This study investigates how cultural familiarity and service failure characteristics affect hotel guest ratings of their tolerance and satisfaction toward a failure in hotel service. The study is significant for two key reasons: (1) it provides the first examination of the effects of cultural familiarity in a service failure setting, and (2) introduces the construct of guest tolerance as an important outcome evaluation of the hotel experience. Data was collected from an online survey of 740 Australians. The study comprised a 2 (failure type) x 3 (severity of failure) x 3 (cultural familiarity) experimental design. While a main effect showed that ‘interpersonal’ failures were less tolerated and resulted in less satisfaction than ‘non-interpersonal’ failures, this effect differed depending on severity of the failure. Interaction effects demonstrate that high cultural familiarity magnifies the effect of high service failure severity in respect of levels of tolerance and customer satisfaction ratings.