Earlier this year, the ACCC took online search engine giant, Trivago, to Federal Court over the fact that the organisation was making misleading hotel pricing representations in its television advertising and website.
 
In breach of Australian Consumer Law, the ACCC alleges that “from at least December 2013, Trivago ran TV advertisements presenting its website as an impartial and objective price comparison service that would help consumers identify the cheapest prices for hotel rooms when, in fact, Trivago’s website prioritised advertisers who were willing to pay the highest cost per click fee to Trivago” (Australian Competition and Consumer Commission, 2018).
 
The ACCC inquiry is welcome news for many independent hotel companies who are fighting to stand out in a sea of online travel agents (OTAs) and chain hotel brands, which typically have big voices and even bigger advertising budgets.
 
For years, Trivago has expertly used their marketing and advertising campaign to lull consumers into a false sense of security regarding hotel prices and accommodation deals. From the wholesome woman in blue, to the easy, melodic language, Trivago positions itself as reliable, transparent and trustworthy.
 
The fact that Trivago has the ability to skew search results is never mentioned.
 
A peek behind the curtain shows that organisations who participate in Trivago’s advertising program can pay to have a higher list ranking or appear as the cheapest deal available to the consumer, even if they are not the best deal available.
 
Based on a cost-per-click revenue approach, advertisers are charged a fee each time a user clicks on one of their offers, and in turn, Trivago receives a payment.
 
Considering marketing budgets alone, there is a larger chance that a global OTA, like Expedia or Wotif.com, have more money to spend on digital list rankings with Trivago than an independent hotel brand may.
 
Not to mention the fact that Trivago, Expedia and Wotif are all owned by the Expedia Group, which largely monopolises the OTA market.
 
While Trivago’s marketing techniques may be old news to hotel operators, it still poses an issue day to day, especially for smaller independents. It even makes Dick Smith pretty mad; his recent video assault on overseas OTA’s was both colourful and fiercely passionate.
 
Dick Smith’s call to action and the ACCC inquiry are steps in the right direction. Despite a noticeable rise in hotel direct booking campaigns globally over the last two years, efforts have not correlated to increased direct booking conversions. OTA’s and Trivago still reign supreme.
 
So how do you stand out in the crowd? You can create hotel loyalty programs, pump more cash into digital ad placements, incentivise guest purchases and reward direct bookers.
 
Failing that, if you can’t beat them, join them. We did.
 
Click here to view Abode Hotels' new video campaign.