I thought the original contract was 3 options, stay in villa, EK pay for hotel or take the allowance and pay your own hotels. I guess they've just removed option 2?
I know a few guys who have taken it, all taking the allowance and allowing for hotel payments out of that.
Seems like they've made it like 'mainline' in that case then. You either live in company accommodation or you take the allowance and pay your way. I can't see this putting a dent in anyone's plans, at least the guys I know anyway. I may have missed something though!