It is well known and in the the Priority club points T&C

"Priority Club members who do not cancel their Reward Night reservation by the cancellation deadline and do not use their reservation (no-show) are still subject to a no-show charge for the first night of the reservation, plus tax, per room, billed to the credit card used to guarantee the reservation upon booking. The points redeemed for the no-showed Reward Night reservation will be re-deposited into the member's Priority Club account".

You did not show they charged; case closed! they owe you nothing you owe the hotel an apology for not knowing the rules you agreed to be bound by and then complaining when the hotel played by the rules

Perhaps the warning should be TO YOU read the T&C's and you won't get surprises