My son's best friend is here from Japan. His parents paid for his plane ticket and sent $1,000 cash. We would like to return the money to them - his stay and expenses are our treat.
How can we do this without offending them?
The best thing would be to simply make sure that the kid does not need to spend money while there. If the kid comes back to his parents and states "I only spent 100 for a souvenir", this would be much better than you sending then the money in any other way.
Possibly find a compromise that the kid can spend some things by himself, like inviting you all for dinner once or other symbolic things.