Trivago fined $44.7 million for lying about ‘best’ hotel deals

The Federal Court has ordered troubled hotel comparison website Trivago to pay $44.7 million for misrepresenting cheap hotel rates, in a decision that wraps up a case running for more than three years.

Consumers were led to believe they were being shown the cheapest options, while Trivago’s algorithm prioritised hotel ranking based on how much they paid in advertising. Advertisers were also invited to pay more to “block” rival offers from hotels that were offering cheaper rooms.

According to the competition regulator, two thirds of the listings shown to Trivago users were hotel offers priced higher than lower-cost alternatives, which were listed lower down. The first search result received around 80 per cent more traffic than the second.

The $44.7 million penalty is a win for the Australian Competition and Consumer Commission (ACCC), although the watchdog had been seeking $90 million in penalties.

Trivago admitted that it collected $58 million in profits through the cost-per-click fee model that did not display the cheapest hotel offer, leading consumers to overpay a collective $38 million for rooms.

The Australian Competition and Consumer Commission’s new chair, Gina Cass-Gottlieb, said it was a key priority of the watchdog to ensure consumers knew what was influencing ‘free’ online services.

“Trivago’s conduct took advantage of consumers’ desire to find the best deal,” Cass-Gottlieb said. The comparison website also gave consumers the false impression of getting a good deal by ‘striking out’ prices that were in fact comparing a standard room with a luxury room, she added.

“This penalty sends a strong message not just to Trivago, but to other comparison websites, that they must not mislead consumers when making recommendations.”