ACCC takes on Trivago over hotel price advertisements

The ACCC has instituted proceedings against hotel booking website Trivago.

Hotel website deceives travellers

The Australian Competition and Consumer Commission (ACCC) is putting the blowtorch to the online travel booking industry, and has instituted proceedings against hotel booking giant Trivago for misleading and deceiving customers.

The ACCC is taking Trivago to the Federal Court, alleging it made misleading claims about pricing in its television advertising campaign and on its website, breaching Australian Consumer Law.

The watchdog has taken exception to Trivago’s TV and web advertisements, on which the hotel price comparison service claims to be impartial and objective, allowing customers to find the cheapest prices for rooms.

However, it was recently revealed that Trivago prioritised advertisers that paid the highest cost per click fee to Trivago.

Trivago’s main source of revenue is the cost-per-click payments it receives, where advertisers are charged a fee each time a user clicks on one of their offers.

Trivago aggregates deals offered by online travel sites such as Expedia and Hotels.com, as well as from proprietors themselves, then highlights the one price out of all their advertisers that is supposed to be the best deal.

“Based on Trivago’s highlighted price display on its website, 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,” said ACCC Chair Rod Sims.

“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 that Trivago’s price comparisons were misleading because they often compared a standard room price with a luxury room price at the same hotel, creating a false impression of savings offered for the standard room.

“We also allege that 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,” said Mr Sims.

ACCC’s investigation revealed that Trivago users overwhelmingly clicked the highlighted 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,” said Mr Sims. 

“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.”

Have you used Trivago? Which online comparison sites do you use? Do you trust them?

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    COMMENTS

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    Jim
    1st Sep 2018
    7:37am
    Always suspected this was the case, I always check with the hotel to see if I can get the same price booking direct with them, more often than not you can get the same deal. Another misleading advert is certain groups say if you book with them you will get free wifi or free breakfast and free parking, if they are offering these things free you will usually find they are free whoever you book with.
    MICK
    1st Sep 2018
    8:18am
    My understanding is that all the big online hotel companies were owned by the same group.
    Advertising lies about the cheaper rooms. From personal experience you get a room which may look noce but has something substandard about it. I remember one room in Niagara where you could hear the wate water flowing through the pipes. Went on and off all night. A couple of others in a really bad position or older rooms.
    There is a reason you get a cheaper room. We lost faith in the advertising and now mostly do Airbnb which is not only cheaper but you get a full house. These are mostly good but you can be unlucky as well.
    Greg
    2nd Sep 2018
    1:33pm
    Nah Mick I think you were just unlucky - I was on the road with work for 10 years around Australia, stayed in around 700 different accommodations (mostly Motels) and regularly booked on Wotif, Booking.com, Last Minute and the rooms were fine, the odd one may have been a problem but I couldn't say for sure they were a cheaper "booking site" room.

    Become a good customer of numerous motels, talked a lot to the owners and they often explained the system to me, they would change what they do with putting rooms on those sites depending on how busy they were, they release a few rooms only on those sites, sometimes more later in the day if they sell the earlier ones but the motel is still not full.
    Karl Marx
    1st Sep 2018
    12:24pm
    This was covered by the ABC's The Checkout a few years ago and as Mick pointed out they are nearly all owned by the same company. Problem is most hotels & resorts are in a bind as most of them now rely on these sites for occupancy. I just go on google maps and search accommodation or if I know I'll be in a place on my travels that has plenty of hotels etc and low season just go in and ask price and if dearer than the web book online while sitting in the foyer lol
    Karl Marx
    1st Sep 2018
    1:21pm
    ABC's the checkout
    https://www.youtube.com/watch?v=FfkGVC1DF9s
    Alan
    1st Sep 2018
    6:37pm
    Trivago make a useful starting point but for international bookings you can't specify a non smoking room in the initial search process so I have tended not to use it and usually use agoda or booking.com
    KSS
    1st Sep 2018
    6:49pm
    Like Alan I uses these sites to get an idea of price, standard and location relative to where I want to be. Then I check elsewhere and finally book directly with the hotel of choice. Often booking direct you get the same or better deal AND if you need to change anything you can do it direct instead of having to go through an agent who may not even be in Australia. Also paying in local currency can be cheaper than paying in Australian dollars even with a currency transaction fee. Also dealing directly with the hotel and forming a bit of a relationship can mean other little niceties like a room upgrade, I have even had personal hand written notes left for me from the hotel manager. It pays to be nice!

    I do the same with flights too. Using sites such as skyscanner to find a flight then checking directly with the airline.
    Greg
    2nd Sep 2018
    1:37pm
    Exactly, people are just lazy if they use those sites - I too check availability/pricing find the right accommodation and book with them direct.
    Julian
    4th Sep 2018
    2:50pm
    I've long suspected this too. You can check other sites and for a few minutes invested, same some serious $. One particular site will refund the difference if priced over another. Of course they have to identical rooms. This year's holiday to Italy, I got back about $130 on 3 bookings plus 3 free rooms because I had accumulated 30 room nights over this and last year's holiday to the USA. A one for ten deal that's hard to beat.

    As for wifi, ALL hotels include this feature. Breakfast is another matter. All of the online bookings I made had breakfast as an add on, but not all hotel breakfast attendants checked our room number, leading me to believe that in some cases we paid for it twice. I went as far to ask one particular hotel manager who replied that the room always included breakfast. This proves that in this case, the on-seller pockets extra.


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