Int. J. Services and Operations Management, Vol. 36, No.

3, 2020 303

Lean management in hospitality: methods,

applications and future directions

Erwin Rauch*
Industrial Engineering and Automation (IEA),
Faculty of Science and Technology,
Free University of Bolzano,
Piazza Università 1, 39100 Bolzano, Italy
Email: erwin.rauch@unibz.it
*Corresponding author

Dominik T. Matt
Industrial Engineering and Automation (IEA),
Faculty of Science and Technology,
Free University of Bolzano,
Piazza Università 1, 39100 Bolzano, Italy
Email: dominik.matt@unibz.it
and
Innovation Engineering Centre (IEC),
Fraunhofer Italia Research s.c.a.r.l.,
A.-Volta Strasse 13a, 39100 Bolzano, Italy
Email: dominik.matt@fraunhofer.it

Christian Linder
Management Department,
ESCP Europe Business School,
527 Finchley Road,
London NW3 7BG, United Kingdom
Email: chlinder@escpeurope.eu

Abstract: The hospitality industry is under constant pressure to optimise

internal processes, while at the same time extending services to the customer.
The purpose of this study is to outline the potential of lean management as a
successful approach to increase efficiency and productivity in operational
processes in the hospitality industry. We demonstrate that the proven potential
of lean methods in fields like manufacturing can be successfully transferred to
the needs of the hospitality industry. As a result, the research shows a selection
of lean methods which are particularly suitable for application in the hotel
sector. This study is based on a real case study in order to test the practical
application of lean methods in hospitality. Our research contributes to process
optimisation in hospitality and can be directly implemented by practitioners.
Further it provides future directions in the transformation of lean methods
through digitisation.

Copyright © 2020 Inderscience Enterprises Ltd.

304 E. Rauch et al.

Keywords: lean management; lean hospitality; lean hotel; digitisation;

industry 4.0; smart hospitality; service industry; hospitality industry.

Reference to this paper should be made as follows: Rauch, E., Matt, D.T. and
Linder, C. (2020) ‘Lean management in hospitality: methods, applications and
future directions’, Int. J. Services and Operations Management, Vol. 36, No. 3,
pp.303–326.

Biographical notes: Erwin Rauch is an Assistant Professor of Manufacturing

Technology and Systems at the Faculty of Science and Technology at the Free
University of Bolzano (Italy). He studied at the Free University of Bolzano
(Italy), at the Technical University in Munich (Germany) and obtained his PhD
at the University of Stuttgart (Germany). He was a Visiting Scholar at the WPI
Worcester Polytechnic Institute, Worcester, MA. His main research interests
are agile manufacturing systems design, Industry 4.0, sustainable
manufacturing, distributed manufacturing, production planning and control in
MTO and ETO enterprises and axiomatic design. He is also the Head of the
Smart Mini-Factory Laboratory for Industry 4.0 in SMEs at the Free University
of Bolzano.

Dominik T. Matt is the Chair for Production Systems and Technologies and
Head of the Research Department ‘Industrial Engineering and Automation
(IEA)’ at the Faculty of Science and Technology at the Free University of
Bozen-Bolzano. Moreover, he is the Director of the Research Centre
Fraunhofer Italia in Bolzano. He has authored more than 150 scientific and
technical papers in journals and conference proceedings and is member of
numerous national and international scientific organisations and committees
(e.g., AITeM – Associazione Italiana di Tecnologia Meccanica, WGAB –
Academic Society for Work and Industrial Organisation and EVI – European
Virtual Institute on Innovation in Industrial Supply Chains and Logistic
Networks).

Christian Linder is an Associate Professor of Strategy and Leadership at the

ESCP Europe Business School in London (UK). He held a position as an
Assistant Professor in Entrepreneurship and Family Business Management at
the Free University of Bozen-Bolzano (Italy) and Assistant Professor at the
University of Bamberg (Germany) prior to his current affiliation. He further
worked as Research Manager at the Institute for Employment Research at the
German Federal Employment Agency, and as research associate for the
Fraunhofer-Institute for Industrial Engineering as well as for the University of
Stuttgart (Germany). He was a Visiting Scholar at the CEIBS, Shanghai,
ACAS, Manila and SWUFE, Chengdu. He holds a PhD in Philosophy from the
Munich School of Philosophy (Germany) and a PhD in Technology
Management from the University of Stuttgart (Germany).

This paper is a revised and expanded version of a paper entitled ‘Lean

hospitality-application of lean management methods in the hotel sector’
presented at 48th CIRP Conference on Manufacturing Systems – CIRP CMS
2015, Ischia-Naples (Italy), 24–26 June 2015.
 Lean management in hospitality 305

1 Introduction

The business environment for hospitality companies, especially for hotels, is becoming
increasingly dynamic and volatile. With changing travel and holiday behaviours (Ariffin
and Maghzi, 2012; Horner and Swarbrooke, 2007), hotels have to respond to new needs,
while simultaneously facing growing competition. Therefore, many argue that
competitiveness in tourism is particularly dependent on innovation and optimisation for
achieving lower costs and higher quality outputs (Orfila-Sintes and Mattsson, 2009;
Ottenbacher and Gnoth, 2005). However, growing dynamics in the industry are a
challenge to predictability and accuracy, making it complicated to plan workforce and
resource demands, resulting in inefficiencies and higher costs for staffing and purchasing.
The act of simultaneously cutting costs, increasing yield management and improving
services and features for guests becomes one of the greatest future challenges for hotel
companies as these elements are often in contradiction with each other (Wong et al.,
1999; Oh, 1999). Thus, hospitality and tourism companies need to look for opportunities
and management models to operate more efficiently (Buhalis and Law, 2008;
Kandampully, 2006). An increase in pricing for room rates and customer services is no
longer acceptable (Lockyer, 2005), therefore internal processes have to be re-designed in
a more efficient way and costs for material and services have to be minimised to secure a
sufficient profit for healthy future growth and new and innovative guest experiences (Hu
et al., 2009).
In this study, we draw on evidence from efforts to increase efficiency of business
processes within the manufacturing industry. Here, similar challenges have been
successfully faced with lean management (Dal Pont et al., 2008). Following the
development of the lean thinking approach in the Japanese automotive industry, lean
management has achieved worldwide triumph and has been successfully introduced
initially into large companies (Holweg, 2007) and later also in small and medium-sized
enterprises (Matt and Rauch, 2013). Today, there is evidence that lean management
provides significant improvements in many industries other than manufacturing, such as
construction, healthcare, administration or product development. In our study, we
demonstrate that lean management, while not yet popular in the service and hospitality
sector, holds some valuable implications for improving performance.
One intention of this article is to promote lean management as a concept for
efficiency improvements in the hospitality sector and to initiate further research in this
area. This article demonstrates that many lean management methods are applicable and
suitable for hotel business. In order to do so, we identified and tested lean management
methods in a real case study to show its applicability and effects. In addition, since
information technology has dramatically transformed travel and tourism (Xiang et al.,
2015a), we provide an outlook for future research towards lean management and
digitisation. This trend is called ‘Industry 4.0’ and includes new and emerging concepts
like internet-of-things (IoT), cyber-physical systems (CPS) and big data (Rauch et al.,
2016c). We argue, for instance, that lean management and an Industry 4.0 (or
digitisation) are supplements that foster efficiency gains. Accordingly, through new and
advanced technologies, lean management principles can be realised better and more
consistently (Rauch et al., 2016a). Summarising, we provide answers to three major
questions surrounding lean management in hospitality:
306 E. Rauch et al.

1 ‘What are suitable lean management methods applicable in hospitality?’

2 ‘How can lean management methods be practically applied and adopted to
hospitality companies and what impact does it have?’
3 ‘What are the future directions in lean management regarding the trend towards
digitisation and Industry 4.0?’
The article is structured as follows: after a short literature review summarising the
theoretical concepts and principles of lean management we explain the origin of lean
management and its diffusion into other industries. Next, we present the application of
lean management within a premium hotel in the north of Italy. The results and
experiences from this case study are described in detail in a separate section to provide
impressions of practical implementation. Future directions towards a digital
transformation of lean methods should illustrate upcoming challenges and potentials for
hospitality companies. Finally, a conclusion and an outlook for future research are given.

2 Theoretical background of lean in service and in hospitality

2.1 The origin of lean management principles

The term lean manufacturing was introduced in the early 1990s in a book by Womack
et al. (1991) called ‘The machine that changed the world’. The author’s show that modern
management concepts such as lean production, waste and lead times could be reduced. In
the context of lean management, ‘lean’ essentially means flexible, agile or light. Lean is a
bundle of principles, methods and actions for the effective and efficient configuration and
examination of the whole supply chain. Lean management aims to create value without
producing waste. Value, in terms of lean management, is any action or process that a
customer would be willing to pay for. Lean management tools therefore help to identify
and to eliminate waste of resources and as waste is eliminated, quality improves while
production time and costs are reduced (Ohno, 1988; Womack et al., 1991). A common
definition of lean management in the industrial and manufacturing community is that it is
a systematic approach to identifying and eliminating waste (non-value-adding activities)
through continuous improvement in pursuit of perfection by allowing the flow of the
product to be ‘pulled’ by the customer (NIST, 2000). This shifts the focus from
individual machines and their utilisation to the flow of the product through processes
(Verma and Ghadmode, 2004). Lean management methods were introduced first in the
automotive or aerospace industry, starting with original equipment manufacturers, before
the concept was extended to the whole supply chain (Matt and Rauch, 2014).

2.2 Lean beyond the production shop floor: the evolution of lean management
in other industries
Lean management methods have been successfully adopted in various sectors other than
production. Thus, there are multiple examples where lean management methods have
proven their potential to increase efficiency and reduce waste in other industries such as
lean construction (Ballard and Howell, 1997; Alarcón, 1997; Ballard, 2000; Cain, 2004;
Eriksson, 2010; Matt et al., 2014a), lean healthcare (Langabeer et al., 2009; Brandao de
 Lean management in hospitality 307

Souza, 2009; Waring and Bishop, 2010; Meredith et al., 2011; Wellman et al., 2011; Matt
et al., 2014b), lean administration (Tegethoff and Wilkesmann, 1995; De Toni and
Tonchia, 1996; Tapping and Shuker, 2003; Radnor and Walley, 2010; Chiarini, 2013;
Todorut and Tselentis, 2015) or lean product development (Liker and Morgan, 2006;
Mynott, 2012; Rauch et al., 2015).

2.3 Current knowledge on lean management in service industries and in

hospitality
2.3.1 Prior literature
Essentially, lean management methods are not widely applied in the service sector,
particularly in small and medium hotels across Europe, thus leaving a space for
improvement (Vlachos and Bogdanovic, 2013). There are only a few available studies on
lean management methods in the service and hospitality industry. One study by Bowen
and Youngdahl (1998), described the characteristics of a lean management methods to
service operations. According to their research, service businesses such as Taco Bell or
Southwest Airlines successfully mastered what they call ‘lean service’, i.e., the
application of lean manufacturing principles to service operations. March and Fugazi
(2002) demonstrated the analysis and optimisation of a hotel airport shuttle service using
lean and Six Sigma tools resulting in shorter wait times and less customer complaints.
Barlow (2002) investigated the potential of just-in-time as a lean management method in
two case studies. According to his results, any hotel should seriously consider adopting
just-in-time. Further, Drew et al. (2004) explained that identifying value streams in the
hospitality industry calls for creative thinking. In a hotel, value streams might be defined
in terms of customer needs such as rest, food and beverages and recreation. Such a
grouping might then lead to changes in the design of processes and allocation of
resources. Cuatrecasas (2004) developed a step-by-step methodology to evolve from a
classical model of behaviour of a production system to a lean production model in a
service sector (the check-out service of a hotel type establishment). Three cases described
by Suarez-Barraza (2008) indicated how lean-Kaizen principles used in the context of
lean service helped both hotels and restaurants to reduce their operating costs, their
client-response time and the quality of service delivered to their clients. Lean 5S and the
kaizen process could benefit housekeeping by eliminating waste in processes and
increasing efficiency (Beiser, 2010). Despite the lack of a standards and methodology for
use in services, its best practices inherited from manufacturing, when applied to services,
can generate large economic and financial results as well as improvements in workers’
behaviour (Leite and Vieira, 2015). Reardon et al. (2015) are currently working on a
research project developing a lean services framework for the Irish hotel sector to achieve
operational excellence and quality improvement.
However, little research is available that highlights the challenges of change
processes associated with the introduction of lean management methods. In this regard,
the study of Leite and Vieira (2015) shows that the application of lean methods in the
services industry may suffer resistance. Their research shows, based on the analyses of
several cases, that the use of lean management methods in services proved to be effective
even if the change process may have been challenging. In a similar vein, hospitality firms
might also consider that sometimes it takes a long time until the new routines are
implemented fully (Sila and Ebrahimpour, 2004). Further resistance to lean management
308 E. Rauch et al.

methods in the hospitality industry could be the notion that these programs are only
applicable in production and manufacturing environments (Engelund et al., 2009).
Standardising services and increasing reliability in service processes through lean
principles can increase efficiency. However, the customer’s active role in certain services
and, simultaneously, high diversity make the application of lean principles increasingly
difficult. Customer satisfaction must be considered when adopting lean management
methods for improving efficiency and service productivity (Carlborg et al., 2013).

2.3.2 Evidence from case studies

In the existing literature there are some few examples for the application of lean
management methods in the hospitality arena: For instance, Starwood Hotels
implemented lean Six Sigma in 2001 and as a result, the company realised some quick
financial wins with an increase of revenues by 19% (Starwood, 2004). Thanks to lean
management, the Yukai Resort in Japan operates with minimal staff and has reduced
overall costs while still maintaining high quality (Yukai Resort, 2017). The
implementation of a lean project at Apex Hotels saved about 5,728 man hours per annum
and improved the service for the guests and the working conditions for the hotel staff
(Apex Hotels, 2016). The Marriot Hotel elaborated 12 guiding principles of leadership
and customer service based on lean principles to improve their customer service
(Marriott, 2017).

3 Applying lean management methods in hospitality

3.1 Overview of typical lean management methods

Lean management methods are methods that fundamentally contribute to achieving the
goals of lean management and are described in relevant lean literature as lean methods.
As known from classical lean literature (Womack et al., 1991) the goals of lean
management are the pursuit of a zero-defect culture, the maximisation of customer value
and the minimisation of waste. Certain methods can be described as core methods of lean
management (e.g., Kanban, Poka Yoke, 5S, Kaizen, etc.), other methods can also be
attributed to lean management and the pursuit of its goals, but are supporting lean
methods (ABC analysis, FMEA, benchmarking, etc.). Currently, various methods and
tools are described in scientific literature in the field of lean management. The majority
of tools have their origin in the manufacturing area. Through adaptation and
generalisation over time, they have become applicable in other fields and not just single
industries.
Table 1 summarises 47 lean methods clustering them into five categories. This list of
methods and clustering is based on the findings of several authors (Kennedy and Hyland,
2003; Thomas and Barton, 2006; Belekoukias et al., 2014) and an accurate and detailed
literature review of lean methods used in scientific literature, that has been conducted by
the authors in previous research (Matt and Rauch, 2013). The clustering into the different
thematic categories was carried out by the authors.
The five identified thematically categories are:
 Lean management in hospitality 309

 Machinery and equipment: lean methods to improve productivity of machinery and

to reduce downtime for setup, maintenance or repair.
 Material flow and layout: lean methods to achieve a material-flow oriented layout
and to optimise productivity and efficiency in logistics.
 Organisation and staff: lean methods to use the internal knowledge of people for
optimisations and to encourage continuous improvement
 Production planning and control: lean methods to facilitate a customer demand
oriented and optimised capacity and resource planning.
 Quality: lean methods to improve the quality of products or services and to minimise
losses and wastes related to non-quality or failures.
Table 1 Overview general lean methods and tools

Cluster N° Lean management method

Machinery and equipment 1 Low cost intelligent automation
2 Overall equipment effectiveness (OEE)
3 Setup time reduction
4 Total productive maintenance (TPM)
5 Single minute exchange of die (SMED)
6 Workplace ergonomics
Material flow and layout 7 Cellular manufacturing
8 First in-first out (FIFO)
9 One-piece-flow
10 Simulation software
11 Optimisation of the supply chain
12 Value stream mapping
13 Work station design
14 Process function diagram (PFD)
15 Value analysis
16 Supermarket
17 Pull
18 ABC-analysis/Pareto diagram
19 XYZ-analysis
20 Sankey-diagram
Organisation and staff 21 Benchmarking
22 Idea-management
23 Job rotation
24 Kaizen (CIP-workshops)
25 Communication rules and standards
26 Gantt-chart
27 Lessons learned workshops
310 E. Rauch et al.

Table 1 Overview general lean methods and tools (continued)

Cluster N° Lean management method

Production planning and 28 Just-in-sequence (JIS)
control 29 Just-in-time (JIT)
30 Kanban
31 Heijunka: line balancing
32 Milkrun
33 PPC simulation software
34 Economic (optimal) lot size
35 Visual management
36 Theory of constraints
Quality 37 FMEA
38 Poka Yoke
39 PDCA
40 Quality function deployment
41 Six-Sigma
42 Statistical process control (SPC)
43 Supplier development
44 Total quality management (TQM)
45 Control charts
46 Dashboard
47 5S

3.2 Suitable lean methods for hospitality industry

Not every method would be equally suitable for every industry. We refer to a previous
study and evaluation of the applicability of suitable lean management methods for the
needs of hospitality firms by Rauch et al. (2016b). According to Rauch et al. (2016b)
evaluated methods are based on their performance regarding the following four
assessment criteria:
1 Effort and costs for implementation: in practice, the cost of investment and the use of
resources should be as low as possible to ensure a very short amortisation period.
2 Time to visibility: this criteria focalises the short term visibility of positive effects
regarding the practical application of the methods, because lean often fails due to
missing results in short terms.
3 Impact on performance KPIs: performance KPIs have a big influence on decisions
taken by a company’s management. The lean method has to bring measurable and
convincing performance results.
4 Sustainability of outcome and application: one main goal of lean-thinking is the
long-term benefit for the enterprise. Changes in the mindset of people cannot occur
 Lean management in hospitality 311

in a few days, but takes time. Therefore, this criterion is also affiliated in the
validation model.
In the previous study (Rauch et al., 2016b) the identified 47 methods were evaluated
according to the above criteria. In this study, the criteria were applied with a specific
focus on hospitality and their evaluation was discussed with hospitality professionals and
hotel owners. For example, the first criterion (effort and cost for implementation)
specifically took into account how much effort is required in hospitality industry, because
certain methods are very easy to implement, e.g., in production companies, while in
hospitality the necessary culture and qualification of the staff must first be created. In this
previous work, the methods were listed in a ranking based on the quantitative results of
the above mentioned criteria. This ranking results in 20 methods as particularly suitable
for the hotel sector. For further details regarding the evaluation and the ranking please
refer to Rauch et al. (2016b).
Based on this existing evaluation, Table 2 summarises the top 20 lean methods for the
hospitality industry. Some of the most promising methods are 5S, the implementation of
Kaizen workshops for continuous improvement, visual management and Poka Yoke. In
the table, logistics or inventory oriented methods like milkrun, economic lot size and
ABC-XYZ analysis, show potential for adoption in the hospitality industry.
Table 2 Top 20 lean hospitality methods and tools

Ranking Lean hospitality methods

1 5S
2 Kaizen (CIP-workshops)
3 Visual management
4 Poka Yoke
5 Milkrun
6 First In-first out (FIFO)
7 Economic (optimal) lot size
8 ABC-analysis/Pareto diagram
9 Idea-management
10 XYZ-analysis
11 Supplier development
12 Supermarket
13 Kanban
14 Optimisation of the supply chain
15 Work station design
16 Control charts
17 Workplace ergonomics
18 Lessons learned workshops
19 Total quality management (TQM)
20 Plan-do-check-act (PDCA)
312 E. Rauch et al.

In the next section, we demonstrate the applicability of some of these lean management
methods in the hotel industry using a real case study carried out in a North Italian
premium hotel.

4 Application of lean hospitality methods in practice

The company we used to test the applicability of the lean management methods is one of
the biggest and noblest family spa grand hotels in Italy, winning several awards and
prices. The hotel is open all year round, has a maximum capacity of 104 beds and
employs about 120 persons (see Table 3).
Table 3 Case study profile

Company profile Description

Hotel category ****S
Location North of Italy
Focus – target group Premium family and SPA grand hotel
Opening period Open all year
Employees ~120
Rooms 104
Luxury SPA and wellness 2.900 sqm with own beauty centre
Indoor play for children 1.250 sqm with over 20 animators

Table 4 Implemented lean measures in the case study and results/savings

Monetary savings
Nr. Lean measure Adopted lean methods Qualitative results
in EUR per year
1 Customer-oriented  Pull  More precise and faster 137.000
resource planning resource planning process
and  Job rotation
 Bonus system for
synchronisation  Visual management
managers with least
 Dashboard negative deviation
2 Continuous  Kaizen  Motivation of employees 12.000
improvement (CIP-workshops)
process (CIP)  Promoting young talents
 Idea-management as lean leader
 Plan-do-check-act  Participative
(PDCA) decision-making process
3 Lean in  First in-first out  Professional qualification 25.000
purchasing and (FIFO) and know-how of
warehouse employees through
management  Economic (optimal)
trainings and adoption of
lot size
lean methods
 ABC-analysis/Pareto
 Strategic partnerships
diagram
with selected suppliers
 XYZ-analysis
 Improved quality control
and control of expiry date
 Lean management in hospitality 313

Table 4 Implemented lean measures in the case study and results/savings (continued)

Monetary savings
Nr. Lean measure Adopted lean methods Qualitative results
in EUR per year
3 Lean in  Supplier  Systematic monitoring 25.000
purchasing and development through purchasing
warehouse balanced scorecard (PBS)
management  Optimisation of the
supply chain
 Supermarket
 Kanban
 Just-in-time (JIT)
 Dashboard
4 Spaghetti diagram  Milkrun  Increased ergonomics 8.000
and Milkrun to and thus employee
reduce waste for  Workplace satisfaction
movement ergonomics

5 SMED workshops  Single minute  Reduction of disturbance 12.000

to optimise exchange of die of guests
productivity in (SMED)
housekeeping  More comfortable
 Workplace working conditions for
ergonomics staff
6 Order and  5S  Systematic approach for 25.000
cleanliness order and cleanliness
through 5S  Visual management
 Introduction of weekly
 Poka Yoke
random 5S-checks
 Control charts
7 Optimisation of  Value stream  Ergonomic re-design of 5.000
check-in/out mapping workplaces in reception
through value
stream mapping  Work station design  Less waiting time of
guests
8 Efficiency in food  ABC-analysis/Pareto  Better predictability of 15.000
offer – menu mix diagram goods
matrix
 XYZ-analysis  More appealing food
offer
9 Reduction of  Value stream  Ecologic sustainability 32.000
waste in energy mapping
consumption  Less maintenance effort

10 Introduction of a  Lessons learned  Train-the-trainer course –20.000

responsible for workshops through external experts (25% of chief
lean management operations
and process  Sustainable development officer)
optimisation of lean management
system
ANNUAL SAVINGS 251.000

Their focus on customer value and the simultaneous pursuit of operational excellence
convinced the management to implement a pilot-project to introduce the lean
management philosophy within the company. Table 4 shows the ten implemented lean
314 E. Rauch et al.

measures in the case study research and the single lean methods used in every measure.
Further the table summarises qualitative achievements and quantitative savings through
the implementation of lean measures. The savings were calculated and defined together
with the company’s controlling department, the working group as well as operational
experts in the specific departments. The cost of implementing the measure and the
expected savings were calculated and an overall net saving defined. The implementation
of the above measures and the determination of the respective savings are described in
Table 4.
The following sections describe the implementation of the most important lean
management measures in this case study to demonstrate the applicability of lean methods
in practice and the related experience resulting from the case study.

4.1 Lean measure 1: customer-oriented resource planning and synchronisation

A major challenge for the company was the personnel planning depending on the
capacity utilisation of the hotel. The difficulties were, on the one hand, a reliable
prediction of overnight stays and composition of the guests in the rooms (the number of
adults and children and what ages). Another challenge was to define how much staff
should work depending on the number and mix of the guests. These are challenges which
also occur in production and can be managed using lean and capacity planning methods.

Figure 1 Target definition and resource planning (modified data due to confidentiality)
(see online version for colours)
Target planning Forecast - number of guests
number of employees <100 100-150 150-200 200-250 250-300 300-350 >350
Kitchen 10 11 12 13 14 15 16
Restaurant 12 13 13 15 17 17 19
Reception 12 14 16 18 20 22 24
Animation 5 7 9 11 13 14 15
Housekeeping 10 12 14 16 18 20 22
Beauty-SPA 3 3,5 4 4,5 5 5,5 6
Bar-Lounge 2 2 3 3 3 4 4
Total employees 54 62,5 71 80,5 90 97,5 106
120
106
97,5
100 90
80,5
80 71
62,5
60 54

40

20

0
<100 100‐150 150‐200 200‐250 250‐300 300‐350 >350
Kitchen Restaurant Reception Animation Housekeeping Beauty‐SPA Bar‐Lounge

In order to make resource planning according to lean principles as customer-oriented as

possible, both forecast planning and personnel deployment planning were revised.
Several forecast methods were analysed (moving average, weighted moving average,
exponential smoothing) selecting weighted moving average with different weights as the
 Lean management in hospitality 315

final method with the best reliability. Next, a template was created defining the target
amount of employees in relation to the number of guests.
Seven utilisation categories were defined (see Figure 1) and target values were
negotiated between management and the responsibility of the single service departments.
Through a match between the new forecast with a higher reliability and the new target
values for employees per guests, a list of required personnel per department could be
created for every single day as far as the forecast could reach. In the planning tool,
additional workforce needs for reception and housekeeping was considered depending on
the amount of arrivals and departures in the forecast. In addition, a controlling instrument
was installed by monitoring the effective number of employees and comparing this
number with the daily target value. Comparing the effective number of employees to the
theoretically determined number of employees using the developed capacity planning
tool, a potential saving of up to 5% in personnel costs could be identified.

4.2 Lean measure 2: continuous improvement process (CIP)

CIP-workshops are a flexible lean management method and applicable in many different
areas. CIP-workshops were implemented in every department of the case study hotel. The
participants had to be well prepared for the workshops, therefore, they conducted
on-site-visits, analysed process specific data or reports and documented and visualised
the achieved improvements. A CIP-leader was named for every department.
In order to collect as many improvement suggestions as possible and to motivate the
hotel staff to care about the CIP-method, a reward system was developed (idea
management). A CIP-board was placed so that achievements were visible to everyone in
the hotel. For the hotel staff, it was possible to write improvement ideas on prefabricated
idea cards. These ideas were then rated by the CIP-jury and either endorsed or rejected.
Another CIP-board showed the status and the results of the endorsed suggestions. At the
end of the year, a lottery was held with the cards of all endorsed suggestions. The
employee with the most suggestions therefore had the best chance of winning a prize (for
example a holiday/travel opportunity). As a result, a catalogue of 88 small CIP-measures
(with A, B and C priority) was defined in the first round of CIP-workshops for efficiency
improvement (see Table 5), with a total saving of 12.000 Euro per year.
Table 5 Summary of CIP-measures per department

Department # measures % A-measures B-measures C-measures

Kitchen 11 13% 7 4 0
Restaurant 17 19% 11 3 3
Reception 21 24% 11 6 4
Animation 9 10% 6 3 0
Housekeeping 13 15% 4 2 7
Beauty-spa 11 13% 10 1 0
Bar-lounge 6 7% 3 1 2
88 100% 52 20 16
316 E. Rauch et al.

4.3 Lean measure 3: lean in purchasing and warehouse management

The hotel in this case study had different warehouses and storage throughout a number of
floors distributed over the entire building. Due to the fact that no one was responsible for
the organisation of the warehouse, the layout and the warehouse management revealed
many potential improvements. Goods that were needed at the ground floor were placed
often two or even three floors up. To avoid such inefficient situations in the future, the
different warehouses and their contents were analysed. The articles were clustered into
different product families regarding their intended uses and places of consumption. To
reduce the time for seeking of a product and to reduce the distance of moving goods in
and out of the warehouse, an ABC-analysis was performed (see Figure 2). The focus was
primarily to identify a product that was needed often. These products were then placed as
close as possible to the entrance of the warehouse (for example pasta). Further a
warehouse manager is now responsible of the inventory stock in the central warehouse as
well as in the decentralised smaller warehouses in the building. This measure led to an
improvement of around 10.000 Euro for all warehouses.

Figure 2 ABC – analysis and reorganisation of the warehouse layout (see online version
for colours)

To facilitate the warehousing organisation even further and also to reduce the time for
purchasing goods, a barcode-system was implemented. The barcodes were stuck to
magnetic cards and placed in front of the relevant article. Purchasing and reordering of
goods became much easier. It was possible to scan the article codes and enter them
directly with the desired quantity. By using the scanner, orders were sent automatically to
the purchase department. In addition, many other lean methods were applied in
warehouse management and logistics. Based on an ABC-XYZ-analysis, articles with a
high value and regular consumption (AX-articles) were ordered with Kanban-cards,
 Lean management in hospitality 317

while reorder quantities and safety stock were defined for many other articles. The
responsibility for purchasing was trained in the calculation of the economic (optimal) lot
size using the well-known Andler formula. Further, the supplier structure was analysed
and purchase volumes for strategic goods (e.g., meat, wine) were bundled, obtaining
much better prices and strengthening the relationship with strategic suppliers. For other
commodities, weekly auctions guaranteed the best prices for leverage items. To monitor
purchasing and warehouse activities and performance a purchasing balanced scorecard
(PBS) was developed. The PBS supports the management to identify deviations of key
performance indicators related to purchasing strategy, finance, supplier structure and
processes.

4.4 Lean measure 4: spaghetti diagram and milkrun to reduce waste for
movement
The paths travelled by the staff throughout the hotel were analysed with the help of
typical spaghetti diagrams known from lean material flow analysis. The advantage of the
spaghetti diagram was that two types of waste, transportation and movement, could be
visualised in a simple way. Two trolleys were placed at every floor, one for clean laundry
and one for dirty. The housekeeping staff were divided into teams. One team consisted of
two or three people that were responsible for different tasks. Task one was to free the
rooms from dirty laundry and garbage and put them on the assigned trolley. Task two
consisted of taking the clean laundry from the second transport carrier and changing the
covers. Task three was replacing the dirty towels with new ones and cleaning the room.
The identified weakness in the process was that the two transport carriers were positioned
at a fixed point in the corridor instead of moving them to the single cleaning locations, as
it was nearly impossible to move them due to their weight and dimensions. To improve
the process, the two old transport carriers were substituted by new and ergonomically
designed trolleys so the cleaning staff could move the trolleys to single rooms. Now
every team had three transport carriers: one for the clean laundry, one for the cleaning
materials one for the auxiliary staff. A packing list for every trolley was created and fixed
on the carriers. In addition, the accessibility to materials on the trolley was significantly
improved. Due to the optimisation of the routes and improvements to the work
management, savings in time and distances of up to 30% were obtained. By distributing
the goods to the various points of consumption, using the milkrun concept, waste could
be minimised.

4.5 Lean measure 5: SMED workshops to optimise productivity in

housekeeping
Housekeeping is one of the most important activities in a hotel with the majority of
guests attach high value to order and cleanliness, especially in the price segment of the
case study hotel. Therefore, it is a major cost factor in a company’s budget. To analyse
the process of cleaning the rooms and to identify non-value-adding activities, a video was
recorded with the consent of the cleaning team. The video was then used for a single
exchange of die (SMED) workshop known from manufacturing to improve machinery
setup times. The cleaning process of a room is similar to a setup in production. The
objective is to reduce the ‘downtime’ of the room to a minimum. The video was analysed
318 E. Rauch et al.

together with the cleaning staff responsible for housekeeping. As usual, for a SMED
workshop the analysis was structured in two parts:
1 Classification of activities in internal and external activities.
2 Conversion of internal activities to external activities and thus reduce the downtime
of the room (e.g., prepare kits for cosmetics or magazines).
3 Minimisation of internal activities (e.g., increasing the staff from one to two,
standard practices for cleaning).
Overall, the video analysis achieved a saving of nearly 10% for cleaning the rooms.

4.6 Lean measure 6: order and cleanliness through 5S

5S was introduced in the single departments in the hotel. A first pilot-initiative was
started in the in-house repair and maintenance workshop for the staff responsible for
facility management. The workshop was used as a warehouse for technical spare parts
and consumables. Analysing the workshop space in more detail identified high disorder
and therefore high inventory as well as long searching time. This situation encouraged the
lean team to implement another lean management method, 5S. 5S stands for the five
Japanese words Seiri (Sort), Seiton (workplace organisation), Seiso (cleanup), Seiketsu
(standardise) and Shitsuke (discipline). Starting with the first, ‘sort’, the staff began to
sort and check the tools in each every workplace in terms of their functionality.
Afterwards, all the broken or unused tools were removed. The second step arranged the
remaining tools and materials systematically on the worktables and assigned every item a
designated place. The unique positioning of each tool was determined based on the
number of times it was accessed, ergonomic use and weight. Tools that were used very
often were positioned in reaching distance from the worktables, while tools that were
used scarcely or were heavy were placed further away. On the wall behind the worktables
shadow tables were mounted to fix every tool at a given position. To fulfil the third of the
five ‘S’ (clean-up), an agreement was reached with the workers that everyone had to
clean his/her workplace periodically. Broken or damaged tools could then be sorted out
immediately, and the safety, quality and reliability were improved significantly. ‘S’
number four asked for standardisation. This meant that all previous steps needed to
become a standard pattern, and repeated within defined periods. With reference to the last
step, ‘sustain’, it was important to sensitise the staff to the relevance of order and
cleanliness at their worktables. The same procedure had been adopted also in other areas.
As it is quite difficult to calculate the precise savings, the team assumed a reduction in
seeking things of five minutes for every present employee a day. Thus, 5S brings an
estimated saving of around 25.000 Euro per year.

4.7 Lean measure 7: optimisation of check-in/out through value stream

mapping
Using the method of value stream mapping, value streams such as those of the check-in
or check-out, could be successfully analysed and visualised. Together with the reception
staff, the entire process was recorded (see the example of check-out in Figure 3).
The complete process, from a guest’s initial request to its effective execution,
including the information flow and related software systems, were visualised in an
 Lean management in hospitality 319

exercise using brown paper. The value stream map provided an ideal starting point to
identify weak points in the process by means of flashes and to work on their optimisation.
Following the documentation of the current state map, a future state map was then
created to visualise the ideal status after the implementation of optimisation measures. By
estimating or measuring the individual times per activity, the entire lead time for the
customer could be recorded. Any waiting time (W) of a technical or organisational nature
between individual activities were also documented. If this lead time could be
significantly shortened, this meant an increase of value for both the customer and the
company. At the end this detailed analysis brought a lead time reduction of around 15%.
In this case the focus is not primarily in the reduction of costs, but much more in
shortening the waiting times of the customer and therefore to a service increase.

Figure 3 Value stream mapping for check out process

Figure 4 Principle of the menu mix matrix and norm strategies (see online version for colours)
320 E. Rauch et al.

4.8 Lean measure 8: efficiency in food offer – menu mix matrix

Lean is the combination of maximisation of customer value and minimisation of waste
and costs. Thus, for the kitchen team, the question was asked, ‘which food menu creates
the most value for the customer and at the same time enables an optimal design of the
menu regarding to food costs?’ Together with the kitchen chef and the head of the
restaurant service, a so-called menu mix matrix was created (y-axis customer preference
and x-axis food cost). All available food courses were classified according to those
aspects. Depending on the position in the menu mix matrix, strategies in planning of the
menu could be defined. Food that was appreciated by the customer and was expensive to
produce would only be served at special events. Food with lower costs that the customer
loved became the main elements in the menu. Food which was cheap, but not appreciated
by the customer, was only served as an alternative or complementary dish or even
eliminated from the menu. Expensive and non-appreciated food would not be offered in
the future (see Figure 4). First feedbacks from guests to the head of restaurant service
confirm that the menu became much more interesting and appealing. Furthermore,
savings of around 15.000 Euro per year resulting from the use of the menu mix matrix
were calculated (less food which is left over as well as lower costs for raw material).

4.9 Lean measure 9: reduction of waste in energy consumption

Another aspect, which represented a large part of waste in the hotel business and was
mentioned in the lean workshops, was energy consumption. To save money and increase
sustainability, it was necessary to identify the primary points of energy consumption and
look for technical solutions and technologies to minimise waste. Value stream mapping
was used to identify the highest energy consumption points and processes in the core
business processes, e.g., the use of LED lamps or motion sensors was examined
in order to drastically reduce energy consumption. Within the framework of the project, a
step-by-step exchange of the traditional luminaires with LED lighting was approved.
LED luminaires last 15 times longer than halogen lamps and consume up to 80% less
energy, which meant that the acquisition costs were paid relatively quickly. A first
estimation through suppliers resulted in a saving of 20.000 Euro per year. This work
package was further improved by working with a specialist consultancy firm on energy
efficiency to take further measures for sustainable energy supply and savings in
consumption. Total identified savings through reduction of energy consumption was
about 32.000 Euro per year. In addition, an internal campaign for sensitisation of the
employees to their use of energy consumption and lightning could also lead to a
considerable saving.

4.10 Lean measure 10: introduction of a responsible for lean management and
process optimisation
The results presented were achieved and implemented within the framework of a case
study project. In order to achieve a consolidation of lean philosophy it was therefore
necessary to ensure that someone in the company was bestowed with the responsibility of
its preservation and further development. The chief operations officer was assigned with
the task of process optimisation and lean management. Further, in every department one
person was engaged and trained as lean leader. In addition to the development of the lean
 Lean management in hospitality 321

management system, further initiatives were undertaken to optimise the processes in

warehousing, purchasing, reception and controlling. To improve knowledge on lean
principles and methods several visits to best practice companies in manufacturing and
service industry were organised by the lean responsible.
Summarising, Table 4 shows the overall results and savings achieved in the case
study project through the implementation of the before mentioned measures. In total a
saving of over 250,000 Euro per year could be reached.

5 Future directions: digital technologies transforming lean management

methods

In this fast changing world, the hospitality industry is bound to adjust its approaches.
Technology has changed rapidly and so have hotel techniques and trends developing
towards smart hospitality (Almeida, 2016). Mechanisation, electrification,
computerisation and digitisation of tasks means we are now in the IoT or the era of the so
called fourth industrial revolution or Industry 4.0, a term that is currently completely
revolutionising many industries (Kagermann et al., 2013). Innovations in the time of the
Fourth Industrial Revolution for the creation of value adding in the tourism industry have
become ever more important (Ivanovic et al., 2016). The collection of data and big data
analytics has become more important to better understand key hospitality issues, such as
the relationship between hotel guest experience and satisfaction. Big data analytics can
generate new insights into variables that have been extensively studied in existing
hospitality literature (Xiang et al., 2015b).
The emerging trend towards digitisation also has a high impact on the development of
lean methods and tools. According to Matt et al. (2016), Industry 4.0 is not replacing lean
management, but rather introduces new technological tools, through which lean
principles can be properly developed. Through new and advanced technologies and
concepts summarised under the term ‘Industry 4.0’, lean principles can thus be realised
far better and more consistently than ever before.
Following, some examples are presented for the potential of digital technologies
mixed with lean principles, which are intended to stimulate reflection and can become the
basis for further research in the direction of smart hospitality.
A currently available solution is information gathering as to whether a room is
occupied or unoccupied by reading the access card or the electricity consumption in the
room. Web-based communication systems or apps can be used to share this information
with the front desk of the relevant facility as well as with the housekeeping staff. As a
result, cleaning can be better allocated, and waiting and idle times can be reduced. Data
analytic applications can also be used to analyse such data in order to identify ideal and
unsuitable times for cleaning.
Location-based decision (LBD) is seen as a promising technology to reduce idle times
of personnel. In large hotel companies, the employees, especially hotel pages and maids,
travel several kilometres every day on footpaths. In order to optimise this situation, an
application (‘App’) allows the receptionist to locate the respective position of each hotel
page and thus call the nearest employee. By implementing this measure, considerable
savings in staff walking time and guest waiting times can be expected.
322 E. Rauch et al.

Monitoring systems and smart energy tracking could be realised in the future with
personnel receiving an alert if the system identifies out of the ordinary energy
consumption. In this case technicians can react immediately to check and repair leaks in
pipes or other technical disturbances. In addition, energy tracking could allow
optimisation regarding energy waste.
A further potential for efficiency improvements in hospitality lies in the expansion of
automation and robotics. In the manufacturing and logistics industry, many simple
transport tasks can be automated through intelligent robots. Collaborative robotics is a
new concept, where a safe human-machine interaction makes it possible to work in
collaboration with a robot. Such systems are quite visionary for the hospitality industry,
but transport of luggage or other standardised movements of goods by service robots or
automated guided vehicles will become a possibility in the near future.
In addition, CPS and emerging digitisation may act also as enablers for innovative
and disruptive business models (Guttentag, 2015; Kathan et al., 2016). In the mean-time,
there are many examples in the service and hospitality sector, which can compete with
traditional business models (e.g., Uber or Airbnb). Digitisation opens the door to new
concepts like ‘sharing economy’ with potential to produce long-term transformation in
consumption behaviour and negatively affect existing companies’ business models. In
2015, Airbnb recorded more than 35 million paying guests worldwide with no sign of
saturation yet from this tremendous uplift (Kathan et al., 2016).

6 Conclusions

This article describes the application of lean management in the hospitality industry.
While the application of lean methods in other industries like healthcare or construction
is highly discussed, only a few research projects can be found specific to hospitality.
Thus, this case study research, aims to fill this gap and provide theoretical principles of
lean, suitable lean management methods for hospitality and practical examples of its
application. The main results of our study provided answers to the three aforementioned
research questions regarding the introduction of lean management methods, their
applications and future directions.
In our study we outlined a selection of traditional lean management methods
particularly suitable for hospitality. This pre-selection allows hotel companies to be
supported in the implementation of lean projects, thereby improving efficiency and
duration of implementation projects.
The application to real cases in a premium hotel, in our experience, requires the
testing of different methods in order to identify the most suitable tool. In our study, we
showed a selection that was applied successfully. These methods have the potential to be
beneficial in similar environments in the hospitality industry. We further recommend that
it may increase successful application to concentrate on a limited and manageable
number of lean management methods in order to introduce the employees step by step to
the subject. In addition to the experience gained in the introduction of lean, the applied
lean methods helped to sharpen the focus on the customer while achieving significant
savings of over 250.000 Euro per year. Particularly in personal-intensive areas such as
the kitchen, restaurant and housekeeping, high efficiency was achieved through the
adoption of lean methods and resulting optimisation measures.
 Lean management in hospitality 323

However, if we consider lean management as a permanent process, the emerging

trend of Industry 4.0 and digitisation will challenge the hospitality industry in the future
since these trends will lead to a transformation of lean management methods. While
digitisation will require investments in human capital and technology, some new potential
efficiency gains will result from more tailored lean management methods by using
innovative digital technologies for data analysis, visualisation, optimisation and
automation of simple standard operations. Several future concepts for the combination of
lean management principles and digital solutions have already been implemented in the
hospitality industry such as web-based communication systems and apps for both internal
use and interaction with the guest, LBD systems or intelligent automation. The main
contribution here is to start a discussion about how digitisation combined with lean
management can improve efficiency in hospitality.
As the overall savings and qualitative results in the case study showed, tourism
should become more aware of lean management methods in the future. We recommend
that future research into hospitality management should be done on two levels. First,
further research is needed in the practical adoption of lean management methods in the
hospitality sector and the adaptation of traditional lean principles to the specific
requirements of hotel companies. Second, further research is needed in the combination
of applicable lean methods in hospitality with new digital technologies to obtain
operational excellence through greater intelligence in hospitality processes resulting in
smart hospitality.

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