolf CoursesInternet service providers Quadrant4Continuing careHospitals (Kimes. 2000. p.127) The industries found in quadrant 2, such as airlines and hotels, are generally those associated with RM, Weatherford et al., (2001). That is because these industries tend to use variable pricing for services with a specified or predictable duration. Nevertheless, Donaghy and McMahon (1995) state that a successful application of RM techniques results in fluctuating room prices. RM therefore, consists of not two, but three separate, interrelated parts; inventory management, duration control, and pricing. BIBLIOGRAPHY Abbott, P. and Lewry, S. (1991) Front Office Procedures, Social Skills and Management. Oxford: Butterworth-Heinemann. Bitran, G. and Caldentey, R. 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The Postwar World After World War II

The Postwar World After World War II The most transformative conflict in history, World War II impacted the entire globe and set the stage for the Cold War. As the war raged, the leaders of the Allies met several times to direct the course of the fighting and to begin planning for the postwar world. With the defeat of Germany and Japan, their plans were put into action. The Atlantic Charter: Laying the Groundwork Planning for the post-World War II world began before the United States even entered the conflict. On August 9, 1941, President Franklin D. Roosevelt and Prime Minister Winston Churchill first met aboard the cruiser USS Augusta. The meeting took place while the ship was anchored at US Naval Station Argentia (Newfoundland), which had recently been acquired from Britain as part of the Bases for Destroyers Agreement. Meeting over two days, the leaders produced the Atlantic Charter, which called for self-determination of peoples, freedom of the seas, global economic cooperation, disarmament of aggressor nations, reduced trade barriers, and freedom from want and fear. In addition, the United States and Britain stated that they sought no territorial gains from the conflict and called for the defeat of Germany. Announced on August 14, it was soon adopted by the other Allied nations as well as the Soviet Union. The charter was met with suspicion by the Axis powers, who interpreted it as a budding alliance against them. The Arcadia Conference: Europe First Shortly after the US entrance into the war, the two leaders met again in Washington DC. Codenamed the Arcadia Conference, Roosevelt and Churchill held meetings between December 22, 1941, and January 14, 1942. The key decision from this conference was agreement on a Europe First strategy for winning the war. Due to the proximity of many of the Allied nations to Germany, it was felt that the Nazis offered a greater threat. While the majority of resources would be devoted to Europe, the Allies planned on fighting a holding battle with Japan. This decision met with some resistance in the United States as public sentiment favored exacting revenge on the Japanese for the attack on Pearl Harbor. The Arcadia Conference also produced the Declaration by the United Nations. Devised by Roosevelt, the term United Nations became the official name for the Allies. Initially signed by 26 nations, the declaration called for the signatories to uphold the Atlantic Charter, employ all their resources against the Axis, and forbade nations from signing a separate peace with Germany or Japan. The tenets set forth in the declaration became the basis for the modern United Nations, which was created after the war. Wartime Conferences While Churchill and Roosevelt met again in Washington in June 1942 to discuss strategy, it was their January 1943 conference in Casablanca that would affect the wars prosecution. Meeting with Charles de Gaulle and Henri Giraud, Roosevelt and Churchill recognized the two men as the joint leaders of the Free French. At the end of the conference, the Casablanca Declaration was announced, which called for the unconditional surrender of the Axis powers as well as aid for the Soviets and the invasion of Italy. That summer, Churchill again crossed the Atlantic to confer with Roosevelt. Convening in Quebec, the two set the date of D-Day for May 1944 and drafted the secret Quebec Agreement. This called for a sharing of atomic research and outlined the basis of nuclear nonproliferation between their two nations. In November 1943, Roosevelt and Churchill traveled to Cairo to meet with Chinese leader Chiang Kai-Shek. The first conference to primarily focus on the Pacific war, the meeting resulted in the Allies promising to seek the unconditional surrender of Japan, the return of Japanese-occupied Chinese lands, and Korean independence. The Tehran Conference and the Big Three On November 28, 1943, the two western leaders traveled to Tehran, Iran to meet with Joseph Stalin. The first meeting of the Big Three (United States, Britain, and the Soviet Union), the Tehran Conference was one of only two wartime meetings between the three leaders. Initial conversations saw Roosevelt and Churchill receive Soviet support for their war policies in exchange for backing the communist Partisans in Yugoslavia and allowing Stalin to manipulate the Soviet-Polish border. Subsequent discussions centered on the opening of a second front in Western Europe. The meeting confirmed that this attack would come through France rather than through the Mediterranean as Churchill desired. Stalin also promised to declare war on Japan following the defeat of Germany. Before the conference concluded, the Big Three reaffirmed their demand for unconditional surrender and laid out the initial plans for occupying Axis territory after the war. Bretton Woods and Dumbarton Oaks While the Big Three leaders were directing the war, other efforts were moving forward to build the framework for the postwar world. In July 1944, representatives of 45 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, NH to design the postwar international monetary system. Officially dubbed the United Nations Monetary and Financial Conference, the meeting produced the agreements that formed the International Bank for Reconstruction and Development, the General Agreement on Tariffs and Trade, and the International Monetary Fund. In addition, the meeting created the Bretton Woods system of exchange rate management which was used until 1971. The following month, delegates met at Dumbarton Oaks in Washington, DC to begin formulating the United Nations. Key discussions included the make-up of the organization as well as the design of the Security Council. The agreements from Dumbarton Oaks were reviewed April-June 1945, at the United Nations Conference on International Organization. This meeting produced the United Nations Charter which gave birth to the modern United Nations. The Yalta Conference As the war was winding down, the Big Three met again at the Black Sea resort of Yalta from February 4-11, 1945. Each arrived at the conference with their own agenda, with Roosevelt seeking Soviet aid against Japan, Churchill demanding free elections in Eastern Europe, and Stalin desiring to create a Soviet sphere of influence. Also to be discussed were plans for the occupation of Germany. Roosevelt was able to obtain Stalins promise to enter the war with Japan within 90 days of Germanys defeat in exchange for Mongolian independence, the Kurile Islands, and part of Sakhalin Island. On the issue of Poland, Stalin demanded that the Soviet Union receive territory from their neighbor in order to create a defensive buffer zone. This was reluctantly agreed to, with Poland being compensated by moving its western border into Germany and receiving part of East Prussia. In addition, Stalin promised free elections after the war; however, this was not fulfilled. As the meeting concluded, a final plan for the occupation of Germany was agreed upon and Roosevelt obtained Stalins word that the Soviet Union would participate in the new United Nations. The Potsdam Conference The final meeting of the Big Three took place at Potsdam, Germany between July 17 and August 2, 1945. Representing the United States was new president Harry S. Truman,  who had succeeded to the office following Roosevelts death in April. Britain was initially represented by Churchill, however, he was replaced by new Prime Minister Clement Attlee following Labors victory in the 1945 general election. As before, Stalin represented the Soviet Union. The principal goals of the conference were to begin designing the postwar world, negotiating treaties, and dealing with other issues raised by the defeat of Germany. The conference largely ratified many of the decisions agreed to at Yalta and stated that the goals of the occupation of Germany would be demilitarization, denazification, democratization, and decartelization. In regards to Poland, the conference confirmed the territorial changes and gave recognition to the Soviet-backed provisional government. These decisions were made public in the Potsdam Agreement, which stipulated that all other issues would be dealt with in the final peace treaty (this was not signed until 1990). On July 26, while the conference was ongoing, Truman, Churchill, and Chiang Kai-Shek issued the Potsdam Declaration which outlined the terms  for  Japans surrender. Occupation of the Axis Powers With the end to the war, the Allied powers began occupations of both Japan and Germany. In the Far East, US troops took possession of Japan and were aided by British Commonwealth forces in the reconstruction and demilitarization of the country. In Southeast Asia, the colonial powers returned to their former possessions, while Korea was divided at the 38th Parallel, with the Soviets in the north and the US in the south. Commanding the occupation of Japan was  General Douglas MacArthur. A gifted administrator, MacArthur oversaw the nations transition to a constitutional monarchy and the rebuilding of the Japanese economy. With the outbreak of the Korean War in 1950, MacArthurs attention was diverted to the new conflict and increasingly more power was returned to the Japanese government. The occupation ended following the signing of the San Francisco Peace Treaty (Treaty of Peace with Japan) on September 8, 1951, which officially concluded World War II in the Pacific. In Europe, both Germany and Austria were divided into four occupation zones under American, British, French, and Soviet control. Also, the capital at Berlin was divided along similar lines. While the original occupation plan called for Germany to be ruled as a single unit through the Allied Control Council, this soon broke down as tensions rose between the Soviets and the Western Allies. As the occupation progressed the US, British, and French zones were merged into one uniformly governed area. The Cold War On June 24, 1948, the Soviets initiated the first action of the  Cold War  by shutting down all access to Western-occupied West Berlin. To combat the Berlin Blockade, the Western Allies began the  Berlin Airlift,  which transported desperately needed food and fuel to the beleaguered city. Flying for almost a year, Allied aircraft kept the city supplied until the Soviets relented in May 1949. That same month, the Western-controlled sectors were formed into the Federal Republic of Germany (West Germany). This was countered by the Soviets that October ​when they reconstituted their sector into the German Democratic Republic (East Germany). This coincided with their increasing control over governments in Eastern Europe. Angered by the Western Allies lack of action to prevent the Soviets from taking control, these nations referred to their abandonment as the Western Betrayal. Rebuilding As the politics of postwar Europe were taking shape, efforts were made to rebuild the continents shattered economy. In an attempt to expedite economic regrowth and ensure the survival of democratic governments, the United States allocated $13 billion to the rebuilding of Western Europe. Beginning in 1947, and known as the European Recovery Program (Marshall Plan), the program ran until 1952. In both Germany and Japan, efforts were made to locate and prosecute war criminals. In Germany, the accused were tried at  Nuremberg  while in Japan the trials were held in Tokyo. As tensions rose and the Cold War began, the issue of Germany remained unresolved. Though two nations had been created from pre-war Germany, Berlin technically remained occupied and no final settlement had been concluded. For the next 45 years, Germany was on the front lines of the Cold War. It was only with the fall of the  Berlin Wall  in 1989, and the collapse of Soviet control in Eastern Europe that the final issues of the war could be resolved. In 1990, the Treaty on the Final Settlement With Respect to Germany was signed, reunifying Germany and officially ending World War II in Europe.