Hotel comparison website Trivago is being sued for making misleading claims on its website and television advertising.

Key points: ACCC accuses Trivago of misleading consumers by claiming it offers the "best price"

ACCC accuses Trivago of misleading consumers by claiming it offers the "best price" Trivago allegedly prioritises hotels which pay it the highest advertising fees

Trivago allegedly prioritises hotels which pay it the highest advertising fees The penalty for misleading and deceptive conduct is up to $1.1m per breach

Trivago deceived consumers into believing it was an "impartial and objective" aggregator that helps them find the cheapest hotel prices, the Australian Competition and Consumer Commission (ACCC) has alleged.

In a Federal Court case the ACCC will argue Trivago's search results prioritise advertisers who were willing to pay "the highest cost per click".

"When you look at a lot of Trivago's television advertising ... and I've seen a lot of it, it's often suggesting get on Trivago and find the best price," ACCC chairman Rod Sims told the ABC.

He said Trivago and other comparison platforms "give the impression they're there to help consumers when in fact they're there to help suppliers who pay them the most money".

Mr Sims said the ACCC began investigating Trivago after it received complaints from hotel operators who realised "they were cheaper [but] weren't getting prioritised".

"We're alleging Trivago's website is deliberately designed to mislead consumers.

"We looked at Trivago algorithm and formed the view that it was misleading in terms of the way it presented options to consumers."

The regulator's investigation found that consumers who visited Trivago's website "overwhelmingly" clicked on the most prominently displayed offers for each hotel.

Misleading 'strike-through' price comparisons

The ACCC is also accusing Trivago of deceiving consumers with "strike-through price comparisons" which offer misleading "deals".

For example, it might list the hotel room's full price as $420 — with a "strike through" to show the price has been slashed — and the final price is listed as $299.

"They are misleading because they often compare a luxury room with a basic room," Mr Sims said.

Trivago hotel price comparisons ( Trivago )

"Strike through the luxury room's price, then show the price of the standard room — and create a false impression of the savings you'll get with the standard rooms.

"By not making genuine room price comparisons, consumers would likely have paid more than they otherwise would have for the same hotel.

"Further, hotels may have lost potential business as a result of this alleged conduct."

The penalties for engaging in misleading and deceptive conduct, under the Australian Consumer Law, can be up to $1.1 million per breach.

Trivago has been contacted for comment.

Industry-wide problem

The ACCC confirmed it is also investigating other comparison websites similar to Trivago.

"We believe this behaviour is widespread, but we're currently investigating just how widespread."

Mr Sims urged investors to consider, if the website is free to use, how it is earning money.

"If they're making their money by commissions from who they prioritise, you have to wonder how much the choice that's presented to consumers is influenced by how much the website is being paid — as distinct from what is the best offer for consumers."