And that view comes despite the recent lawsuit filed by Dallas-based Southwest Airlines alleging false advertising and unfair competition.

In an advisory to clients, GS said that "our analysis of Orbitz's beta site leads us to believe that it has a competitive offering in air, Web fares, car rentals and cruises."

Clearly the competition is being stepped up, largely because online travel has proved to be one of the most viable segments of the business-to-consumer e-commerce industry.

Orbitz is backed by a consortium that includes American, United, Northwest, Delta and Continental.

"While we are bullish long-term on e-travel, several near-term factors present stock overhangs to Expedia and Travelocity," GS said, citing factors such as increased competition from the expected launch of Orbitz in June, unfavorable airline dynamics (i.e. commissions) and valuation.

"We are near-term cautious on the group as a result of uncertain competitive dynamics," GS said.

Travelocity.com just yesterday launched Dream Fares, a new mobile application feature that allows members to specify how much they are willing to spend on their travels and displays a list of the cities offering fares for their designated budget. Its stock was trading at $34.65 this morning, well up from its 52-week low of $8.75.

Expedia, which actually reported a first-quarter pro forma profit, was trading at $28.80 in mid-morning, also well up from its 52-week low of $7.75.

Although the Orbitz site is competitive in airlines and car rentals, it lags behind the two more established travel sites in many of the non-air travel areas, GS said, particularly vacation packages.

"We believe the key to fully capturing the large travel opportunity is linked to a company's ability to evolve into a complete one-stop travel destination -- as an order maker as Expedia and Travelocity's continued progress in expanding non-air offerings provides them with a solid lead in evolving into a complete travel destination where consumers can find a one-stop solution for all elements of a trip."

GS said that it believes the online travel market overall is a compelling category "because it is the largest online consumer market with an estimated $12 billion to $15 billion in sales in 2000, (because) it is the third largest consumer market overall at over $225 billion in the United States, (and because) it is exceptionally well-suited for online selling given the information intensiveness of the purchase."

"We believe 15 to 20 percent of travel could move online over the next 5 to 10 years, up from 5 to 6 percent today."