Your angling for an upgrade is skewing your logic. A room that is presently unoccupied but earmarked for another purpose is unavailable. A table at a restaurant waiting for the people who called a month ahead of time to reserve the specific table is unavailable if it is empty fifteen minutes before that, but has been promised in the reservation. The haircut appointment at 3:00 is unavailable, even if it's 2:55 and the person with the appointment at 3:00 is not yet there. If I'm making a cake tonight, there are two eggs in the fridge and I've put a note on the carton that states, "Don't eat - need for cake tonight" those eggs are unavailable to anyone else.

The rule isn't you can have the room if it's unoccupied. The rule allows you the room if it's available. If MI meant the former, the rule would have been written that way.

Under your logic, a person in a wheelchair could make a reservation for a handicapable room, but if someone shows up before the person checks in, lose the room.

Under this logic, a family could have connecting rooms blocked, but get to the hotel and find out their rooms are on different floors. (Granted, that's always a risk, but c'mon.)

Under this logic, requests for a feather-free room, a room with a crib, a non-first floor room, a room away from the ice machine, etc., would be unblockable. Taking this to the next step, business travelers who often check in late, but check in often, would leave the hotel in droves if these types of requests aren't honored.

I'm sorry, but making a lowly Gold who gets to the hotel at five happy at the expense of the Ps and PPs who are checking in later is foolish. Businesses take care of their best customers first. I rarely get, ask for or even care about upgrades, so this isn't really my issue, but it's very clear that rewarding the most frequent and profitable guests makes sense.