Trivago has been fined $44.7 million by the Federal Court for making misleading representations about hotel room rates on its website and in television advertising.
In January 2020, the Federal Court found that Trivago had breached Australian Consumer Law by misleading consumers into believing its website would help them find the best deal or cheapest rates for a given hotel.
According to consumer watchdog the ACCC, Trivago used an algorithm which favoured online hotel booking sites that paid Trivago the highest cost-per-click fee and therefore did not highlight the cheapest rates for consumers.
“One of the ACCC’s key priorities is to hold online businesses accountable for their representations to consumers and to ensure consumers are fully aware of the way these supposedly free services actually work and what influences the prices they display,” said ACCC Chair Gina Cass-Gottlieb.
“The way Trivago displayed its recommendations when consumers were searching for a hotel room, meant consumers were misled into thinking they were getting a great hotel deal when that was not the case.”
Trivago admitted that between December 2016 and September 2019 it received approximately $58 million in cost-per-click fees from clicks on offers that were not the cheapest available for a given hotel. As a result, consumers overpaid hotel booking sites approximately $38 million for rooms featured in those offers.
“Trivago also mislead consumers by using strike-through prices which gave them the false impression that Trivago’s rates represented a saving when in fact they often compared a standard room with a luxury room at the same hotel,” Cass-Gottlieb said.
“Trivago’s conduct took advantage of consumers’ desire to find the best deal, and the Court’s decision to order such a significant penalty reflects the seriousness of Trviago’s conduct.”
The Accommodation Association said the decision highlights the value for Australian consumers in booking accommodation direct or through Australian travel businesses.
“On behalf of our members, the Accommodation Association welcomes today’s common-sense decision from the Federal Court on Trivago, however, for Australian hotels and motels the writing’s been on the wall for some time,” said Accommodation Association CEO Richard Munro.
“After surviving COVID-19 and closed borders, the harsh reality is that many of our members rely on a portion of their bookings generated through these platforms, and can find themselves stuck between a rock and a hard place.”
Munro said the Association is continually alerting the ACCC to exploitative practices and wants the ACCC to cast its net wider.
“[We want the ACCC] to review price parity rules where similar large, overseas based multi-national corporations threaten Australian accommodation providers with exclusion if the accommodation provider offers a better rate online,” Munro said.
“Australian travel consumers deserve access to the best available rates, and the only way to guarantee that outcome is to book directly with Australian accommodation operators or through your local travel business.”