Australian Government Suing Trivago For Misleading Customers

For those of you who have not used hotel comparison site Trivago before, it promises to compare major hotel booking platforms (Hotels.com, Booking.com, Expedia.com, etc.) to show the best deal for each room type at each property. The idea is that you can be assured you are receiving the best price for the room you are booking, without having to check multiple hotel booking platforms, because it will do it for you.

I usually use Hotels.com to book independent hotels because of their fantastic 10% off Reward Night program which I have written about before, but will often cross-reference Trivago to check that I do indeed have the best price for the particular room and property I’m choosing. If Trivago does show the same room for more than 10% less than Hotels.com is showing, I will usually book the Trivago option.

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Trivago is owned by Expedia, and advertises heavily around the world. So even if you have not used the site, you may have at least heard of it.

Like all independent hotel booking websites, they receive a commission from the hotels they list, for each room booked through their platform — this is how they make their money (there is no booking or payment fee charge over and above the room price).

Australian Competition and Consumer Commission

The Australian Competition and Consumer Commission is an independent authority of the Australian Government, that is designed to protect consumers against unfair business practices, namely breaches of the Consumer Act 2010 (which was previously known as the Trade Practices Act 1974). You may be familiar with the phrase ‘misleading and deceptive conduct,’ which is probably the most famous wording from this act — retailers in Australia must not mislead or deceive consumers.

I did an entire subject at law school on Consumer Law many years ago.

Where the ACCC believes a retailer has breached the Consumer Act 2010 (i.e. where it may have engaged in ‘misleading and deceptive conduct’), it has the power to bring a case against a retailer in the Australian Federal Court. If successful, the Federal Court may penalise the offending retailer with penalties of up to AUD$10 million.

The ACCC successfully sued Australian hotel group Meriton for misleading consumers by manipulating TripAdvisor reviews, which I wrote about here.

ACCC v Trivago

The ACCC has instigated proceedings in the Federal Court against Trivago, claiming the television advertisements they ran over 400,000 times from 2013 to April of 2018, have mislead consumers in the following ways:

• Trivago represented itself as an impartial aggregation and comparison tool, that promoted the cheapest publicly available price for a particular hotel room.
• When customers visited the Trivago website, a particular price and deal would be highlighted by Trivago to the customer. The customer would believe this was the lowest available price, however it was in fact the deal that paid the highest amount of commission to Trivago.
• The savings shown on the Trivago website were not a genuine representation of the actual discount for that room, but rather showed a higher priced standard room, which was naturally more expensive than the cheapest room at the cheapest price.

Let me show you a dummy booking on Trivago to see if this is still happening.

Let’s say I’m searching for a room at the Hilton Paris Opera next year. Here are the Trivago results.

Now you can see from the results that the highlighted best deal/price is from Booking.com ($372). This suggests that it is $40 cheaper for the same room than the struck-out Expedia price of $412.

However you can see there are ‘More deals from $356,’ which is cheaper than the highlighted/suggested Booking.com price.

When comparing what type of room and product is offered by each of the three prices ($356, $372, and $412) I can see the following:

The cheapest Alpha Rooms option shows the same room type as the more expensive promoted Booking.com option.

So Trivago is not promoting the cheapest price for a Superior Room.

While Alpha Rooms and Booking.com may have slightly different cancellation policies (i.e. one may be more generous and therefore more valuable than the other) for the same Superior Room, Trivago is indeed promoting a more expensive price for the same room, even though they are supposed to promote the best price.

And what about the most expensive price for this room, the $412 option listed by Expedia?

Well in fairness it does include breakfast which would be worth the extra $40 (for two people), but it’s not showing a like for like, as it’s suggesting by booking with the promoted Booking.com option you will save $40 on the exact same room and inclusions as Expedia is charging for, when the Expedia option includes breakfast and the Booking.com option doesn’t.

Bottom line

I have occasionally booked with Trivago before, and must admit I was unaware of this tactic. While the example above shows a promoted price that is only slightly more expensive than the cheapest available price, it does indeed mislead consumers.

I’ll be very interested to see the outcome of the Federal Court case, and if Trivago is found guilty (and it appears they are still engaging in some of these practices), they can expect a severe fine just as Meriton did.

Have you booked with Trivago before?