Title: Where Service Recovery Meets its Paradox - A search for the level of Service Recovery required for the Service Recovery Paradox to occur in the Hotel Industry  Level: Student thesis, final assignment for Bachelor Degree in Business Administration  Author: Beatrice Nylander & Andreas Edström  Supervisor: Patrik Sörqvist  Date: 2021 – June  Aim: The purpose of this study was to, within the hotel industry, investigate at what level of service recovery the service recovery paradox will come into existence.  Method: Two surveys have been conducted where 190 respondents were introduced to a scenario- based service failure in the hotel industry. Survey 1 collected data about the amount of monetary compensation that customers felt they needed post service failure, in order to subsequently feel a little more satisfied than in the case of an error-free service experience (the point for service recovery paradox). In survey 2, customer satisfaction was then measured at three different levels of compensation after service failure. The three levels were the mean from survey 1, mean -1 SD, and mean +1 SD. This with the aim to, in an independent sample, test whether the point for service recovery paradox in survey 1 causes the paradox to arise in survey 2 or not.  Result & Conclusions: In the event of a specific service failure in the hotel industry, the level of service recovery paradox, through monetary compensation, was found. Survey 1 (N = 40) determined the compensation level to be SEK 1204. The same compensation level was confirmed as a sufficient level to achieve the service recovery paradox in survey 2 (N = 150).  Contribution of the thesis: Service failures are often not completely avoidable, especially not in the hotel industry. This study helps to understand the level of monetary compensation that may be required to achieve the service recovery paradox, in the event of a specific service failure in the hotel industry. The results from this study contribute to guidance in service recovery and give hotel managers knowledge of what monetary compensation level they should apply to restore customer satisfaction and also avoid overcompensation, in case of service failures.  Suggestions for future research: Future researchers should assume that service industries and service failures are all unique. Failure scenarios need to be described in detail in order for results to be applicable by managers. Future research may also examine the anchoring effect in order to avoid overcompensation if possible. SRP researchers who examine the hotel industry in particular may investigate the SRP level of additional customer segments that travel; alone, at work, with friends or with children. Although SRP might occur because of service recovery, repurchase intentions might decrease. A major challenge for future researchers will therefore be to measure how customer satisfaction after service failure and recovery stands long term. Another suggestion is to conduct the study again, but with real service failures and with real compensation.  Keywords: service failure, service recovery, service recovery paradox, service recovery hotel industry, customer satisfaction