Watchdog wants NZ Trivago investigation
Australian case shows consumers can’t rely on aggregator sites for the best deal, experts say. John Anthony reports.
There are growing calls for the Commerce Commission to investigate and prosecute online travel agents such as Trivago. In a landmark ruling, an Australian court found the hotel deals website guilty of misleading customers.
Online booking agents are the first port of call for many tourists when holiday planning.
Trivago, Expedia, Hotels.com and Booking.com have become household names that have changed the way the accommodation sector operates.
Instead of booking direct with hotels and motels, tourists search these websites which aggregate deals offered by online booking sites and accommodation providers’ own websites for available rooms.
They’ll serve up the ‘‘best deals’’ to customers and, if a room is booked, take a commission on the sale.
But the transaction doesn’t always work out in the best interests of the accommodation provider or customer.
This week the Australian Federal Court found Trivago misled customers on which room deals were best.
The case was brought by Australian consumer watchdog the ACCC which argued that rather than serving customers the best deals, the aggregator promoted its biggest advertisers.
Trivago’s TV advertisement says Trivago searches hundreds of websites at the same time and shows the most popular hotels.
‘‘Trivago makes it easy for you to find the ideal hotel for the best price,’’ a woman in the advert says.
A hearing for penalties against Trivago will be held at a later date but the maximum penalties per breach of Australian consumer law, including making misleading representations, is A$10 million (NZ$9.6m), three times the value of the benefit received, or 10 per cent of annual turnover in the preceding 12 months if the court cannot determine benefit obtained from the offence, which ever is the greater.
Trivago is owned by Nasdaq-listed company Expedia, which is worth about US$16 billion (NZ$24b).
No company by the name of Trivago is registered with the New Zealand Companies Office but Expedia New Zealand is.
Its sole shareholder is EXP Holdings in Luxembourg and its holding company, Expedia Group, is registered to a Washington, United States, address.
It has not filed annual financial statements since 2015, at which time it made an after-tax profit of just $28,000 in 2014.
In 2018 the commission investigated Trivago’s pricing in relation to additional taxes and tariffs and decided not to take enforcement action.
A commission spokesman says it received 18 complaints about Trivago since January 2015.
The commission is not investigating Trivago but will liaise with the ACCC to ensure that any changes the company makes to its practices as a result of the Australian case are echoed in New Zealand, the spokesman says.
That’s not enough for independent watchdog Consumer NZ.
Its head of research, Jessica Wilson, says it wants the commission to investigate Trivago and other online booking agents and take legal action if any were found to be in breach of the Fair Trading Act.
‘‘We would like action taken here,’’ Wilson says. ‘‘We consider there to be grounds for court proceedings.’’
It was becoming increasing difficult for consumers to know whether they were getting a ‘‘legit’’ deal on booking agents’ sites, she says.
Commerce and Consumer Affairs Minister Kris Faafoi says misleading behaviour worries him but he will leave it to the commission to take appropriate action.