It was clear in the T&C that these certificates were for category 1-4 hotels. That does limit your options somewhat but there are nice Cat 4 hotels around. If you do a little research (including threads in this forum discussing Cat 4 hotels), you could find something that would work. It was your choice to stay in hotels where the certs weren't useable.

For example, Mr Canuck and I have a couple of nights in Toronto before heading home for Christmas. While I could choose to stay in and pay for a Cat 5 Marriott property, I found the perfectly nice hotels (including a FS Marriott) where I could use my certificates. The first year I had the Marriott Premier Visa, I used our Cat 4 cert for an overnight stay near a friend's New Year's Eve party at a Courtyard that wanted $250 for a cash booking.

Next year, when your card renews, you'll get a Cat 5 cert, which significantly increases your options as far as hotel stays. We used last year's cert at the Marriott in Cairo. This year, we used our cert in Chicago (and while I would have liked to stay a Cat 6 Marriott, I found and was satisfied with a Courtyard Cat 5.)

So - the choice is up to you. Do the research or don't. Find a way to use the cert or don't.