- The Federal Court found Trivago breached consumer law after it misled customers about hotel rates on its ads.
- While Trivago claimed to help customers find the cheapest rates on any hotel, the court found it would rank hotels that paid Trivago the most.
- The ACCC highlighted that Trivago’s hotel rankings “often did not highlight the cheapest rates for consumers”.
- Visit Business Insider Australia’s homepage for more stories.
Hotel price comparison website Trivago has come under fire for misleading customers, after it promoted hotel rooms as the cheapest – when really it was getting paid the highest commission.
The Federal Court found the company breached Australian Consumer Law by making misleading claims about hotel rates on its TV ads and its website.
In its ruling, the court found that from at least December 2016, Trivago claimed its website would help customers find the cheapest rates on any hotel. However, the company used an algorithm that would favour the online hotel booking site that paid Trivago the highest cost-per-click (CPC) fee – a type of billing websites use based on how many times someone clicks on their ads – to determine the rankings on its website.
According to the ACCC, these rankings “often did not highlight the cheapest rates for consumers”.
Trivago is partially owned by Expedia Group. Its revenue comes mainly from CPC payments from online hotel booking sites. In this case, the CPC payments would affect that particular site’s prominence and appearance on Trivago’s search results.
“Trivago’s hotel room rate rankings were based primarily on which online hotel booking sites were willing to pay Trivago the most,” ACCC Chair Rod Sims said in a statement.
Trivago’s site pulls together deals for available rooms offered by hotels and online hotel booking sites like Booking.com and Expedia. It then highlights one offer out of all online hotel booking sites, which is considered the ‘Top Position Offer’.
But, according to the ACCC, Trivago’s very own data showed that more expensive room rates where chosen as the ‘Top Position Offer’ instead of cheaper ones in 66.8% of listings.
“By prominently displaying a hotel offer in ‘top position’ on its website, Trivago represented that the offer was either the cheapest available offer or had some other extra feature that made it the best offer when this was often not the case,” Sims said.
On top of that, the Federal Court found Trivago’s room comparisons that used text in different colours or strike-through prices gave customers a false idea of savings because they would often compare a standard room with a luxury room at the same hotel.
“Many consumers may have been tricked by these price displays into thinking they were getting great discounts,” Sims added. “In fact, Trivago wasn’t comparing apples with apples when it came to room type for these room rate comparisons.”
The Court also found Trivago misled customers into thinking its website offered impartial and transparent price comparisons until at least July 2, 2018.
The ACCC added that a hearing on penalties “will be held at a later date.”
A Trivago spokesperson told Business Insider Australia in an email, “The judgment received yesterday from the court provides new guidance on how results of comparator websites, like trivago and others, should be displayed in Australia. trivago will closely review today’s decision.
“We are working to quickly understand the implications of this decision on our website design and its overall impact on the Australian travel industry and the way websites are to be designed in Australia. We will continue helping millions of Australians research and find great accommodation deals and look forward to continuing to help our customers find their ideal hotel.”
So on your next travel trip, think carefully about your hotel bookings.