Cat, it's going to be very hard to find the "etiquette" on refusing to comply with such a rude request.

I wouldn't even ask them to meet you half way on the accomodation. The suit thing is fricken ridiculous.
I would work the email "it's out of our budget right now - sorry". They can cough up the dough to have the BEST man stay.
Why do people do this - tell them to pull their heads out of their butts