Wow, a Choice is quite disappointing! Again, having travel insurance means that if I don't like the assigned hotel, I just pop into the one of my choice.

In the experience I mentioned above, I don't think the hotel assignments were differentiated based on status. I overheard the ticketing agent, who assigned us the hotel and re-booked our flights, say to her colleague "I still have a couple of Fairmonts in my back pocket". Of the two of us who got the Fairmont, I was Elite, but I'm pretty sure my fellow passenger was not. The only commonality between us was just that we were among the last passengers in the queue at the ticketing desk. So, I think the agent was saving the Fairmonts, perhaps in the event a SE showed up, and then when none did, just gave them out near the end.