The Australian Competition and Consumer Commission (ACCC) has initiated Federal Court proceedings against Trivago, alleging it made misleading hotel pricing representations in television and online advertising, in breach of Australian Consumer Law.
In its press release, ACCC alleges that in television commercials, Trivago presented its website “as an impartial and objective price comparison service, that would help consumers identify the cheapest price for hotel rooms when, in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago.”
ACCC allege that the Trivago website aggregates deals offered on online travel sites (for example, Expedia, Hotels.com and Amoma) and hotel operators, for available rooms, highlighting one price from these advertisers. In doing so, providing the consumer the impression that the highlighted price is the best available price for the room. In many cases investigated, this price was not the cheapest available – instead “Trivago based its rankings on the highest cost per click it would receive from its advertisers.”
ACCC contend that given the design of the Trivago website and representations made, “consumers were denied a genuine choice about choosing a hotel deal,” instead possibly making choices based on “this misleading impression created by the Trivago website.”
ACCC also alleges that online strike-through price comparisons (the cheapest offer Trivago receives from the most expensive booking site, for the hotel over the particular dates of stay), 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, ACCC assert that “consumers would likely have paid more than they otherwise would for the same hotel,” resulting in potential lost business for hotels.
An analysis of consumer behaviour by ACCC demonstrated those who visited the Trivago site, “overwhelmingly clicked on the most prominently displayed offers for each hotel.” ACCC Chair, Rod Simms reflected that “this case highlights growing concerns that ACCC has in relation to comparison platforms,” particularly regarding “how algorithms present search results to consumers.” Mr Sims expressed his concern that “such platforms convey the impression that their services are designed to benefit consumers, when in fact listings are based on the supplier who pays the most to the platform.” He reinforced that “businesses must ensure the nature of search results (if they are sponsored or paid for), is made clear to consumers” to prevent contravention of relevant Australian Consumer Law.
ACCC understands that television advertisements referenced in this advice were aired over 400,000 times from December 2013. In April 2018, Trivago ceased airing television advertisements featuring representations about price.
Nationally, TAA has met with ACCC on multiple occasions to provide insights and information from the hotel industry to assist them to explore the myriad of contracts and behaviours that exist in the OTA space. Our key concern has been ensuring that any exploration of these issues are not restricted to OTAs, but also include our members’ experiences.
Related information: ACCC press release