Hot topics for the travel industry and consumers

 

 

Trivago's bag of tricks exposed

Trivago is a popular website which allows the public to compare hotel prices.

If you enter your destination and stay dates, a range of hotel rooms will be displayed. At the top of the list are the best room rates for like-for-like rooms.

If the traveller clicks on a room price, they will be redirected to the hotel's booking site to make the booking.

So where does Trivago make its money? Trivago does not charge a commission to the hotel for the booking. Instead, Trivago charges the hotel 'pay per click'. The amount hotels pay per click is left to the hotel, with the incentive being that the more the hotel offers to pay per click, the higher the ranking in the search.

Three years ago, the Australian Consumer Watchdog - the ACCC (Australian Competition and Consumer Commission) - began investigating misleading practices Trivago used in its marketing

Recently, the Federal Court of Australia found Trivago guilty of four misrepresentations, or 'tricks'. They were:

  1. Find cheap hotels on Trivago - The Court found that the hotel rooms on top of the list were the cheapest only 33.2% of the time. The reason was that Trivago's Algorithm favoured hotels which paid higher fees per click.
     
  2. Price comparison - The Court found that the higher red strike-though price which appeared on top of the best price was not for a comparable room.
     
  3. Highlighting the top room price - The Court found that Trivago went to great lengths to highlight the top room price, without making it clear that it was the top room only because it paid the highest fee per click.
     
  4. The website was transparent - the combination of 1, 2 & 3 meant that the website was not impartial, objective and transparent, even though it gave that impression.

For more details on the Federal Court decision, click How the Trivago online business model failed the Australian Consumer Law test

 


 

If You injure yourself on holidays the fine print might take away your claim

Walking along a jetty, swimming at a beach or in a pool, snow and surf skiing, boating, dolphin and whale watching, and going on theme park rides are all enjoyable holiday activities.

No one gives a thought about suffering a serious injury, but injuries happen every day. And when they do, apart from the pain and suffering there are hospital, medical and physio expenses, there is time off work and the cost of carers and helpers.

Who pays for these? Or more to the point, can you recover these expenses and costs from the owner of the place, such as the Council, or the operator of the activity?

The first answer lies in the Civil Liability Laws. The second answer lies in the fine print that the Laws allow the owner or operator to exclude liability.

The image at the top is the new sign Coffs Harbour Council has placed at the entry to its famous jetty which contains many warnings.

The sign was put up after the Council lost a NSW Court of Appeal case where it was ordered to pay more than $500,000 because its previous sign was not clear enough. That explains the legalese in the wording!

But in most cases, the sign or warning is clear enough and the Council or operator is not liable.

For my case summary on the Coffs Harbour Jetty case click

 


 

For viagogo, profit comes before all else

Rarely have I heard a Judge be so scathing about a party's misbehaviour as Justice Katzmann was about viagogo! This is a selection:

"Viagogo’s responses give it the appearance of being a company that is indifferent to the interests of Australian consumers and which prefers to elevate its own profit motives above those interests, even when on notice of the potential for harm being done.”

"The representations were on an industrial scale for the relevant period."

“Viagogo’s corrective action [to change its website] was taken very late [some time after the delivery of the liability judgment] and for it was the legal equivalent of drawing teeth.”
Small wonder the penalty was $7 million.

For more, see this link

 


 

A Machiavellian plan?

Niccolò Machiavelli is famous for his clever political plans in his book The Prince written in 1513.

This is the story of a modern day Machiavellian plan.

The scene is a restaurant bearing his name, Machiavelli Ristorante Italiano in Clarence Street Sydney.

The players are the restaurant manager and the investor.

The plot The players jointly purchased the restaurant for a price of $850,000, of which $450,000 was paid in cash to an associate of the seller, which the manager paid, and $400,000 was paid under a proper Contract, which the investor partly financed.

The business was awash with cash: the staff wages were paid in cash stuffed into envelopes, suppliers were paid in cash and the players paid $1,000 a week to each of their families in cash. They kept two sets of books - the tax books without the cash entries and the true books with the cash entries.

The players started to argue. The manager sidelined the investor by blocking online access to the financial accounts by making them read-only.

The Machiavellian Plan The investor decided on a plan to force the manager to buy him out for $600,000 by using the threat of liquidating the business as his bargaining lever. The manager refused. The investor went to court to ask the court appoint a liquidator claiming he was being oppressed because access to the financial accounts was restricted.

The result Justice Black was appalled by the cash transactions and the tax evasion. He decided not to help either the investor or the manager and refused to make court orders for a buy out or for the appointment of a liquidator. Justice Black would have referred the court file to the Australian Taxation Office had the parties not voluntarily disclosed the true position to the ATO before the hearing.

The moral The courts won't help people with Machiavellian plans if they are running a cash business.

For my case note click on Don't be a minority shareholder without a shareholders agreement for protection

 


For COVID-19 travel refunds, the ACCC sits on the fence

The ACCC - the Australian Competition and Consumer Commission - is the Australian Consumer Law watchdog.

The ACCC provides the latest information on consumer rights, travel and event cancellations in relation to COVID-19 on its website with a special Q&A section: My flight, tour or cruise has been cancelled. Am I entitled to a refund?

Allowing for the fact that it is impossible to lay down general rules for an industry as diverse as the travel industry - from flights, cruises, day trips, tours, resorts, hotels and sports packages - the rules the ACCC lays down are vague and contradictory. For example:

  • If your travel is cancelled the ACCC expects that you will receive a refund or other remedy, such as a credit note or voucher, in most circumstances.
     
  • If your travel is cancelled due to government restrictions, this impacts your rights under the consumer guarantees. However, you may also have other remedies outside of the Australian Consumer Law.

Allow me to answer the question Am I entitled to a refund? in this way:

  1. If travel is cancelled because of COVID-19 travel restrictions, the consumer's right to a refund does not apply because the cancellation is not the fault of the travel supplier.
     
  2. The ACCC will allow a travel supplier to issue credit note or voucher as an alternative to a refund for COVID-19 cancellation, provided that the expiration date is far enough in the future for it to be used.
     
  3. If the consumer insists upon a refund, and the travel supplier is willing to give a refund, then it is entitled to charge a cancellation fee and/or retain the travel deposit (in accordance with their terms and conditions).

For more details on refunds for COVID-19 travel cancellations, click on my article My flight, tour or cruise has been cancelled because of COVID-19 travel restrictions. Am I entitled to a refund?

 


 

Four reasons why Trivago hotel room reviews can't be trusted

The Trivago hotel room comparison website was put under the spotlight by the Federal Court of Australia last week, and was found wanting! As the Court put it, 'Trivago misled the public as to the nature, characteristics and suitability for purpose of the accommodation search service provided by the Trivago website'.

The Court found that Trivago hotel room reviews can't be trusted for these four reasons:

  1. The hotel rooms are reviewed by a secret algorithm. But just like a cheap pizza is made with few ingredients, Trivago displays the cheapest hotel room by inputting only prices in its algorithm - it does not include non-price attributes such as free breakfast, refundable tariffs, bed size or pay at check-in as inputs.
     
  2. The Online Booking Sites pay Trivago a Cost per Click - a fee each time a customer clicks on their link. Trivago rewards Booking Sites and Hotels which offer to pay the most per click with 'Top Deal' status. And Trivago punishes Booking Sites and Hotels who won't pay the minimum it demands per click by leaving them out of the room comparison.
     
  3. The hotel room comparisons are not 'like for like' because the comparisons are not necessarily for the same room type. A hotel room may be cheaper because it can be overlooking a carpark, compared with a hotel room which looks the same internally but is overlooking the sea. This is not mentioned.
     
  4. The 'Top Deal' is displayed is visually appealing way. It has a relatively large font, has a white space around it, it is green in colour above a green "View Deal" button. The comparison rooms are in small grey font to the left. See the image. Behavioural scientists said that the time-poor consumer would click the button without reviewing the comparable rooms.

The Court concluded that in only 33.2% of the time was the 'Top Deal' highlighted by Trivago the cheapest price.

For a full analysis of the Court's decision, click on my case note Cheap rooms? Probably not? Trivago's top deals are hotels which pay the most

 


 

Do you have a right to peace and quiet (if your neighbour is a hotel)?

If you buy an apartment or house next door to a long-established hotel, do you have a right to complain about the crowd noise from patrons or the loud music?

Complain is what Mr Ammon did after he bought a luxury three bedroom apartment in the Raffles Hotel (Apartments) which overlooked the beer garden and the Riverside function room of the Raffles Hotel (see the low building in the centre of the image).

He brought the little-known legal action for tort for private nuisance. He claimed that the loud noise from the hotel caused a 'substantial and unreasonable interference' with his peaceful enjoyment, especially on Wednesday, Thursday, Friday and Saturday evenings when the music was played after 9:00 pm at night. He complained he was unable to sleep, read his book, and watch the TV, even with the balcony doors and windows closed.

The Court of Appeal of Western Australia were not convinced.

But it was not the 'hotel was there first and so don't complain' argument that won out.

It was the 'what do you expect when you buy close to two highways where the traffic noise is higher than the crowd noise and the music from the hotel most of time' that won the day.

As the court said, you have no right to peace and quiet. You must ask whether the noise is reasonable for the locality. In this case, it was.

The lesson is that if the owner of the hotel applies to extend the hours of operation, or applies for a permit for renovations or extensions, the time to complain is when the application is made.

It is a lot easier for a local authority to impose and enforce a condition or regulation relating to noise levels than it is for a neighbour to succeed in an action for private nuisance for noise pollution.

For my case note click Do you have a right to peace and quiet (if you live next door to a hotel)?



Raffles Hotel Apartments – low building centre


 

Whatever you do, don't annoy the voters!
New laws for Airbnb rentals to start in 2019 in NSW

The Castle is a great movie because it captures the emotional attachment Australians have to their home and to living a friendly and peaceful neighbourhood.

Town planning laws support this by strictly separating residential from business and commercial areas, with exceptions for home offices and occupations.

However, Airbnb style short-term rentals have disturbed the neighbours, especially in strata buildings, because the guests come and go frequently, some are noisy, some hold parties and some cause damage. They have disturbed the Local Councils because Airbnb rentals introduce a commercial activity into residential areas.

For the past three years, the NSW Government has been searching for a compromise between encouraging tourism and allowing people to make extra money on the one hand, and complaints by voters of increased levels of noise and disturbance in residential neighbourhoods on the other.

Now the NSW Government has introduced new laws to regulate short-term rentals.

In summary:

  • Homestays are legal all year round if the owner-occupier is renting a spare room, a flat or a studio as a short-term rental in their home. No Council approval is needed.
     
  • Whole house or apartment short-term rentals are legal up to 180 days per year, where the owner-investor is not present. This limit applies to Greater Sydney. Elsewhere in NSW, there is no upper limit on the number of days. No Council approval is needed.
     
  • If the apartment is in a strata building, the Owners Corporation can totally ban owner/investors from using their apartment for short-term rentals, but not owner/occupiers from using the apartment for short-term rentals when they are away, such as on holidays (for up to 180 days per year). A special by-law is needed, passed by a 75% majority, to ban short-term rentals
     
  • All hosts will need to register their property. Airbnb hosts, guests, holiday letting agents, etc will need to comply with a code of conduct to keep the neighbourhood peaceful, and observe rules for parking and garbage disposal.

Of course, there are many fine details. To find out more click Be ready for the new Airbnb / short-term letting laws which will start in 2019 in NSW


Meriton in trouble for filtering out negative guest reviews

The long arm of the law has caught Meriton Suites and has fined it $3 million for filtering out negative guest reviews, leaving the favourable reviews of its serviced apartments.

While Meriton is known as a high rise apartment builder, it has 13 high rise serviced apartment buildings in Sydney, Sydney Surrounds, Brisbane and the Gold Coast. The hotel business is proving to be very successful, with 4 more high rise buildings of what it calls Meriton Suites under construction.

By encouraging guests to post reviews on TripAdviser, the world's largest travel website, a hotel can increase its ranking, gain more prominence, and increase bookings. To encourage guest reviews, TripAdvisor provides a service where if a hotel supplies it with the email addresses of its guests and an email template, then it will email the guests and prompt them to write reviews. It is called Review Express.

Meriton Suites knows that to prosper in the highly competitive accommodation industry, it needs to encourage favourable reviews. So it adopted a company policy that the check out clerk would ask "Have you enjoyed your stay?" If the response was negative, they would add 'MSA" to the guest's email address before sending it to TripAdvisor, to ensure it would 'bounce'. And if there was a major service disruption, such as lifts not working, they would not send the email address to TripAdvisor at all.

The Federal Court has held that this is deceptive conduct, in breach of the Australian Consumer Law. Meriton was ordered to pay a $3 million fine, to not engage in manipulating guest reviews for 3 years and to adopt a strict Compliance Policy.

The lesson for Meriton is to say ‘sorry’ and do its best to deal with the complaint.

For more information, click on my case note Meriton Suites fined $3m for manipulating TripAdvisor Reviews


New NSW policy welcomes short stay rentals (Airbnb style)

On 5 June 2018, the New South Wales Government announced a new policy for hosts for short-term Airbnb style holiday letting. The new policy will affect both owner-occupiers and investors.

The key is a new cap of 180 days in any one year on short-term lettings for an investment property, meaning a property that is not owner-occupied. The cap does not apply to owner-occupiers who rent a spare room or rooms.

Owner-occupiers - who rent 'rooms' in houses and home units anywhere in NSW - There is no cap on the number of days in a year that rooms can be let for short-term lettings. This applies to owners who let part of the house for short-term lettings, and live in another part. If breakfast is served, a B & B Licence might be needed from the Local Council.

Investors - who rent 'whole' houses and home units outside of Sydney - There is no cap on the number of days in a year that the whole house or home unit can be let for short-term lettings.

Investors - who rent 'whole' houses and home units in Greater Sydney - there is a cap of 180 days in any one year for short-term lettings. The boundary line for the Greater Sydney Region is yet to be drawn.

Investors - who rent home units in Sydney - If the Owners Corporation passes a 75% majority resolution (a special resolution) then it can ban short-term lettings by investors of 'entire' home units in the building. This cannot affect owner-occupiers who let rooms. It is not clear whether existing bans will be allowed to continue, or whether a new resolution will be needed.

For all short-term lettings, there will be a new mandatory Code of Conduct that hosts and guest must follow, accompanied by a two-strike policy, whereby hosts or guests who commit two serious breaches of the code within two years will be banned for five years and listed on an exclusion register.

For more details on the new rules, click Is the new NSW Government policy a win-win for short-term (Airbnb style) holiday letting?


Dreamworld tragedy highlights legal Duty of Care for theme park guests

Theme park visitors should not need to worry about being injured, let alone killed, on the rides. They expect to be in a safe environment - because of the legal duty of care the theme park operator owes to its guests.

The Thunder River Rapids Ride at Dreamworld was not safe on 25 October 2016. When the raft reached the top of the conveyor belt it collided with a stationary raft stuck at the top. The raft flipped, two adults were killed - crushed by the raft, two adults were killed - drowned when they fell through the slats in the conveyor belt, and two children were thrown clear.

Dreamworld breached its legal duty of care to maintain a safe ride, and will now face the consequences.

To read more click here


Sleaze has no place in the workplace
88% of sexual harassment complaints made to the Australian Human Rights Commission are workplace related. Unwanted and uninvited 'sharing' of sexual explicit photos and sexy texts and making comments of a sexual nature, are two forms of sexual harassment. In a recent decision by the Fair Work Commission, a Cabin Crew Supervisor on an unnamed airline was accused of sexual harassment which was primarily directed to female flight attendants.
 


Why good lighting on the stairs reduces liability risk for leisure venues
Good lighting on stairways is a top priority when operating a club, bar or restaurant to reduce liability


The Publican, the Patron, the Drinks and the Punch
Given that this incident happens on licensed premises, the publican has a duty of care to prevent injury to patrons, which they must fulfil or otherwise be responsible for compensation.


Are you a target for consumer claims?
Strategies for Travel Agents, Tour Operators, Airlines, Railway Operators and Accommodation Providers


We also offer a full service property practice; for further information go to http://www.businesslawyer.com.au


Disclaimer Notice

The articles in this website provide a summary of the law. They do not cover the whole of the relevant law on their subject matter.

Moreover, because legal language is avoided wherever possible, there may be some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances need to be taken into account when determining how the law applies to you.

For these reasons, the articles are not a substitute for professional advice. Nor can we accept any responsibility for any actions you may take or not take, after having read the articles.
Liability is limited by the Solicitors Scheme, approved under the Professional Standards Act 1994 (NSW)


Copyright Notice

The material in this newsletter is © Copyright. Anthony J. Cordato. Sydney 2007. A licence to use the material will be granted, on application, free of charge, where the material is to be used for self education or for non-profit purposes and an appropriate acknowledgement is made of the source of the material and the copyright. Permission may also be granted for commercial use of the material, on terms, on application. In all cases, unless permission is given, the reproduction of the material by written, electronic or other form is prohibited.
The pen and ink illustrations are by Yolande Bull, and are published with the kind permission of Lexis Nexis.

Anthony J. Cordato

© Copyright 2020 Cordato Partners