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Trivago loses appeal after misleading consumers over hotel ads

November 5, 2020 Headline News 2 Comments Email Email

The Full Federal Court has dismissed an appeal by hotel comparison site Trivago against an earlier decision which found Trivago had breached the Australian Consumer Law by making misleading representations about hotel room rates on its website and television advertising

In January 2020, the Federal Court had ruled that Trivago had misled consumers by representing its website would quickly and easily help users identify the cheapest rates available for a given hotel.

The judge at first instance had found that Trivago did not sufficiently disclose to users that its website used an algorithm that gave prominence to accommodation providers paying Trivago a higher payment fee (cost per click), meaning that the most prominent offers were often not the cheapest offers for consumers.

The primary judge also found that Trivago misled consumers through the use of strike through prices and text in different colours because Trivago often compared the rate for a standard room with the rate for a luxury room at the same hotel.

Today’s decision by the Full Federal Court upholds the primary judge’s decision that Trivago’s website representations misled consumers.

“This is a win for consumers and is an important warning to comparison sites that they must not mislead consumers about the results they recommend,” ACCC Chair Rod Sims said.

“We brought this case because we were concerned that consumers were being misled by Trivago’s claims that their site was getting the best deal for consumers, when in fact they were shown the deals that benefited Trivago.”

“Trivago’s conduct meant that consumers may have paid more for a room at a hotel than they should have, and hotels lost business from direct bookings despite offering a cheaper prices,” Mr Sims said.

The matter will now return to the primary judge, who will consider the orders sought by the ACCC against Trivago at a later date. The ACCC is seeking orders for declarations, injunctions, penalties and costs.

Background

Trivago’s website aggregates deals offered by online hotel booking sites (like Expedia, Hotels.com and Booking.com) and hotel proprietors’ own websites for available rooms at a hotel and highlights one offer out of all online hotel booking sites (referred to as the ‘Top Position Offer’). However, Trivago’s own data showed that higher-priced room rates were selected as the Top Position Offer over alternative lower-priced offers in 66.8 per cent of listings.

Trivago’s revenue was primarily obtained from cost-per-click (CPC) payments from online hotel booking sites, which significantly affected that booking site’s appearance and prominence in search results.

In August 2018 the ACCC instituted proceedings against Trivago and in January 2020, the Federal Court found Trivago had breached the Australian Consumer Law when it made misleading representations about hotel room rates on its website and television advertising.

In March 2020, Trivago appealed the Court’s decision.

The following is an example of Trivago’s online price display taken on 1 April, 2018. For example, the $299 deal is highlighted below, when a cheaper deal was available if a consumer clicked “More deals” (underneath the offers from other booking sites in the middle panel).

 

A sample of Trivago’s TV advertisement as at 24 December 2017 is below:

Currently there are "2 comments" on this Article:

  1. gnits says:

    …..but how do you actually define ‘best price’… does it really mean the lowest price… or the price you get for an offer… can accc also go after tripadvisor which is doing the same cpc for business listing on top of annual fees…

  2. David Astley says:

    The 1 April 2018 price display shown in the article doesn’t really mislead the consumer because the ‘Top Position Offer’ doesn’t say it’s the cheapest, and it’s clear from the column next to it that there are cheaper rates on offer. You’d have to be rushing to make a booking to miss that. In any event, any astute traveller these days should know to check the hotel’s direct rates to be sure that the comparisons are “apples with apples” and not “apples with oranges”. Many hotels offer extras for direct bookings that are not available when booked through third-party booking sites, and even if they don’t you are much more likely to get an upgrade when you’ve booked direct with the hotel than when you’ve booked through a booking site.

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