DD brought a friend for the first time at age 16 (last February), we already were getting a 2 bedroom for the 4 of us anyway, so no big deal. Parents paid her airfare and bought her park ticket. We paid for the meal plan, and while parents did send her with money, told her to have fun, I think I asked for 20 bucks the last day because I was out of cash!!
On other occasions, we have done kind of the same thing, same friend came to St. Maarten with us, had parents pay for airfare, they sent her with cash, but we paid for food, and she used her money for spending.
This summer they took my daughter to France for a week, staying all over the place, I bought the airfare (ouch) as they travel first class!! and sent her with money for the parents, they may have taken 200-300 of the money to help cover some of the expenses. They went all over, visited Normandy, went to a horse race, saw it all.
I feel it's different if its a once in a life time thing. This coming April it's almost assumed the same girl is heading to St. Maarten with us, and it's a given my daughter is going to Club Med with them in the summer! If I could afford to just foot the bill every year, that would be fine, would love to do it, but it just gets too much!
A few years ago, I took my neice and my son to Disney, just the three of us (they were 8 & 9), my treat, but my sister refused to allow it and bought her airfare and park ticket. I covered the rest. Disney just isn't a cheap vacation, not sure I have an extra 1000 to cover every trip for a friend!