This paper classified various types of a hotel"s physical environment problems using the critical incident technique and investigated the impact of the severity of service failure and service recovery satisfaction on revisit intention, recommendation intention and the degree of relationship change. The data demonstrate that a hotel"s physical environment problems are four different categories: machine, cleanliness, equipment, and design problem. While equipment problems showed the lowest score in terms of the severity of the service problem, satisfaction with service recovery was the lowest among the four groups. In addition, the results revealed that severity of service failure and service recovery satisfaction had an impact on revisit intention, recommendation intention, and relationship change with the hotel. This research also examined the various degree of revisit and recommendation intention across the four different physical environment categories. This paper concluded with a summary of the results and research implications.