Why Trivago's trouble is helping keep travel agents cranking

Lucy, from the House of Travel campaign and the face of Trivago. Photos / Supplied

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There's a scene in an ad for one travel agent where a bar patron teasingly says he thought the bricks-and-mortar businesses would have gone the way of the dinosaurs a long time ago.

But House of Travel rebooted the ''Lucy'' ads last year with a message, and while it could be argued it could have been even blunter, it made the point that traditional agents are still here and they're changing.

Most importantly, the ads stressed that the traditional agent still has value against the surge of online competition from global giants Booking Holdings, Expedia and - arriving fast - Google.

The news this week was that Expedia-owned Trivago, the hotel room rate comparison company with a different friendly TV face to Lucy, was in fact doing very unfriendly things to its customers. It turns out that some of its global revenue of more than $1.4 billion a year was derived from rigging rankings.

The Dusseldorf-based company has been found guilty of misleading and deceptive conduct by Australia's Federal Court, for suggesting that top-listed prices on properties advertised on its site were the best.

Hotels were instead found to have been ranked based on commission - room rate rankings were based mainly on which online hotel booking offered the best return for Trivago.

In New Zealand, the Commerce Commission says there have been 18 complaints about Trivago. While there are no investigations into the company here right now, the probe by the Australian Competition and Consumer Commission (ACCC) ''had been noted''.

The New Zealand regulator says it will continue to communicate with the ACCC to ensure changes to the company's practices enforced across the Tasman would be replicated here.

This country's main travel industry body, the Travel Agents Association of NZ (Taanz) represents about 75 per cent of ''traditional'' agents, excluding Flight Centre, the biggest single player with up to 40 per cent of turnover.

The association has a new president, Brent Thomas, and he questions why this country's regulator didn't take action itself but accepts that Aussie body was probably in a better position to investigate Trivago.

Dream holidays can turn sour due to disruptions. Photo / Supplied

''It's one of those situations where you have an overseas company in an online environment pushing their product in a certain way, which leaves the consumer confused which is never good. It is a buyer beware situation.''

And it's not only Trivago under scrutiny

Last year the commission promised to stamp out misleading "pressure tactics" used by booking sites to persuade users to rush purchases. Those tactics included phrasing such as "only five rooms left" and "the offer finishes in 24 hours", with a countdown to ''nudge'' purchasers.

And almost everyone has a story about the accommodation that wasn't accurately represented online - whether that's the dive of a motel in Hamilton whose reviews were re-ordered to put the oldest (and most complimentary) at the top of the list, or the ''apartment'' booked through Booking.com in Budapest that turned out to be the proverbial shoebox, and the promised view a small window with a glimpse of a corridor.

Thomas puts it this way: ''Pushing the travel agents' barrow, we're here, we're bound by the laws of the country - an online company can skirt those things and you don't have the same protections as you would booking through a travel agency in New Zealand.''

Another travel boss talks about the importance of ''flesh and blood'' consultants to provide back-up in what is a more complex travel environment. Weather disruptions are becoming more common, full planes, congested airports and booked up hotels make the margin for error finer. Who do you call if you've used a faceless online travel agent (OTA) to book a big multi-country holiday with kids in tow and you're hit with a cancelled flight?

Of course, main-street or mall agents are not immune to letting consumers down. Recent collapses of small agents here — not members of Taanz — is proof that buyer beware doesn't just apply to the global giants.

Taanz membership requires a bond be lodged in proportion to turnover, client funds be separated from working capital and provides an emergency fund for clients. Travel is booming, but it is possible to get it wrong in this high volume, low margin business, or get over-complicated and left behind, as happened to Thomas Cook in Europe last year.

Travel is booming and many traditional agents say they're getting a bigger share of the pie. Photo / 123rf

Online agents have forced traditional agents to lift their game, and for New Zealand-based suppliers of accommodation and attractions they have opened up a world of exposure they could never have enjoyed, even if the margins of 15-20 per cent creamed by these booking sites do seem steep.

But by one estimate, pure OTAs have less than 10 per cent of travel booking business in New Zealand. These remote companies - with a tiny fraction of the staff compared to the thousands of Kiwis employed by traditional agents - have a profile out of proportion to their presence.

They own little and although they say they have global help desks, they're mainly technology and marketing vehicles.

Thomas says agents welcome clients who have done all their research through OTAs, but still come into stores armed with price and other information, then make their bookings.

''I think people understand we have a whole lot of knowledge, very competitive pricing in this retail environment and together we can give a better experience. At the end of the day, we're all trying to make a sale but you do have the consumers' rights at the front of mind.''