I am the OP and was going to post an update to this story, but reading Mr. Sanders policy clarification, it seems he already told you everything you need to know about Starwood's reservation process. Sounds like you have no rights or compensation entitlement whatsoever if a hotel declines to honor your confirmed and guaranteed (by you, not them) reservation, if they offer you a reservation at some other hotel. You folks can decide if that's OK for you.