Given the severity of the problems in other markets, less mainstream attention has been placed on the state of the travel industry. Compete analyzed online activity within the air and hotel categories to identify if shifts are taking place in consumer interest in these products. The findings show a clear decline in online travel research activity, with actual booking and purchase activity also trending downward.

Air and hotel shopper volumes (consumers researching but not necessarily purchasing) have both gone into negative territory compared to a year ago, a first for 2008. In each month of 2008 to this point, online air and hotel shoppers had been up versus the prior year periods. Cautious consumers then began thinking less about travel in September, and started to abandon travel websites in October. While only a fraction of shoppers end up completing a purchase in any given month, these declines represent an important shrinking of the pool of vacationers, last minute shoppers, and undecided consumers to which travel marketers can generate transactions from.

On the positive side, online travel bookers for air and hotel are still up compared to a year ago, however significant wind has been taken out of the sails. Shopping and researching activity is a leading indicator of future travel purchasing, and unless a positive catalyst introduces itself, it appears that bookings growth will be pressured further in the coming months.

Travel marketers have reason to be concerned and must pay close attention to the signals that their customers and online prospects are sending. Given the decline in shoppers to work with, a well-planned online marketing strategy is more important now than ever. With the right mix of online advertising to bring in new shoppers, helpful website functionality to cleanly present a variety of choices, and compelling offers to seal the deal, savvy competitors will weather the storm.

The major online travel agencies are in constant competition to be the top performer in the search game, but not all searches are created equal. Many marketers are only interested in attracting specific desirable customer segments that will be most likely to engage with their product.

One of these segments is high-income women travelers between the ages of 35 and 44, which Hotwire has been increasingly successful in attracting search-driven hotel bookings from. While Expedia and Priceline have remained steady in this segment, Hotels.com has lost some ground. A year ago Hotwire had captured only an average of 10% of the search-driven hotel bookings of this demographic, but the past few months have seen the brand rise to up to a 30% share in May 2008.

Women’s OTA hotel conversions deriving from a search engine as a whole are the result of organic clicks 68% of the time and sponsored clicks for the remaining 32%. The only competitor to rely more heavily upon paid than natural was Hotels.com at 54%.

This specific demographic is just one example of how quickly market share shifts can take place. As online marketers pursue specific consumer segments – either demographic, affinity/lifestyle, or other groups – understanding the search behavior of each can give them a distinct edge. And in such a competitive landscape that relies so heavily on search, a lot can be gained from such an advantage.

It’s hard to think of an online consumer offering that doesn’t rely heavily on search, and travel is no exception. With economic factors making consumers more price-conscious than ever, travelers are looking for good deals more and more, making search an integral traffic driver for Online Travel Agencies (OTAs).

Expedia is the class of the industry when it comes to search though, with a 26% share. This means that they receive traffic from just over one out of every four clicks (both paid and natural) to a major OTA from search, followed by rivals Travelocity and Orbitz. Priceline has moved into the fourth position by growing its share by nearly 5%, replacing Cheaptickets, which has fallen by almost the same percentage.

Taking a deeper look at paid search traffic specifically, we see that 36% of all search traffic to OTAs comes through sponsored links. Hotels.com leads the way with an average of 44% of search referrals coming from paid search. Expedia is in the advantageous position of being on the lower end of paid search percentage ((34%), despite having such a large search share.

With ever increasing ROI expectations being placed on travel marketers, optimizing the online channel is critical. Given that many of the OTAs are relying more heavily on paid search referrals, and the degree of volatility in this space, it would benefit the OTAs to closely monitor share of search traffic across the competitive landscape.

Compete’s Travel Search Intelligence can fill in the gaps with a web-wide view of your performance, benchmarked against rivals.