Thank you all for your answers!

Like many of you advised I did call hotel today and they acknowledge the $167 rate per night. (my profile still shows the $1,200 on file but I hope that goes away eventually).

They also sent me this e-mail:

We would like to thank you for choosing us for your upcoming visit to Bogota and for contacting us regarding your rate.

We have verified the charge corresponding to the advance payment of your reservation and it is correct:

Great Getaway Rate booked per night US$167.20

Room Rate per night: US$167.20 X 3 nights = US$501.60 X COP$1,900.- (Exchange Rate Applied) = COP$953,040.-
Room Rate taxes 10%: US$16.72 X 3 nights = US$50.16 X COP$1,900.- = COP$95,304.-
Hotel Insurance: COP$7,000.- per guest per night X 3 nights = COP$21,000.- X 2 guests = COP$42,000.-

Total amount charged on Amex card: COP$ 1,090,344.-

We charged your card in Colombian pesos, because by law we are allowed to only bill in our local currency.

/ ----/

I guess the 5% bit me back but I would rather have that than the 1,200 charge.

Also it's the first time I see "Hotel insurance" on the charges.. what is that about?

Thanks again for your great feedback!