I don't recall ever having done this, but I certainly don't have a problem with it.

In NYC, this type of practice is fairly common. I once gave the manager of a parking garage $100 and all of a sudden a $160/month space in his garage became available. Most other garages were charging $400/month. At ball parks and arenas, it's fairly common to "tip" ushers for a seat upgrade. (At Fenway Park in Boston, $20 once got four of us bumped up from SRO to second row seats adjacent to third base to see Roger Clemens pitch.)

But at hotels, in particular, management easily can -- and almost certainly does -- audit what the front desk clerks are doing. So if the front desk clerk was not authorized to give you that $400 suite for the $250 rate you're paying, the clerk will have some 'splaining to do.