It's hard to imagine that they won't give you an argument, but it seems like a unique situation.

It was clearly Mx so they are obligated to provide lodging. Usually they give you a voucher at the airport. My personal opinion is that once they decided to not do that, they gave up the right to cost-control it. I'm not saying that they should pay for a $25K/night suite at Caesar's Palace if it had been Vegas, but I'd put the "burden of proof" on them to prove the cost was excessive.