The credibility of Trivago – possibly the Australian travel industry’s largest broadcast advertiser – and its supposed mission to offer consumers the lowest possible hotel rates, has taken a heavy hit with the Australian competition watchdog taking the global meta-search site to the Federal Court for deceptive conduct that breaches Australian Consumer Law.
The ACCC, whose pursuit of Meriton for gaming TripAdvisor led to a recent $3 million fine, alleges that across 400,000+ TV ads “from at least December 2013, Trivago ran TV advertisements presenting its website as an impartial and objective price comparison service that would help consumers identify the cheapest prices for hotel rooms when, in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago.”
It explains: “Trivago’s website aggregates deals offered by online travel sites (like Expedia, Hotels.com and Amoma) and hotel proprietors for available rooms at a hotel and then highlights one price out of all their advertisers, which the ACCC alleges created an impression it is the best deal. However, in many cases the highlighted price was not the cheapest available at that hotel.”
ACCC Chair Rod Sims said: “We allege that consumers may have formed the incorrect impression that Trivago’s highlighted deals were the best price they could get at a particular hotel, when that was not the case. Trivago based its rankings on the highest cost per click it would receive from its advertisers.”
“We allege that because of the design of Trivago’s website and representations made, consumers were denied a genuine choice about choosing a hotel deal, by making choices based on this misleading impression created by the Trivago website.”
The ACCC also alleges:
- Trivago’s online strike-through price comparisons were false or misleading because they often compared an offer for a standard room with an offer for a luxury room at the same hotel, creating a false impression of savings offered for the standard room.
- By not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel. Further, hotels may have lost potential business as a result of this alleged conduct.
Mr Sims added that consumers who visited Trivago’s website overwhelmingly clicked on the most prominently displayed offers for each hotel.
“This case highlights growing concerns the ACCC has in relation to comparison platforms, and on how algorithms present search results to consumers,” Mr Sims said.
“We are very concerned that such platforms convey an impression that their services are designed to benefit consumers, when in fact listings are based on which supplier pays the most to the platform”
“Businesses must ensure the nature of search results, such as if they are sponsored or paid for, is made clear to consumers or they risk contravening the Australian Consumer Law.”
Chief Executive Officer of the Accommodation Association, Richard Munro, welcomed the ACCC action.
“The ACCC deserves credit for seeking to hold Trivago to account – and this should be one of many ways our competition regulator is scrutinising the practices of Trivago and offshore-based online travel agencies, which overwhelmingly dominate the Australian accommodation booking market,” he said.
“Hikes in commissions, a lack of professionalism in their dealings with operators of accommodation businesses, compelling accommodation operators to agree to room-rate price parity clauses, paying virtually no tax in Australia and employing very few Australians are among the many ways the likes of Trivago and offshore-based online travel agencies are wrecking balls for Australia’s accommodation industry.
“If unethical and unlawful practices by Trivago and offshore-based online travel agencies operating in Australia is proven to have taken place, guilty parties deserve to face the full weight of Australian law.”
“The Accommodation Association urges the ACCC to investigate the relationship between Trivago and its parent company, Expedia, to help ensure that Australian consumers and Australian accommodation operators are not being ripped off.
“The Accommodation Association re-states its position that room-rate price parity clauses should be banned in Australia immediately.”