Search here in FT and you will see all of the threads surrounding "major events." This is far from the worst. Many of them are, "agree to a much higher rate or your room is cancelled" or "sorry, but your room is cancelled."

As others note, it's easy to give advice to someone else about what someone else ought to do. But, if what the property really wants is for the OP (and others) not to respond and then to use that as a reason (a poor reason, but a reason) to cancel and rent the room for $500+, the question to OP is what is Plan B?

What to do if the room is cancelled, the property is full and everything in the area is oversold?