Customer engagement involves customers’ interactive experiences with a brand or service provider. Focusing on the hotel industry, this study investigates the role of customer interactivity, positive affect, and employee motivations in enhancing employees’ innovative behaviors under the S-O-R (stimulus–organism–response) framework. Using data collected via a mixed-mode quantitative survey of 830 Chinese hotel employees, the authors developed and tested a structural model. The findings suggest that customer interactivity, positive affect, and motivations as influential factors affect employee innovative behavior. Specifically, customer interactivity influences employee innovative behavior directly and indirectly through positive affect and intrinsic and extrinsic motivations. Theoretically, the study clarifies the mechanisms underpinning the effect of customer interactivity on employees’ innovative behaviors and extends the S-O-R model by applying it in the organizational behavior domain. Practically, the results highlight a need for reward systems to incorporate measures of employee performance in relation to fostering customer interactivity and engagement.