1. 1
Another ITIL®4 Story of a Japanese Business Hotel
Case Study
yuko.soma8@gmail.com, 30 September 2023
Introduction
The Moto Hiroo-Yu Inn, established in 2011 and boasting an on-site hot spring, is headquartered in Shibuya,
Tokyo, Japan. Before the pandemic, it was a renowned business hotel chain with prime locations in front of major train
stations throughout Japan. Since its establishment, the service had been deployed using the ITIL®v3 2011 Edition
framework. However, by April 2022, their business was facing difficulties. For business trips, there are also options of
unique regional inns, known as 'Ryo-kan,' staying with relatives or friends, serviced apartment areas within hotel facilities,
and a plethora of low-priced business hotels. Moreover, factors such as easy access to hotel service websites for
comparing prices/services, expense reductions by client companies, a decline in inbound demand due to the pandemic,
the replacement of business trips with remote meetings, and the increase in fixed costs due to employment challenges
in the service industry, have been identified as reasons for the difficulties, according to data analysis from Moto Hiroo-
Yu Inn's own research conducted by their Brand Marketing team.
The board members of Moto Hiroo-Yu Inn are interested in expanding their services beyond just lodging to
include booking experience, dining experience, and leisure experience (UX: User Experiences). After the pandemic,
business travelers potentially desire a comfortable and enjoyable new travel experience. Additionally, many companies
are considering cutting business trip expenses (CX: Customer Experience). Moto Hiroo-Yu Inn's service providers are
thinking of increasing revenue. Moto Hiroo-Yu Inn Internal IT department is looking to develop new digital competencies
in areas such as AI and PRA (Robotic Process Automation), and form SRE (Site Reliability Engineering) to accelerate their
business to become real digital organization.
Wouldn't the ITIL®4 framework possibly create value co-created by service provider, users, customers, and other
these stakeholders all through the customer journey much better than the ITIL®v3 2011 Edition framework?
Chapter 1
ITIL® principles 1 Focus on value
Step1:
First, we will identify who will experience the unique CX
(Customer Experience) and UX (User Experience) of
Moto Hiroo-Yu Inn, who the stakeholders are, and what
value Moto Hiroo-Yu Inn is currently offering to those
people.
・ Sponsoring companies of business travelers -
Monetary cost savings, health and safety of employees
・ IT departments of the companies to which the
business travelers belong - Physical and technical safety
measures
・ Expense reimbursement personnel of business
travelers' companies - Savings on processing time costs
・Japan Domestic business travelers - User loyalty
・International tourists and business travelers - Ease of
access to services
・Japan Domestic tourists - Customer loyalty, low cost
・Remote workers - Job growth opportunities, low cost
・ Guests attending conferences at nearby five-star
hotel banquet halls - Opportunities for communication
・ Group travelers (school trips, company trips) -
Opportunities for communication
・ Patients accepted with COVID - Revenue
compensation, public benefit
2. 2
・Unexpected guests arrived late at night - Low cost
・Leisure facilities around Moto Hiroo-Yu Inn - Revenue
・ Service providers of Moto Hiroo-Yu Inn (cleaning
services, coffee bean suppliers, chef dispatch
companies, etc.) - Revenue
・Leisure facilities around Moto Hiroo-Yu Inn - Revenue.
・ Moto Hiroo-Yu Inn's service providers (cleaning
services, coffee bean suppliers, chef dispatch
companies, etc.) - Revenue.
・ IT employees of Moto Hiroo-Yu Inn - Growth
opportunities through digitalization.
ITIL® principles 2. Start where you are
This time, the focus is on business travel
customers. Next, let's objectively measure all the
available services, processes, tools, and other resources
to fully utilize them, and see what can be cut.
・IT talents capable of providing high service activities -
Can they be upskilled to reduce the number of staff?
・Multi-factor authentication security (for elevators,
guest rooms, and leisure facilities).
・Receipt issuance system - There seems to be room for
improvement.
・Work desk, external monitor, and printer in guest
rooms - Printers are not used much post-pandemic due
to paperless trends, but still incur maintenance costs.
・ Lobby meeting areas with partitions – Due to
corporate confidentiality issues post-pandemic, it would
be better to replace them with soundproof booths for
two.
・Leisure facilities like hot springs, reading rooms, head
spas - There seems to be room for improvement.
・Breakfast with a wild vegetable buffet - Consider
improvements like turning it into wild vegetable boxed
lunches or small dishes.
・Free wild vegetable risotto provided at night - Should
it be made instant for infection prevention?
・Soft serve ice cream server after a hot spring bath -
Considering infection prevention, should it be changed
to cup ice? Isn't vanilla too ordinary?
・Vending machines offering tako-yaki, tonkotsu ramen,
etc. - Incorporated due to their popularity in Singapore,
but are they not used much because of the high price?
・ Located in front of train stations in all Japanese
provincial cities - Since it doesn't differentiate, there's
an interest in expanding overseas.
・Lodging reservation smartphone app (manual entry
for accommodation fees) - There seems to be room for
improvement.
・The lobby's self-check-in machine - As it often gets
crowded, is it possible for hotel guests to perform the
check-in process from any desired location within the
premises without requiring assistance from hotel staff?
ITIL® principles 3. Progress iteratively with feedback
Moto Hiroo-Yu Inn will reassess our current
unique values, such as streamlining each responsible
staff member, adding business magazines to comic
books, and increasing our regular customers to boost
revenue. With the budget generated from this
reassessment, we may invest further in dramatic
changes to our reservation management system. As a
result, the general value might dramatically improve
into a distinct value.
They will conduct consumer surveys on
employee satisfaction, receipts, work environment,
leisure environment, food and beverage, and factors
effective for turning customers into regular ones. We'll
also measure the rate at which customers return. We
aim to receive feedback from service consumers and
stakeholders, and continuously improve based on
analyzing this feedback. By making changes in smaller
increments (agilizing), results are felt and achieved
more rapidly, enhancing the motivation of stakeholders,
including those involved in the service.
3. 3
ITIL® principles 4. Collaborate and promote visibility
While departments like room management,
meal management, leisure management, marketing,
and IT each have their specific responsibilities, if these
siloed organizations independently make
improvements, there's a risk of inefficiencies emerging.
Information sharing and analysis must be conducted
based on trust and data. For example, room
management department prepared business magazines
to all guest rooms. And leisure management also
prepared business magazines to their shared lounge
which manga collection were there. A year later, they
might realize the redundancy in this service activity.
Moreover, many executive businessmen have digital
subscriptions to business magazines, often paid for by
their companies. Thus, the physical business magazines
provided by the hotel might largely go unused. evident
three years later when the marketing department finally
analyzed three years' worth of guest surveys and
discovered the magazines were barely being used.
Three years later when the marketing department
finally analyzed three years' worth of guest surveys and
discovered the magazines were barely being used.
ITIL® principles 5. Think and work holistically
Beyond just siloing within individual
departments, we can also refer to the siloing effect
when there are different processes known exclusively
among managerial positions across departments,
processes known only at the executive level across
departments, and processes recognized among non-
managerial positions across different departments.
Organizational behavior must incorporate a
comprehensive design that provides end-to-end
visibility and transcends both departments and
hierarchies. Especially when issues arise that need
resolution, they shouldn't be hidden; everyone involved
should contemplate them, and the appropriate
personnel should address them. Considering the
interface between the new ITIL®4 concepts of XX
practices and ZZ practices comprehensively is related to
the 7th principle of 'Optimize and Automate.' This
principle encompasses system implementation and the
automation of workflows. In other words, we need to
verify whether the seven ITIL® principles can be used in
combination, rather than in isolation, and ensure their
relevance.
ITIL® principles 6. Keep it simple and practical
For instance, while every task has exceptions,
creating detailed manuals for every individual exception
complicates matters. Instead, it's better to create
guidelines or procedures to address exceptions when
they occur, making it easier to act on them. When it
comes to practices related to the development of hotel
reservation dynamic pricing software, it's advisable to
start simply. If there's a need for additional functions
later on, it's never too late to make it more complex.
ITIL® principles 7. Optimize and automate
For example, when it comes to pricing,
dynamic pricing can be established with capacity
management practices, allowing different prices to be
displayed on reservation sites without human
intervention. The only time human intervention is
needed is for exceptions, such as when there's an
unreasonable complaint from a consumer (like a
business traveler) or when there's an incident like a fire
in a room. By consolidating previously separate on-
premises reservation management and invoicing
systems on Azure and automating them with RPA, the
need for software capital assets disappears, optimizing
costs.
Step2:
List the value, results, costs, and risks that each
of the following stakeholders of "Moto Hiroo-Yu Inn"
obtains from general business accommodation service
consumption, breakfast, accommodation fees, Wifi
services, and receipt issuance. (Omitted)
4. 4
Chapter 2
CDS (Create, Deliver, and Support)
Step 3:
The Application Development Department of
50 employees out of Moto Hiroo-Yu Inn's total
workforce of 10,000 is being pressed by the
management to urgently implement a disparity billing
feature for room rates in the existing hotel reservation
system based on ITIL®4. AI automatic dynamic pricing
relates to credit card data, personal information of
Moto Hiroo-Yu Inn guests, trade secrets of client
companies, and even AI ethics. Considering the
complexity involving internal stakeholders like those
related to PCI DSS 4.0, P (Privacy) Mark, and those
responsible for handling reputation damage, Chiyoda,
the IT Department Head, initiated a "swarming" session
gathering all 50 members. He believed in a culture of
servant leadership and collaboration.
A newcomer, Minato, who possesses expertise
in security, project management, accounting, and Azure
Cognitive, hence being a skewer type professional,
suggested that they should create a visual diagram
including ASIS and TOBE as soon as possible, so that they
can consult with external ITIL® consultants by next week.
After its creation, Chiyoda, the IT Department Head,
promised to discuss it with Meguro, the Service
Manager, and coordinate with all stakeholders. Roles
were decided on the spot, and the meeting was
dismissed. Continuing swarming after designating
appropriate personnel would be a waste of resources.
The reason why even the newcomer Minato
could make such a proposal was that during the state of
emergency declaration, with the difficulty in assigning
tasks due to remote working, the WorkHarder app,
introduced in April 2020 for resource and talent
management practices, had an automatic
recommendation feature. It allowed the registration of
skills acquired from past projects and certifications like
Azure Architect and ITIL®4 Foundation. Knowing that
Minato was the top candidate due to these registrations,
Shibuya, the HR Department Head, had recommended
him to Chiyoda, the IT Department Head.
Chapter 3
DSV (Drive Stakeholder Value)
Step 4:
The term "potential service consumer" is used
in touchpoints because the service consumer has not
yet engaged with the service provider. Moto Hiroo-Yu
Inn's primary touchpoint starts from the moment one
considers beginning their search for accommodations,
including platforms like Airbnb. This marks the
commencement of the customer journey. It might be
beneficial not only to have one's own website but also
to contract with major hotel reservation sites like Juban
Travel and travel agencies like HISS. If there's a member
registration and a history of comparing with other
business hotels, limited-time discounts can be displayed.
Even without membership, it's essential to be capable
of AI chat support and encourage guests to register.
After a reservation is confirmed, emails promoting
breakfast wild vegetable buffets, photos of the on-site
Moto Hiroo Onsen, and local events such as the Mikoshi
Summer Festival can be sent to enhance engagement.
Service consumers provide various marketing data such
as the number of people, dates, layout preferences,
approximate arrival time, and parking usage. The
service provider must assign all resources accordingly,
release resources if changes occur, reassign them,
answer questions, and collaborate with contracted
service providers to ensure successful business trips and
increased profits for partners like the wild vegetable
buffet service company. Both service consumers (and
sponsors) and contracted service providers engage in
"value co-creation."
Step 5:
During the spring of 2020 amidst the COVID-19
pandemic, the provision of the free midnight wild
vegetable risotto was abruptly canceled, failing to meet
customer expectations. However, offering the Moto
Hiroo-Yu Inn's original cup wild vegetable risotto for
free that very night received significant media attention.
Thanks to ongoing partnerships with the wild vegetable
risotto food provider, a design company, and a business
5. 5
consultant who came up with the naming, they quickly
prepared an instant risotto that could be rehydrated
with hot water and eaten in the guest rooms, complete
with a lid featuring the inn's original design. During the
engagement phase of the customer journey, the service
of providing free midnight wild vegetable risotto was
quickly updated on the website in collaboration with the
web management company, notifying users of the
service interruption and the replacement with instant
risotto. Many service consumers were satisfied with the
newly introduced Moto Hiroo-Yu Inn Original Instant
Wild Vegetable Risotto, humorously named "Gomen Na
Sansai (We are sorry)," with some even taking it home
to show off to their families. This became the Business
Continuity Plan (BCP) if, for some reason, fresh wild
vegetable risotto couldn't be provided at midnight in
the future. It also began to be sold as a souvenir from
Moto Hiroo-Yu Inn, enhancing promotional effects
through packaging. Under the state of emergency, the
algorithms previously considered couldn't cope, and
heuristic tasks became necessary. Moto Hiroo-Yu Inn
was able to realize its partnership potential during these
trying times.
Step 6:
Onboarding Moto Hiroo-Yu Inn's business
accommodation service consumers to the breakfast
wild vegetable buffet requires resources across the four
dimensions of service management, as outlined below:
The four dimensions 1. Organizations and People:
This dimension encompasses the need for skilled staff,
training programs for them, and cultural values. This
ensures that the team can efficiently deliver and
support the breakfast wild vegetable buffet. It might
include chefs skilled in preparing wild vegetables,
waitstaff trained in serving and explaining the variety of
dishes, and management ensuring smooth operations.
The four dimensions 2. Information and Technology:
Modern reservation and feedback systems might be
employed to make reservations for the buffet, gather
feedback post-consumption, and make iterative
improvements based on the feedback. This can also
include POS systems for efficient billing and payment
processing.
The four dimensions 3. Partners and suppliers:
The right engagement is required with farmers with
extensive experience in picking up tasty wild vegetables.
Step 7:
The famous wild vegetable breakfast buffet at
Moto Hiroo-Yu Inn has made the author a repeat guest.
However, during the COVID-19 pandemic, there were
times the buffet service was halted. Before planning a
trip, the author would verify via the inn's website if the
buffet would be available. If it wasn't, he planned to
book another business hotel. On one occasion, even
though the website confirmed the availability of the
buffet, upon arrival, it was replaced with a wild
vegetable bento box. The change was not updated on
the website. Some branches had initiated this change
due to low business guest arrivals and requests from
local government to accommodate COVID-19 patients.
Though a cost-cutting measure led to the decision of
replacing the buffet with bento boxes across all hotels,
most managers were unaware. As a result, customer
expectations were not effectively managed. The service
provider misunderstood the guests' expectation of
enjoying a "fresh wild vegetable dish".
Step 8:
This crucial change should have been
communicated to guests. Most of the hotel guests
expected a buffet style because the fun part for them is
choosing and picking up the fresh wild vegetable dish by
themselves. Even fresh wild vegetable small bowls are
not acceptable for them.
The change management for vegetable buffet
breakfast service to a wild vegetable bento box at Moto
Hiroo-Yu Inn are summarized. (Omitted).
6. 6
The four dimensions 4. Value Streams and Processes:
This dimension ensures that the entire process from
sourcing the wild vegetables, cooking them, serving
them to the guests, and gathering feedback is smooth
and adds value at every step. It encompasses the end-
to-service.
Chapter 4
HVIT (High Velocity IT)
Step 9:
In the fall of 2022, influenced by the COVID-19
pandemic, Moto Hiroo-Yu Inn decided to terminate
contracts with all platforms like Juban Travel, JTA Travel
Counter, and others, aiming to save costs. Instead, they
focused exclusively on reservations from their
smartphone application and official website, shifting
their policy to invest in web advertisements that drive
traffic to their own site. They decided to enhance their
lodging price management system with AI dynamic
pricing capabilities. Under these circumstances, the
primary action patterns contribute to the objectives of
"High Velocity IT" as follows: (Omitted).
Step 10:
In the spring of 2023, Moto Hiroo-Yu Inn set the
maximum nightly rate based on the travel regulations of
each contracting company. Within just under two years
of introducing differential pricing based on factors such
as the reservation site browsing time, comparisons with
prices of hotels in the same area, off-season timing, and
how many times a user has repeated their stay, sales
skyrocketed.
However, in November 2023, the newly
introduced app began to malfunction due to an
oversight by the code reviewer. Contrary to ITIL®4 best
practices, many changes were managed as a single
change, and code reviews were conducted collectively.
Many check items were approved without being
reviewed because they were deemed troublesome. As a
result, reservations were confirmed at significantly
discounted prices (instead of the average of 10,000 yen
per night, it was 3,500 yen), resulting in 1,000
reservation transactions in one month and a loss in sales.
After detecting the anomaly in January 2024, they
suspended the new system for three months, until April,
during the busy season. They reverted to the old system,
which significantly decreased revenues and forced
budget cuts. This was a significant IT incident that had a
massive impact on management. Consumers, who
stayed at unfairly discounted prices, didn't feel good
about it. Some customers even approached the front
desk wanting to pay the correct price. But with the AI's
dynamic pricing, no one, neither the receptionist nor
the application developers, knew the correct price.
There should have been solutions, such as reverting to
a certain point in development, but no value stream had
been created to address this. The lodging reservation
system was integrated with the receipt system only later,
so the receipt system and credit card payment system
were also suspended. Only cash transactions were
handled, and handwritten receipts were issued.
Exhausted by these complications, 90% of the front desk
staff resigned in April 2024. As a result of this incident,
breakfast wild vegetable buffets, midnight wild
vegetable risotto services, and hot springs were
discontinued due to budget constraints. The inn lost its
unique features, and more customers drifted away.
Still, led by Mr. Minato, they improved their
incident and problem management practices by using
the following principles, models, and concepts:
Ethics: Decisions based on moral responsibility and
social responsibility are required in digital organizations.
They must not misuse digital technology to illegally use
employees' personal information, surveil them, gain
unfair profits from customers, or infringe on individuals.
Safety Culture: Mistakes are opportunities for
improvement. It's important to treat incidents as
chances to better the organization, not just blame
individuals.
Lean Culture: This involves waste reduction,
visualization, 5S, innovative thinking, and a balance of
standardization and error prediction capability.
Toyota-no-Kata: A scientific experimental approach that
helps digital organizations form and maintain new
habits. It's based on the Deming cycle.
7. 7
Lean/Agile/Resilience/Continuous: A general high-
velocity IT approach involves introducing lean
methodologies and trimming the fat.
Service Dominant Logic: Both the customer and service
provider participate in creating the value of the service
of Moto Hiroo-Yu Inn, but the core of the service
exchange remains the customer.
Design Thinking: This supports the execution of the
customer's tasks. They look from the guest's perspective
and create small prototypes based on hypotheses of
priority practices.
Complexity Thinking: Opposite of systems thinking, you
can explain in retrospect but can't predict. The incident
with AI running amok in 2024, where AI was an
immature technology in Japan and hard to predict,
required a heuristic approach. It might have been
necessary to create a value stream where intentional
failures are induced in the test environment to check
resilience.
Chapter 5
DPI (Direction, Plan, and Improve)
Step 11:
Additionally, the reservation management
system of the Moto Hiroo-Yu Inn underwent
improvements in its change management practices, and
by October 2024, the number of value streams had
increased to 10.
Scope of Control
Based on the roles of IT department personnel,
changes to the reservation management system were
categorized by risk level. They clarified their control
scope for testing and deployment to production
environments. Mr. Minato was also delegated the
discretion to review the source code if there were not
enough personnel for code review.
Alignment of Goals and Requirements
The requirements for testing and deploying to a
production environment include security, legal
compliance, functionality, operational aspects, and
business continuity, such as compliance with PCI DSS
v4.0 and adhering to personal information protection
laws. Therefore, all these are coordinated with the
operational department, audit department, and
administrative staff. Legal factors are essential, so there
is coordination with the legal department regarding
matters like COVID-19 measures and emergency
declarations.
Policies, Controls, and Guidelines
They established policies that businesses
should adhere to when developing AI applications.
Controls for AI must be tied to decision-making
(policies). Guidelines are provided illustrating ethically,
technically, and legally challenging points in using AI,
making it easier for everyone to implement.
Delegating Decision-Making Authority to the
Appropriate Level
Entrusting all decisions to the board members
of the Moto Hiroo-Yu Inn would delay incident
resolutions and service releases, hindering value
delivery to consumers. All employees, no matter how
minor, are given some decision-making ability by
defining risk levels and delegating accordingly. Risk
management is the responsibility of all employees.
Step 12:
From November 2024 onward, individual
contributions of employees to the success of the Hiroo-
Yu Inn were measured using SMART metrics, resulting in
a decrease in turnover rate. By December 31, 2024, on
WorkHarder, employees input what they have learned,
projects they've completed, daily tasks, and
certifications obtained. They also receive annual
feedback from supervisors. It's vital for individual
contributions to be specific, measurable, achievable,
relevant, and time-bound. However, by inputting into
8. 8
WorkHarder, there's no need to be conscious of these
as they are covered. In the case of IT staff member Mr.
Minato from Hiroo-Yu Inn, his goals by March 2026
include passing the ITIL®4 Strategic Leader exam and
increasing the number of value streams from 20 to 30.
Both align with the 2025 organizational direction of
embedding ITIL®4 into the organization.
Three Years After the Moto Hiroo-Yu Inn's ITIL®4
Story
Three years after the board members planned
the implementation of ITIL®4 in April 2022, and one year
after a significant incident was resolved, April 1, 2025,
marked the opening day of the Lounge Moto Hiroo-Yu
Inn. The business hotel's first-floor large lobby area was
removed. And areas for chatting, self-study, satellite
office lounges, breakfast buffet area were created instead.
There's also a silent area for studying for qualification
exams. External monitors, security cables are available for
self-service. The lounge offers the latest books, comics,
new magazines, ten types of matcha drinks, wine, a wild
vegetable buffet, a matcha flavor soft serve, and quiet
tele-booths for two. All these amenities are available for
free for business hotel guests. The hotel's entrances and
exits have been equipped with ten anti-passback gates,
allowing for unmanned check-ins and check-outs with a
smartphone touch. After pressing the checkout button on
the smartphone and passing through the gate, charges
for souvenirs, lounge fees, or accommodation are
automatically settled, and the receipt is emailed to either
their company accounting department or an employee.
Due to changes in business customs after the pandemic,
the expensive laser printer that was no longer used was
removed. By adopting a third-party payment processing
system, they reduced the costs associated with PCI DSS
4.0 compliance.
All hotel services became cashless, so there's no
front desk staff, and ten air-purifying cleaning robots with
book location screens quietly move around the floor. The
hotel reservation and additional lounge usage AI tiered
billing system was trained extensively without external
connections through an API connection to GPT5, ensuring
personal information protection and stable operation.
Although they frequently add new features, risk
management and deployment management practices are
functional. The system's durability is outstanding, and if
an issue is detected, the app is automatically rolled back
to a predetermined point in the test environment and
then automatically promoted to the production
environment. Consumers enjoy these new customer
experiences, and the number of customers is increasing
daily.
In 2025, they are developing a solidified version
of a real hot spring using ITIL®4 framework, searching for
a small temporary store in Dalian, China with only a
bathing area and matcha soft serve server installation
space, and have started accepting reservations on an
existing hot spring reservation site with additional
features that apply Chinese data privacy law and other
regulations. Under ITILv3, it took time to plan, and they
couldn't expand their business with such agility. They plan
to expand their business hotel operations globally after
achieving success in establishing hotels throughout China
by applying ITIL®4 framework.
Reference Materials
Axelos Ltd, ITIL® 4 Practice Guides, Axelos Ltd, 2019
AXELOS Ltd, ITIL® Foundation ITIL®4 Editon, TSO, 2019
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