Online travel agencies are under fire, but don't count them out just yet.

Major hotel chains and airlines are trying to get travelers to go straight to their own Web sites instead of through the online agencies. They've also been attempting to negotiate better terms. And a newer kind of third party -- travel search Web sites that hunt through suppliers' sites to offer travelers a smorgasbord of different rooms or flights -- is emerging as a threat to online agencies like IAC/InterActive's ( IACI) Expedia, Sabre Holdings' ( TSG) Travelocity and Orbitz, now a unit of Cendant ( CD).

But the agencies can still distinguish themselves in a changing landscape, say observers. There are significant growth opportunities abroad, where online travel markets tend to be less developed than in the U.S. Online travel agencies also have become savvy at packaging vacations that combine multiple components, or purchases -- say a flight, a rental car and a hotel room. And they still are a valuable sales channel for smaller hotel chains and individual hotels that lack the brand recognition and marketing muscle of their larger-sized rivals.

There's no getting around the pressure the agencies have felt from suppliers, particularly hotel chains. Evidence came in IAC's second-quarter results last year. The company reported year-over-year decreases in revenue and earnings and trimmed its full-year cash-flow forecast. IAC's U.S. merchant hotel business "continues to experience competition from other third-party distributors, promotion by hotel chains of their own direct sites and a more challenging supply environment resulting from recent increases in hotel occupancy rates," the company said. "We believe these factors have resulted, and may continue to result, in slower growth rates in domestic merchant hotel bookings."

Under the so-called merchant model, online agencies purchase blocks of hotel rooms at wholesale prices and then sell the rooms on their own sites at a markup. IAC's travel portfolio includes Expedia.com, Hotels.com and Hotwire.com. IAC plans to spin off the travel businesses into a separate publicly traded company in the second quarter of this year.

Expedia and Hotels.com have become selective about taking hotel inventory in order to maintain their merchant business margins, although that comes at the expense of revenue, said Martin Pyykkonen, an analyst at Janco Partners.

Despite a push from large hotel chains, Expedia and Hotels.com still have a large group of hotel inventory suppliers that are unlikely to be so aggressive. "About 75% of the merchant booking inventory that's available to Expedia and Hotels.com comes from smaller chains and independents," Pyykkonen said. "That's chains as large as Red Lion hotel all the way down to independent hotels. If Marriott ( MAR) and Starwood ( HOT) are doing great business on their own Web sites, that's still not as big a piece of Expedia's and Hotels.com's business as some would think."

(Pyykkonen owns no shares of IAC, and Janco does no investment banking for IAC. Janco does seek to do business with companies its analysts cover.)

The IAC travel businesses have some other buffers against any slowdowns in their domestic hotel businesses in the form of packaged vacations, overseas expansion and corporate travel sales, Pyykkonen said.

Dynamic packaging of multiple travel products is something that both agencies and suppliers like because the prices of individual components are masked, said Henry Harteveldt, an analyst at Forrester Research, a Cambridge, Mass., technology consulting company. "The travel agency makes a nice margin, the suppliers get good value and customers get a nice deal."

Expedia is particularly skilled at packaging, said Harteveldt, and is putting together multidestination itineraries, thereby providing convenience to consumers who may not want to assemble all of the components themselves.

One emerging threat to agencies are search companies like SideStep, kayak.com, mobissimo, and FareChase.com, which Yahoo! ( YHOO) purchased last July.

Consumers enter their travel dates on these Web sites, and the sites scour the Internet for flights or hotel rooms. The search companies often offer a broader selection of results than online agencies. For example, SideStep has a partnership with JetBlue Airways ( JBLU), which does not sell through online agencies.

Still, the search companies don't always find everything that's available online. SideStep searches Orbitz's inventory but not Travelocity's or Expedia's.

Because most travel search companies are fairly young, the sector's impact on the online agencies is hard to calculate. But analysts say it should not be underestimated.

"Search-based travel models, such as SideStep, are gaining traction and funding," noted Pacific Crest analyst Steve Weinstein in November, when he lowered his rating on IAC. "Although it is difficult to determine how successful these models will be in the long term, we believe the resources being dedicated to them will affect the growth and margins of incumbents."

Companies like SideStep say they offer suppliers a cost-effective way to gain customers because they take customers directly to supplier sites for a referral fee that is significantly less than the global distribution system (GDS) fees incurred on many agency transactions.

Still, not all suppliers are convinced about travel search. Northwest Airlines ( NWAC) hasn't struck deals with companies like SideStep because it is already getting customers through various online travel agencies. "We don't want to double pay," said Al Lenza, vice president of distribution and electronic commerce at Northwest. "If we were not in the GDSs, we would be more open to participating in more of these services. To the extent that we were to become less represented in Expedia and Travelocity, then these aggregators might become more important to us."