OP - You will have a fight on your hands. You don't specify your location in your profile, but many countries have credit card chargeback rights.

As an example, if you are based in the US and have a US CC, I would suggest that when you return home, you initiate a chargeback for the difference between what the hotel charged and the Expedia refund, alleging fraud. Make certain that you use the word "fraud" and that you supply the original Expedia confirmation. If you are based elsewhere, you will need to follow the rules of that country.

As a warning for others, the second OP received the cancellation email from the property, he should have called Expedia. Expedia could have used its market power to get this fixed in advance (or at least cancel and help OP find a room at another property). OP knew when he arrived that he would have to pay more, whether it was via a cancellation or a room rate change. Letting it wait means that his chances of recovering the difference are much slimmer.