Global hotel booking company Trivago, part of Expedia Group, has been hit with a massive fine of A$44.7 million (US$32.8 million) by the Australian Federal Court for misleading consumers about the hotel rates it offered.
The company admitted duping online customers but was shocked by the size of the fine, saying it was “very disappointed with the outcome”.
Trivago admitted that between December 2016 and September 2019 it received approximately A$58 million in cost-per-click fees from clicks on offers that were not the cheapest available offer for a given hotel, causing consumers to overpay hotel booking sites approximately $38 million for rooms featured in those offers.
The case was brought by the ACCC, Australia’s Competition and Consumer Commission watchdog, which said Trivago used an algorithm that placed significant weight on which online hotel booking site paid Trivago the highest cost-per-click fee in determining which rates to highlight on its website, and as a result often did not highlight the cheapest rates for consumers.
How Trivago markets its hotel comparison offers.
“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,” said ACCC chair Gina Cass-Gottlieb.
“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.
“This penalty sends a strong message not just to Trivago, but to other comparison websites, that they must not mislead consumers when making recommendations,” Cass-Gottlieb said.
Accommodation Association CEO Richard Munro applauded the Federal Court’s decision. “However, for Australian hotels and motels the writing’s been on the wall for some time,” he added.
“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.”
He said the association now wants the ACCC to cast its net wider and 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”.