Purpose: This study aims to conceptualize the potential stimuli and consequences of perceived yuanfen in the accommodation service encounter by interpreting how Chinese customers perceive yuanfen during their stay in accommodations. Design/methodology/approach: Online accommodation reviews containing yuanfen perception were interpreted using a grounded theory approach. Group interviews were conducted to verify the interpretations. Findings: Positive outcome-generated emotional accommodation experiences (e.g. happiness) can elicit perceived yuanfen, which then evokes customers’ feelings of gratitude, emotional attachment to an accommodation and memorable accommodation experiences. Also, perceived yuanfen facilitates customers’ tolerance of service failures and promotes customers’ intention to stay longer at, recommend and revisit the accommodation. Research limitations/implications: This study contributes to the literature on accommodation experiences, loyalty, word-of-mouth and service recovery. Future research can explore the interventions that trigger Chinese customers’ perceived yuanfen during accommodation. Practical implications: This study informs practitioners of the importance of perceived yuanfen in enhancing accommodation experiences and service recovery. Moreover, the conceptualized characteristics and stimuli of perceived yuanfen offer possible guidelines for practitioners on how to stimulate customers’ yuanfen perception. Originality/value: This study fills the gap of how perceived yuanfen functions in the service encounters in accommodations.