I hadn't seen this on FT, but I was up in Tahoe this past week for spring break, and I heard about this change. And then this morning, I got the official announcement from HHonors:
This is a real bummer for me, as my family enjoys skiing quite a bit and this is the only HH property at South Lake Tahoe. We've stayed there perhaps a dozen times including 4 or 5 times this ski season, once last summer for a business trip that we extended for weekend fun, and several times in past ski seasons. I appreciated being able to either use or burn HH points on my ski trips up there. It's not the highest-quality property and can use the planned refurbishment, but the premium rooms are well-appointed and they have had good choices at breakfast recently. The staff is also great, and I've gotten to know a few of them fairly well.

This past week, we stayed at a rental house (12 extended family members), but I was thinking of staying there in two weeks, and lots more next year. I guess we will be staying at the Hampton Inn Tahoe-Truckee and skiing more at Northstar instead of Heavenly next year. I hope that Hilton realizes that this leaves a big gap in their network, and does something to add a new Hilton property in the near future. Maybe they can take the 6-year-old hole in the ground across the street (planned for a convention center), and build a real hotel there.

After skimming this thread (for the first time), I note that as a Diamond I was never upgraded to one of the Lakeview suites, but I did get upgraded to one of the premium rooms. We'll miss this place - I doubt that we will be back unless their prices drop along with dropping the ES brand. I was able to use mine or my wife's corporate and other discounts to get good rates there.