Well I assume "lack of demand" means "lack of paying customers", not lack of diamond guests who would like upgrades.
While I have had some success with suite upgrades at Hyatt's with no RC (i.e. Newport RI), or where the RC was closed on the weekend (i.e. Cambridge, MA), I think they should really revise the program to give complimentary breakfast coupons and perhaps a few drink chits if there is no club lounge available.