Trivago describes its service as helping you "find your ideal hotel and compare prices from different websites"...simple enough mission you would think!
The issue is that Trivago (officially) has two income streams. The first is where hotels are charged based on cost-per-clicks (CPCs): someone looks and/or books, they pay!
The second (lesser) stream is the data rich Hotel Manager Pro subcription service that allows participating hotels to manage their presence on the Trivago site.
But Trivago is a basic price comparison website (PCW) and consumers trust it to be honest in delivering what it promises. Well, it appears that Trivago has been less than honest in this regard for a considerable length of time.
Recently, in Australia, Justice Mark Moshinsky ruled that Trivago had contravened many sections of consumer law in that country by claiming that it offered the cheapest or best prices whilst actually presenting results based on the amount of money it would make alongside overriders, advertising inducements and backroom agreements with suppliers (i.e. hospitality providers). Additionally, the head of the ACCC stated that the conduct of Trivago was:
Particularly egregious, staggeringly bad; shocking; obviously wrong and wrong beyond any reasonable degree and that the court's 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.
Rod Sims, Chair of the Australian Competition & Consumer Commission
Trivago N.V. (NASDAQ TRVG), is a German technology company specialising in internet services for the hospitality industry as well as in the metasearch field. Accordingly, a large percentage of its actual revenue derives from selling private metadata to advertisers and social media companies
And it will comes and no surprise to anyone who has seen the volume of above the line and online advertising that their single largest expenditure item is marketing!
Basically, they collate and exploit public domain information whilst a) producing nothing themselves and b) hoodwinking users into utilising their service whilst profiting from skewed results and the resultant misuse of personal data.
And this isn't the first time or place Trivago has been in trouble for misleading or deceptive conduct. These include:
Selling rooms or room types that are not available at the time of booking thereby forcing customers to fork out forupgardes upon arrival.
Downgrading websites competitive to its owner Expedia and directing searches to it.
Return false hotel gradings in favour of advertisers and commission overrides
Extensive 'wordsmithing' on its website and ads to gloss over the fact that different room types have different prices and that some may not be available.
Hosting a considerable number of fake reviews
Whilst it's terms & conditions documents are both long and tedious, they are carefully worded to avoid the notion that they sell data but instead talk at length about 'sharing' with 3rd parties, thereby effectively transfering the responsibility for privavcy to them.
The ACCC and the EU think differently!
Given it's business model, the company thrives on the volume of traffic it directs to its site. Therefore,it relies on a heavy media spend (and it can afford it given that it's annual turnover exceeds US$1 MM).
And it has made an international star of it's last brand ambassador, GabrielleIts profit model also allows for a huge TV and social media advertising budget fronted in the UK and here by Aussie actress Gabrielle Miller.
Almost all price comparison websites would be out of business if they operated transparently. Simply put PCWs aggregate commonly available web prices from some vendor sites, and present these as 'best deals'.
Some vendors agree to pay commission overriders in order to get preference. In travel, the standard commission is around 10%. Trivago is alleged to have asked for up to 40% as a mix of standard commission, overriders, advertising subsidies, click-through fees and paid preferential ratings. As a consumer, you are paying for that!.
The ACCC has also been instrumental in enforcing similar actions against energy supplier comparison sites with considerable success.
The Court found Trivago misled customers into thinking its website offered impartial and transparent price comparisons up until at least July 2, 2018.
The judgment received yesterday from the court provides new guidance on how results of comparator websites, like trivago and others, should be displayed in Australia. trivago will closely review today's decision. We are working to quickly understand the implications of this decision on our website design and its overall impact on the Australian travel industry and the way websites are to be designed in Australia. We will continue helping millions of Australians research and find great accommodation deals and look forward to continuing to help our customers find their ideal hotel.
Let's hope so!
Caveat emptor, buyer beware...and we all understand the reality of T&C agreements...but we have to operate in an environment of transparency, something the internet promised, and can still offer...but only if trustlessly run by honest brokers.
The Expedia Group, an American travel company, are the majority shareholders in Trivago. The value of each share has declined from $19 to $6 during the second half of 2019...sometimes the figures don't lie!