Hospitality-based service recovery, outcome favourability, satisfaction with service recovery and consequent customer loyalty: an empirical analysis Ghazal Shams, Raouf Rather, Mohsin Abdur Rehman and Rab Nawaz Lodhi Abstract Purpose – In recent studies, tourism scholars focussed more on service failure and recovery. Thus satisfaction with service recovery (SSR) and outcome favourability in conjunction with service recovery (SR) and customers’ behavioural intention was given very little attention, while they are very attention- grabbing, particularly in marketing areas of hospitality and tourism studies. Using stealing thunder and co-creation-based strategies, this study aims to investigate the impact of SR on outcome favourability, and its association with SSR and customer loyalty. Design/methodology/approach – To attain the objectives of the current study, data were collected through field survey by applying a random sampling technique from 346 regular customers four- and five- star hotels in the context of Iran. The structural equation modelling technique was applied for testing the measurement and relationship models of the study. Findings – The findings of this research reveal a positive relationship between SR and outcome favourability. The findings also indicate that outcome favourability positively affects SSR and loyalty. Finally, SSR exerts a favourable and significant impact on customer loyalty. Research limitations/implications – The study findings may have restricted applicability in different contexts other than four- and five-star hotels. Theoretically, the current research contributes insight into the dynamics of characterizing SR, outcome favourability, SSR and behavioural intention-based theoretical associations, as observed in the hospitality industry. Originality/value – This study adopted an un-explored SR, outcome favourability and SSR theoretical perspectives to identify the strength and nature of relationships between them and discuss their important implications for academicians and hotel managers. Keywords Service failure, Co-creation, Service recovery, Behavioural intention, Hospitality industry, Stealing thunder, Satisfaction with service recovery, Outcome favourability Paper type Research paper Introduction Failure is so important. We speak about success all the time. It is the ability to resist failure or use failure that often leads to greater success. I have met people who do not want to try for fear of failing. J.K. Rowling Service failure and recovery research remains one of the most important themes in marketing. As per Glasly’s 2018 Customer Service Expectations Survey, 92% of respondents revealed that they would not repurchase from a company once three and fewer service failures. Amongst those, 26% would stop purchasing after their first service failure experience (Forbes, 2018). Most of the firms are expected to stumble on some Ghazal Shams is based at Islamic Azad University, Dehaghan Branch, Isfahan, Iran. Raouf Rather is based at Department of Management Studies, University of Kashmir, Srinagar, India. Mohsin Abdur Rehman is based at Institute of Management Greater Manchester, University of Bolton, Bolton, UK. Rab Nawaz Lodhi is based at UCP Business School, University of Central Punjab, Lahore, Pakistan. Received 10 April 2020 Revised 14 July 2020 12 September 2020 Accepted 24 October 2020 DOI 10.1108/IJCTHR-04-2020-0079 © Emerald Publishing Limited, ISSN 1750-6182 j INTERNATIONAL JOURNAL OF CULTURE, TOURISM AND HOSPITALITY RESEARCH j