Midway through 2008 the battle between online travel agencies and travel supplier sites continues. Both groups have faced a slowing economy and rising travel costs in the past year, and have seen consumers who are increasingly careful in their travel decisions. Year to date, it is the travel supplier sites that have slightly outperformed the online travel agencies and increased their online bookings share.

From July 2007 to July 2008 the major agencies collectively captured an average of 26% of online flight bookings and 25% of hotel bookings, with the remaining share going to carrier and hotel chain supplier sites. Year over year this represents a decline of 3 points in the flight category and 4 points in the hotel category for OTA’s.

Most of the share shift that has taken place has been driven by strong growth in volumes at supplier sites. Agencies have grown their hotel volumes a few points compared to a year ago, but hotel chain sites are collectively up 25% in bookings volume. For flights, agency booking volumes are down ten points with carrier sites up 6 points.

Compete data shows an increasing volume of consumers using online travel agencies for comparison shopping and search functionality, but the greater bookings growth is taking place at supplier sites. Increasingly for suppliers, by the time consumers reach these websites they have already compared their options at an online travel agency or travel meta search engine like Kayak.com. Quick, user-friendly experiences to present rate and availability information is critical for suppliers to keep their customers satisfied.

For the OTA’s, winning back bookings will require continued investment in value-added services and promotions. Loyalty programs such as Expedia’s Thank You Network, and promotions such as Priceline’s “No Fee” and Orbitz’s “Price Assurance” are important differentiators. With these types of programs prominently in place, consumers will show a willingness to skip the supplier sites.