well obviously this is a "know your family" issue -
but i have never been invited to sleep over someone's house and then sent out to sleep in their backyard. If they don't have room - then they shouldn't invite sleepover guests, or they should make it clear in their invite that this will be a bring your own tent deal. I've slept in people's guests' rooms, or their kids' rooms (and the kids bunked with siblings) or in a nearby hotel.
To the OP - you can certainly un RSVP if you don't want to go.
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Definitely. I don't mind bunking in with other family members if necessary (it can actually be a lot of fun), but sleeping in a tent in the backyard instead? No thanks. At the very least, not everyone has camping equipment and/or means of transporting it.
If the hosts of this shindig had been honest at the forefront that would've given people the chance to decline immediately, rather than after they'd gone to the trouble of organising time off, travel etc, and possibly putting them out in terms of money and eating into annual leave that could've been saved for another time.
It sounds like the kids want to get credit for throwing their dad a party without actually doing any work for it.