Desperate Disney makes history - by offering discounts

The magic is fading for Disney, but for its customers, it's just beginning.

This morning, after announcing that theme park bookings fell off a cliff in the last month and corporate income was down 13% last quarter, Disney's stock dropped 6.1%. Hotel bookings at the Walt Disney World resort are down 10% from what they were a year ago, profits are down from last quarter, and they're only going to get worse.

So Disney, which runs nine of the ten most-attended amusement parks in the world, has sprung into action and is doing something it never does: It's giving stuff away. After years of turning up its whiskered nose at discounting, suddenly it's scrambling to draw customers back to Orlando. Disney is going all-out to fill its parks again.

The biggest score was just announced. If you book by December 20, you can get a seven-day vacation for the price of four days. That means that if you buy four nights in one of its hotel rooms plus four days of park tickets at the full price, Disney will give you another three nights and three days theme park tickets--free. The buy-four-get-three-free deal, equivalent to a 34% discount, also comes with another astonishing gimme from January through March: a free $200 gift card, which can be used to buy food and souvenirs.

What? Disney is giving away money? What's next-- talking fairies?

To seize this promotion, you can take your vacation between January and June of next year, minus the period around Easter vacation. The deals are good at the resort's Value rooms (available at four properties at the resort), which fortunately is already the cheapest class of room available there.

Finding a stellar deal on Orlando hotels is not tough. Using Priceline, I've found prices as low as $25 a night at perfectly good motels just outside the park property in the off season. No, the real budget killer has always been that Disney doesn't discount on its tickets. It's been resolute about this. In fact, just a few months ago, it raised prices again in its annual ritual. A day's ticket is now a shocking $80, and for a week's stay, a basic pass would cost $243 per person over the age of 9. That means that even if a family of four sleeps in the car, they'll spend over a grand to just get into the park gates.

Up until today, Disney, whose Magic Kingdom is the most popular theme park in the world, was already showing signs of extreme nervousness by slashing prices on its cheapest rooms from $82 a night to $59. That deal (which must be booked by Dec. 7) is still in place, and it's might be the better choice for people who don't want to stay an entire week. It doesn't come with tickets, though.

This new announcement -- free tickets! free money! -- is unheard of. Disney's desperation is big news. What was that about dreams coming true?

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