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ArishMell The company I worked for for thirty years did the same. We used to get either a fixed amount dived into two thirds for accommodation and one third for food, local transport, etc. And if either category exceeded the set (and quite generous amount) they would pay the receipted costs.
we were sternly instructed that we were representing the company so we were not to stay in places that we could not take a customer to, and that's reasonable. So I used to rent a flat because I was typically away for at least two weeks at the same location. The accommodation allowance was about a hundred pounds a night and that rented a pretty good flat in the 1990s in Poland.
Then they were taken over by a large international engineering company and the rules started changing, first they insisted on only certain chains as you mentioned, with the connivance of the in house travel agent we ignore that for as long as we could but eventually they forced us to book through the travel agent website instead of by talking to her and later they switched to receipted only for accommodation. As you say, almost certainly more expensive.