CASE STUDY – Not even a pandemic can prevent a lean organization from learning: this hotel in Tenerife has decided to make the most of its forced closure to review and improve its processes.

Words: Bart Rozema, Director/Hotel Manager, Dreamplace Hotels & Resorts

At the end of February, a hotel very close to us, in Costa Adeje, had one of the first cases of Covid-19 recorded outside of Italy and China. The first known case of coronavirus in Spain was also here in the Canary Islands, in La Gomera, at the end of January. Tourists started to feel reluctant to travel to Tenerife, even before the lockdown. While being an island gives us the advantage of being able to, at least in theory, check everyone who arrives to avoid any imported infections, it’s also true that people quickly began to feel rather apprehensive about getting on an airplane for many hours.

We began the process of closing down the hotel – probably among the first ones in the world – during the second week of March, without really knowing how to exactly handle the situation. If it happened now, there would be protocols in place, and plenty of examples. But not back then. At that moment in time, we had around 700 guests and although it hasn’t been the case in our hotel, the possibility that someone might be infected suddenly began to feel very real. We therefore started to devise some countermeasures, but before we could do much the cancellations began.

Then came the State of Emergency. All hotel guests, it was decided, had to stay indoors at all times. They couldn’t leave their rooms except for eating or going to the pharmacy. It’s one thing to be hunkering down in your home, it’s another thing to be in a hotel room. People are used to being outside all the time here, and suddenly they were confined for several days. When even the Spanish Army appeared in the streets to help local law enforcement, the atmosphere turned really grim. We did all we could to keep our guests entertained and cheer them up, including a show in the swimming pool area that they could watch from the balconies, but only few guests really felt in a holiday mood.

People were thinking about getting home as fast as they could. We helped them to make arrangements to return home and, then, the lights went off on March 22nd. Judging by the amount of positive and heartfelt reviews, out team has done an outstanding job of taking care of our guests when it was most needed.

The day we closed we told people to get ready for a quick reopening a couple of weeks later. Little did we know we’d be shut for months (it might well be six). Things have never been more uncertain, and our estimations of how bad it will be continue to change. All we know is that several hotels around here will be closed for a while longer and that many others won’t reopen.

Hotels in general are struggling, of course. Arguably, no sector has been hit as hard as tourism. The whole industry has virtually come to a standstill. Luckily, Dreamplace is a healthy organization and our owners have always had a long-term vision and were smart enough to save for a rainy day. We know we can survive. In fact, we might even come out stronger depending on what happens to our competition. For organizations like hotels, cashflow is the biggest headache: when the refund requests start pouring in, a big chunk of the money guests paid up front has already been spent. That’s why everyone wants to give out vouchers. We ourselves tried not to lose reservations, moving them to a time of the year when we hope we might be open – even if it makes us less money than it would have under normal circumstances. We are losing money, but we are saving our cashflow.

MAKING THE MOST OF A BAD SITUATION

We have tried to use these months of closure for hansei, reflection, on how we can maintain and advance all of our lean improvements on one hand and on what the pandemic means for our business model on the other. It’s been hard, because every time we set a goal, a point on the horizon line, we had to change it a few days later. That means we have spent a lot of time thinking about problems that were not problems in the end and not enough on real issues.

Personally, I have reflected a lot on the way we do business. I believe this pandemic should encourage us to move away from individualism and think more in terms of community. How can we reflect that in the way we work? I have decided that I would like to shift the management mentality (change always starts with a shift in philosophy) and have them see that economic results are a natural consequence of offering the best service we can. That’s why our focus should be on making people happy. This is not to say that we were not guest-centric before, of course, but I think we should focus on it even more. The good thing is that we now have enough time for all those changes we never got around to doing.

Some of these changes are bigger, systemic even, while others are smaller but not less important. One of the big changes I’d like to implement is a more egalitarian organization of the work across the three teams working in our restaurants, bars and at Café del Mar (our hotel runs a franchise of the famous brand). People at the bars typically work eight hours straight, whereas people at the restaurant do not (they do breakfast and dinner). People working at the bar make a lot of money with tips, something that of course restaurant staff doesn’t get (people typically asks us to add the bill to their room charges). I want to heijunka the types of jobs, so that both benefits and drawbacks are shared among everyone. Instead of having a team doing breakfast and dinner and another one covering the time in between and the time after, why not put them all together and get one team to do breakfast and lunch and the other to do dinner and evening? That way, they can all do eight hours, share their tips equally, even use the same uniform. We think this will have a big impact.

Another, smaller change is one we have been playing around with for a long time, and Covid provided us with the opportunity to finally do something about it. Having had to reduce the number of tables we can have in our dining hall by 20%, we had to increase the efficiency of the remaining tables. Our estimations put the OEE at around 65%: some tables are only occupied if they are the only ones available and others are always taken. To figure out how to improve the OEE, we looked at where we lose time. There will always be tables in less attractive locations (which is very subjective), but we did identify two moments in which the table is not being used: either when it is still dirty from the previous guest or when a table is clean, but people don’t realize it’s available. It’s not unusual in our dining hall to see a table dirty and empty for up to 20 minutes, and that’s because staff waits to clean up until they are 100% sure the guests are done with their meal. They prefer not to take the risk of clearing a table while the guest has only gotten up for a second round of dessert. Still, those are 20 minutes that we lose. Other times, across the whole service, a table is not used because we don’t have a system to alert people that it is available. If the table is set up with a slightly tilted knife for example, other guest might thing that this was done on purpose by somebody else to “mark” their table. Ultimately, the measure that allowed us to improve the efficiency of the tables by 20% was placing a tea box-sized container with three lights in them – green, yellow and red – on each table. When the table is clean, the green light is turned on. When customers sit down, they switch the light from green to yellow, and then again from yellow to red when they leave. We need customers to collaborate, but ultimately this is a benefit for them as well because it means we are 100% sure that the table they are sitting at has been sanitized and it will be much easier for them to find a table. All they have to do is look for a green light!

THE BENEFITS OF LEAN THINKING

I wouldn’t know how to do any of this without Lean Thinking, and there are a couple of reasons for this. First of all, when you start thinking in flow, everything becomes so much easier: you know the direction you are travelling, and you know that everyone will be working towards the same goal. Silos are never good, let alone in a time of emergency. There are no kings of the castle here. We are all in the same boat, and we are all working in the same way – the lean system.

The second way in which lean is helping us is through standardization. Without standards, we’d be in real trouble right now. You just can’t make any decisions if you don’t have a stable, standardized process. The experience of our guest has to be right (and safe) first time, and that’s what standards enable us to ensure. The biggest cost for our hotel is personnel, housekeeping representing the highest. Our housekeepers perform 400 processes of 15 minutes each every day: one step to the right or the left can make a huge difference and we simply can’t afford to have each housekeeper perform the process differently. This becomes even more important now that we need to abide to extra sanitation measures. Three years ago, before we introduced Lean Thinking, people thought standardization wouldn’t work; now we couldn’t survive without it.

The philosophy of Dreamplace has always been to put people before profit. Normally we show this respect in the way we treat each other during our day-to-day activities, our horizontal leadership structure and the way we communicate. Above all we respect and encourage the autonomy of each team member, and their ability to offer solutions to our problems. After all, our team members on the front line are the ones that know our product and the needs of our guests better than anyone else. With 99% of our staff at home, we have not been able to do this, but we did want to show to everyone that we are with them in the good times, but also in challenging times. That’s why we have been paying the difference between the government subsidy (in Spain, the ERTE is a suspension of an employee’s contract that still allows them to receive unemployment benefits) and the 80% of our employees’ net salary. This to us is one way of showing what respect for people is all about.

There is no doubt that we are more adaptable and resilient thanks to Lean Thinking, and we think this is more critical now than ever. It is helping us to ensure business continuity by turning each and every one of us into a problem solver, and I am confident it will help us to innovate our way into the future.

_{THE AUTHOR}