Good grief. She doesn't sound as if she wants you there, to be frank, as others have said.
We've just come back from a week in Crete at a five star resort, half-board, for not much more than that for the two of us, when you factor in fares to and from the airport, cattery fees, and travel insurance. The only reason it cost us more is that we decided to do excursions and things; we could equally well have stayed in the resort or just got the shuttle bus to the beach every day which wouldn't have cost us a penny extra.
I agree with a previous poster, either cancel; or, if you definitely want to go ahead with the trip, let mumsnet know where it is you're headed (just general area even) I'd be surprised if collectively we weren't able to come up with an accommodation solution, even if it's just a camping park or something. And if you do end up going and paying her, I'd be tempted to take a receipt book and make a real point of paying for everything....
I've lived in many different places, some in the UK and some overseas, and have friends who come from/have lived all over the place too, and none of us have ever charged friends or family for staying - we'd do something like pay for the groceries (offers often refused), or take our hosts out for a meal or two, or to a show or something, or buy a really nice gift. Admittedly I do choose to stay in a B&B or Premier Inn when I visit family at the other end of the country but that's more to do with sibling politics and the fact most have small houses. Although funnily enough the ones with the small houses are infinitely more welcoming than the ones with 3+ bedrooms and children fled the nest long ago, but that's my family...friends always offer even if it means sleeping on a camp bed in the living room. And yes to a previous poster, that even includes stays of 5-7 nights and longer... ;)