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boekel, you omitted which room type you booked and type +cat given was, and the unavailable +2cat room type? If you booked a suite (or 1cat below a suite) then I can understand hotels +1cat upgrade, but not the lack of rate adjustment.
(Can be IC hotel prefers old rule t+c Exec/Club/Suite and pre Sep2016 booking Suite was only 1cat upgrade and has a policy of only upgrading RA +1cat when suites are involved)
Sadly all you can do is reach out to Amb Services during USA hours asking them to contact hotel.
To be honest I'd be asking Saltlake for points from IHG for the hotels refusal to upgrade/reduce-rate, which IHG Corporate will then back-charge to IC Chennai, and also charge an intervention fee. If too many interventions are needed in a year then some extra ine is levied. Although you don't get the money knowing the hotel doesn't keep the extra profit from your lesser 1cat upgrade may be of some comfort.
(i)How close in to stay did u book room (ii)Was +2cat for sale when a)you booked b)in the week before checkin iii)Did you book lowest cat room when upgrade is easier or high cat room for a +2cat 'full' suite, or worse for hotel +2cat to Ambassador/Royal type suites? Further some hotels only have handful of suites above 'so called 1-room Junior-Suites' and that adds to issue.
If RA/Amb books so foc +1/2cat upgrade is to a full suite, hotels may in truth be unable to upgrade Amb +1cat or RA only 1cat not 2cat, but I have never heard of IC not adjusting rates either proactively or on request at checkin, though rate adjustment offer may be derisory+small based on day-of-checkin flex rate not say time of booking ADR/BAR. It is even possible day of checkin flex rate of lower cat is already higher than your booked rates!
Alas lengthier RA t+c (versus Ambassdor landing page benefit saying Guaranteed Upgrade) only say 2cat upgrade 'SHALL BE GIVEN' the 'MUST' is a separate point refering to Club Access for the RA
(I also noted checking today, as RA, we only get the standard Amb Benefits block page, no longer get the extra RA Benefits Page, despite being signed in ) @
boekel, you neglected to provide us with what room you booked, which +1cat room you received and what room type +2cat is. If as RA you booked suite or 1cat below a suite, then I can understand the lesser upgrade, but not rate reduction.
Regards RA/Amb upgrade +1/2 cat.... Alas t+c's say upgrade allocated on arrival, so hotels are not forced to upgrade at reservation time, and will happily keep trying to sell suite rooms. Yes I have had +1cat upgrades only, usually with proactive rate refund (eg IC Sydney), others with flex bookings I negotiated from strong (can walk) flex week mininimum bookings with (IC Miami downtown, IC Melbourne).
If you book close in other than base room, or when the +2cat suite is soldout, or worse only basic/non-suite rooms available, then hotel is in impossible position regards +2cat upgrade, but most proactively upgrade +1cat and adjust room rate. Although adjustment can be from booked rate to rate on day, and I then negotiate to rate on -1cat of day I reserved.
Historically I also book flex when corp rate was only for base rooms in an hotel, which gave similar cancel on day of arrival. Now with cancel being day before arrival, new best option is to book first night of multi-night stat as separate 1night booking , as you can then cancel remaining nights and use a more accomodating hotel. Of course if on BAR/ADR (non canceable) ones negotiating position is much less if hotel wants to not conform to RA t+c's.