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20jan trivago price tactics breach hero
29 January 2020

Trivago’s price tactics breach fair trading laws

Australian court found hotel price aggregator Trivago misled consumers.

Trivago’s promotion of hotels paying the highest commission and use of misleading price comparisons breached consumer laws, the Australian Federal Court has found.

Judge J Moshinsky concluded Trivago inaccurately presented itself as an impartial way of finding the cheapest hotel rates, after the Australian Competition and Consumer Commission (ACCC) took the travel website to court.

Acting as a hotel price aggregator, Trivago collected offers from a range of booking websites and presented consumers with a list of recommended hotels and deals after they typed in travel destinations and dates.

However, Trivago obtained different rates of commission from the booking websites – and regularly highlighted the websites paying more commission over those offering the cheapest rate.

According to Trivago data, there was a cheaper price – often obscured in the smaller “More deals” section – than the highlighted deal for two-thirds of all hotels listed. However, customers rarely spotted these less expensive offers.

Trivago refused to list cheaper offers, even in the “More deals” section, unless the booking websites’ commission met a certain threshold.

By prominently showcasing price offers in green, Trivago led consumers to believe the deal was either the cheapest offer or had some extra feature that made it the best offer, ACCC chair Rod Sims said.

“[However] Trivago’s hotel room rate rankings were based primarily on which online hotel booking sites were willing to pay Trivago the most.

“This decision sends a strong message to comparison websites and search engines that if ranking or ordering of results is based or influenced by advertising, they should be upfront and clear,” Mr Sims said.

The court also found Trivago’s price comparisons were misleading. The website often listed a more-expensive price in red against its recommended deal. This gave the consumer the false impression that by using Trivago, they were saving significant amounts of money.

However, the comparisons often pitted the price of a standard room against one for a luxury room.

The offending, which breached Australian consumer law, took place from December 2016 to September 2019. During this period, Trivago tweaked its price comparisons and information provided to consumers about the commission it received from booking websites.

Judge Moshinsky found, despite the changes, Trivago’s ranking of offers and price comparisons remained misleading.

A Trivago spokesperson said it is “working to quickly understand the implications of this decision on our website design, [the] overall impact on the Australian travel industry and the way websites are to be designed in Australia”.

The ACCC has requested Trivago pay penalty fines and courts costs. These will be determined at a later hearing.

What we found

When we investigated Trivago in 2018, we found price comparisons were like-for-like just 13% of the time.

For example, Trivago contrasted the $183-a-night cost of the Auckland Jet Park hotel’s standard room on Hotel Quickly with the $489 price of a one-bedroom apartment on Sembo.

Trivago also compared the price of a double room at Auckland’s SkyCity hotel on Amoma ($455 per night) against Expedia ($355 per night). However, the Amoma deal included breakfast, whereas Expedia’s package didn’t.

18nov trivago body

We considered these pricing tactics risked breaching the Fair Trading Act and filed a complaint with the Commerce Commission in 2018, asking it to investigate.

A commission spokesperson said it’s received 19 complaints about Trivago (including ours) since 2015. It had investigated complaints about additional taxes and tariffs but chose not to take enforcement action.

The commission didn’t investigate the misleading price comparisons we’d identified. “The ACCC has taken the lead and for the commission (or any other regulator) to mirror their investigation may not be the most effective use of our resources,” the spokesperson said.

The commission would liaise with the ACCC “with the objective of ensuring that any changes made by Trivago to their practices as a result of the case are also made in New Zealand,” the spokesperson said.

If you believe you’ve been misled by a website’s pricing tactics, report it to the Commerce Commission.

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