Mrs Baker had paid two staff from the Royalton Jamaica Resort to secretly decorate Mr and Mrs Stephens' bedroom with a cake and balloons.
But the two hotel workers created the mannequin instead, complete with a can of lager and tears on its face.
The body was lying next to petals arranged to read: "We miss you Alex".
Mrs Baker, who first discovered the effigy, said she was "utterly horrified" and managed to remove the dummy before Alex's parents saw it.
She told the BBC: "When I walked into the bedroom, all I can describe is a dummy body on the bed," she said.
"Staff had gone through my friend's wardrobe and stuffed the clothes with towels to make it look like a body on the bed. They even put tears down the face and a can of lager in his hand.
"I was absolutely horrified - as you can imagine I was sweating and shaking. We just didn't want our friends to see it.
"I have truly never seen anything like it. I still look at the photographs now and can't believe somebody thought to do that".
Alex Stephens died after flying to Barcelona with friends for a music festival in 2014.
The 21-year-old footballer was scouted by Watford FC aged 10 and played for Norwich City between 2009 and 2011 before becoming a first team player for AFC Wembley.
A TUI UK spokesman said: "We offer our sincere apologies to the Baker party for their holiday experience in Jamaica.
"We're following up with the hotel and believe it was a misunderstanding with no intention to cause upset."
The family have since received a full refund from TUI of £1,300 per person for the five-star holiday.