I spent over twenty years working for a company that I felt had a very enlightened and correct approach. You got an annual T&E budget. Size depended on how much travel you were expected to do.

In my case I was expected to be on the road about 40% of the time (domestically in the U.S.) and the budget was around $45k....to be used as I saw fit. While I had a lot of lattitude, it was closely monitored. I had to keep track each week of where I was versus budget. Travellers who were over got asked some tough questions. If you could justify it, you were ok. If not, you got your ears pinned back.

Guys (and gals) who thought they could outsmart the system to either pamper themselves or try to help themselves to some tax free income, sooner or later got a rude awakening. I'd look at my T&E as a resource. I approached it from the standpoint of "How much time can I get in front of my customers with this resource" "How many trips can I get out of this".

I'd plan my travel pretty carefully, but by being a wise steward of my travel funds, I never had to worry about needing to be somewhere on short notice, etc.

What did the $45K get me? About 16 mostly short-hop plane trips a year, and nearly as many road trips in my company car (which also came out of the t&e). The majority of my trips were 2-4 nights duration....staying in Marriott Courtyards, Fairfield Inns or similar. Breakfast usually at the hotel (freebie if offered), lunch would be with a customer, dinner would be soup/sandwich or small entree/beer usually at a casual sit-down chain or similar.

It worked out fine. Now I work for a different company, don't travel quite as much, and don't have a formal annual budget. But I still travel in the same fashion as always and my new company is 100% cool with it. As for the per diem question, my current bosses start asking questions when non-entertainment meals start running over $50 or so per day....$100-150 on hotels depending on the city.