Rates will come into it somewhere I'm sure, including what you spend whilst there.

Take the following example.

The hotel GM says to the FD Manager you can upgrade as many as you want but you must leave at least four premium rooms available for paying guests every night - which isn't unreasonable IMO as there has to be some available for people who want to pay for these rooms.

So it gets to Tuesday and the FD Manager has one room left to play with for free upgrades. They look at the manifest for the evening and they see that Bill & Ben are both checking in - both for two nights and both on corporate rates but for different companies.

Bill has 20 nights at this hotel so far this year, never buys breakfast, has only eaten in the hotel once.

Ben has 20 nights at this hotel so far this year, always pays for breakfast and more often than not dines in the restaurant and if not its room service.

Now based on that if I was the FDM Ben has the upgrade and Bill can keep an eye on the bins for the evening.

Most hotels run a secondary system tracking stuff like this and can tell you the net worth of a guest down to the last dime.

It may just simply be case that even though there were superior rooms available higher yielding guests have been in residence and they take priority.