Cheap rooms? Probably
not? Trivago’s top deals are hotels which pay the most
The Trivago website creates the impression that it
quickly and easily identifies the cheapest available hotel
room responding to a consumer’s search.
But is the impression a transparent comparison of rooms,
or is it manipulated and false?
The Federal Court of Australia has found that Trivago
misled the public by promoting hotels as having cheapest
rooms when it was true only 33.2% of the time. The Court
will impose pecuniary penalties on Trivago for contravening
the Australian Consumer Law.
The decision is Australian Competition and Consumer
Commission v Trivago N.V.  FCA 16 (20 January
2020) (Moshinsky J).
In this article, we review the Court’s reasons as to how
the Trivago website contravened the Australian Consumer
The Trivago Business Model
Trivago N.V. is a foreign company, incorporated in the
Netherlands. It carries on business in Australia by
conducting an online search and price comparison platform
for travel accommodation. Trivago has an Australian website.
Consumers use the website to quickly or easily identify
the cheapest rates available for particular hotel rooms.
They do not pay a fee to access the Trivago website.
The Trivago website acts as a metasearch site and not as
a direct booking site. If a consumer clicks on an offer,
they are taken to the booking site where they complete the
Trivago interacts with the Online Booking Site’s
databases and displays accommodation offers in response to
consumers’ searches. There are currently 400 Online Booking
Sites which use Trivago. They are either travel agencies
such as Expedia, Wotif.com. Hotels.com and Amoma or
accommodation providers such as hotels and serviced
The Sites pay Trivago a fee, referred to as a Cost Per
Click (CPC), if a consumer clicks on their offer on the
Trivago website. The CPC is not fixed. There is a minimum
CPC determined by Trivago, but Online Booking Sites bid
higher amounts to improve their exposure. The CPC is
Trivago’s principal source of income.
The Trivago website
The Landing Page displays a selection of hotel
rooms and the Trivago Logo. It had a slogan “Find your ideal
hotel for the best price” which was later changed to “Find
your ideal hotel and compare prices from many (different)
websites”. These were the Lowest Rate Statements which the
Court found to be misleading. These statements were repeated
in television advertisements.
The Initial Search Results Page displays search
results for the city or region, stay dates and room type the
consumer has selected. For example:
In this listing, note the Strike-Through Price
(the Red Price), and the Top Position Offer in green
of $295 appear above the “View Deal” click-out button which
takes the consumer to the Booking.com website. Note also the
Hotels.com offer which appears to the left in grey and in a
smaller font. Finally note the “hover-over” which explains
the Strike-Through Price. The Court found this display to be
The computer science experts agreed that:
- The Trivago Top Position algorithm calculates a
“composite score” from these inputs: the offer price,
the CPC, the priority modifier; the hotel position,
average historical price, historical click-through rate;
and the minimum price, maximum price, minimum priority
CPC, maximum priority CPC, minimum gain and maximum
gain. Non-price attributes are not used in the
algorithm, such as free breakfast, refundable tariffs,
bed size, free Wi-Fi and Pay at Check-in.
- Trivago did not disclose the ‘weights’ used for the
inputs in the algorithm, and did not call any employees
to explain how it worked. The Court found that the CPC
was a very significant factor, and also that any offers
which were lower than the minimum CPC were filtered out.
- Higher priced hotel offers were selected as the Top
Position Offer over alternative lower priced offers in
66.8% of listings. The most common reason was a
difference in CPC paid. Conversely, the Top Position
Offer was the cheapest offer in only 33.2% of listings.
The consumer behaviour expert evidence was that:
- Trivago used the decoy (or attraction) effect by
positioning the higher priced option in red next to the
Top Position Offer – the strike-through reinforces the
- Consumers are used to believing that the comparison
price will be for the same room.
- Many consumers are likely to interact only briefly
with the website.
- The layout of prices, be it font sizes or colours,
has a significant impact on user behaviour and, thus, on
For more detail on this evidence refer to the Marketing
Commentary at the end of this article.
Contravention of the
Australian Consumer Law
The relevant class of consumers was members of the public
looking to book accommodation online. They are assumed to
have some familiarity with using the internet and making
bookings online, but have not used Trivago before.
In the period 1 December 2016 to 3 January 2018, there
were 20,039,530 sessions on the Trivago website where the
Top Position Offer for a hotel listing was clicked.
The ACCC alleged four breaches of the Australian
Consumer Law. The Court found in favour of the ACCC on
all four, as follows:
- Cheapest Price Representation was made when
the words “best price” are used, which is synonymous
with “cheapest price”. The whole point of the Trivago
website was to help the consumer quickly and easily
identify the cheapest price for the hotel.
The Court found that Trivago misled the public as to the
nature, characteristics and suitability for purpose of
the accommodation search service provided by the Trivago
website by making the Cheapest Price Representation. The
reasons included that the Top Position Offer was
incomplete as the website did not display CPC bids less
than the minimum threshold set by Trivago, and in only
33.2% of cases was the “best price” the cheapest on
- Strike-Through Representation was made when a
price strike-through appeared. The implicit
representation was that the Strike-Through Price and the
Top Position Offer were, apart from price, ‘like for
like’ in terms of the same room category. The hover-over
did not dispel the impression because it did not state
that the Strike-Through Price may relate to a different
The Court found that Trivago had misled and deceived the
public by the Strike-Trough Representation.
Later on, Trivago used a Red Price Representation
instead of a Strike-Through Representation. This did not
alter the Court’s finding.
- Top Price Representation was made when
Trivago represented that the Top Position Offers were
either the cheapest available offers or that they had
some other characteristic which made them more
attractive than any other offer for that room.
The Court found that the presentation of the Top
Position Offer in the far right column in green, in a
relatively large font, with white space around it and
above a green “View Deal” button, created the overall
impression to the consumer that this was the best offer
for the hotel room, either in terms of price or some
The Top Position Offer determined by the algorithm is
not the cheapest offer for reasons given above. Nor is
it more attractive because the Top Position algorithm
does not use non-price attributes of the offers to
determine the composite score. The hover-over did not
dispel the impression because it did not disclose the
significance of the CPC in the selection of the Top
Position Offer in the algorithm.
The Court found that Trivago had misled and deceived the
public by its conduct and by its representations in that
the Top Price Offer was not the cheapest offer for the
room, nor did it have some other characteristic that
made it more attractive than any other offer for the
room and that the comparison was not like for like in
terms of room type.
- Additional conduct allegations were made when
representations were made that the Trivago website
provided an impartial, objective and transparent price
comparison to identify the cheapest available offer for
a particular (or exact same) room at a particular hotel.
This applied especially to the television
The Court found that Trivago had misled and deceived the
public by its conduct and representations because the
search selection was heavily influenced by the CPC, that
is, the amount the booking site or hotel paid Trivago if
the consumer clicked on an offer.
Note: Not all of these findings applied for the whole
period under examination, which was between 1 December 2016
until 13 September 2019, because Trivago made a number of
adjustments to its website during that period.
The Court will set a hearing in relation to relief,
including pecuniary penalties.
The ACCC made these comments in its media release after
the decision Trivago misled consumers about its hotel
room rates (21 January 2020)
“We brought this case because we consider that Trivago’s
conduct was particularly egregious. Many consumers may have
been tricked by these price displays into thinking they were
getting great discounts. In fact, Trivago wasn’t comparing
apples with apples when it came to room type for these room
rate comparisons,” ACCC chair Mr Sims said.
“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 with consumers about this so that
consumers are not misled,” Mr Sims said.
Marketing commentary by
Michael Field from EvettField Partners.
Consumer trust in online information is at an all-time
low, largely driven by concerns about data collection,
privacy and use of data by search engines and social media
That being said, consumers still want to be able to, and
should be able to trust the information they source online
from purportedly reputable vendors, especially if they
intend to rely on that information to make purchase
decisions. As such, consumers will rely on the brand,
reputation and marketing of online price comparison sites to
assess the trustworthiness and reliability of the
Trivago have done themselves and the broader online price
comparison website category a huge disservice by
deliberately deploying manipulative marketing strategies to
deceive consumers, misusing the trust consumers place in
their brand in the process.
The judgement relied on expert evidence from Professor
Slonim to examine the consumer marketing perspective. To
summarise his evidence, Professor Slonim dispels the myth
that consumers are ‘maximizers’ who gather all of the
available information on all of the available options to
come to a rational decision to ‘optimise’ their purchase
As consumers are time poor, and flooded with choices,
there is a trade-off that takes place in the mind of the
consumer whereby they aim to minimise the amount of time
spent searching and comparing, especially if the perceived
benefit is not high enough to justify the investment. For
example, it may not be worth spending an additional hour
online searching and comparing prices if the additional
saving is likely to be worth less than the time spent
Trivago would have, or should have known that their
actions would be likely to deceive consumers. There was a
clear commercial benefit for Trivago to maintain the
deception as they continue to earn CPC revenue from
advertisers willing to pay a premium for position.
The casualty in this judgement is consumer trust.
Marketers would be well advised to heed the lesson, review
their marketing strategies and ensure they are compliant
with the relevant Australian consumer laws. This is
especially true for international brands wishing to enter
the Australian market.