middlepath,
overnight allowances are paid in cash in the local currency at the hotel reception. They will cover your costs of eating fine at that hotel or if you step out to the local food places (most destinations), you will have some extra play money. I rarely eat at the hotels, preferring to sample the authenticity of local food, and in doing so have some coin left to bring some nice bottles of red home to Dubai. The majority of cabin crew BYO food and save the money or spend it shopping.
LHR rain,
from my experience, in Dubai, like Singapore, if you want to dine out like a tourist, you will be paying tourist prices for your experience. If you are steet smart you will pay less than many many modern cities for a good 'nose bag full'.