Federal Court's decision against Trivago will have significant consequences for the accommodation industry

Key takeaways

  • The Federal Court of Australia found accommodation website Trivago engaged in deceptive and misleading conduct.
  • The decision is likely to significantly detract from the very reason consumers use accommodation booking websites in the first place
  • Accommodation providers might experience an increase in the number of customers coming directly to them with booking inquiries.

The Federal Court of Australia’s decision that accommodation website Trivago engaged in deceptive and misleading conduct is likely to have significant consequences for accommodation online search and price comparison platforms.

It is also likely to lead to an increase in the number of customers coming directly to accommodation providers with their booking inquiries.

On January 20, 2020, The Federal Court of Australia found Trivago had engaged in misleading and deceptive conduct in breach of the Australian Consumer Law (ACL) in its website and television advertising of hotel room rates. 

The Australian Competition and Consumer Commission (ACCC), which is the regulatory body charged with enforcing the ACL, had claimed Trivago had misrepresented the situation when it said it was offering the cheapest available accommodation rates or that there was some other feature of the offer which made it the best offer for the consumer. 

The Federal Court found:

  1. Trivago used an algorithm to prioritise the display of online hotel booking sites which paid Trivago the highest cost-per-click rate in a way which misled consumers to believe the display represented the cheapest available offer when that was not necessarily true.
  2. Trivago misleadingly compared rates of different standards of rooms to create a false impression of the cheapest available offer.
  3. Trivago misleadingly identified offers meant to have some other characteristic which made them more attractive than any other offer but did not have such characteristics.

The decision is likely to have significant consequences for accommodation online search and price comparison platforms and their business model.

To ensure they do not engage in misleading and deceptive conduct in future, these businesses will need to clearly disclose to consumers on their platform that the displayed results are based on rates paid to them and do not necessarily represent the cheapest available offer.

This is likely to significantly detract from the very reason consumers would use the platform in the first place. It could also be expected the court’s decision will apply to other online search and price comparison platforms in other product and service sectors. 

The advice for consumers is to contact accommodation operators directly to check whether they are getting the cheapest available offer and the best deal.

They may be surprised by what they find.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.