Hilton is capable of similar issues. For example, I've been given an already occupied room.

The real failure here isn't the key screwup. It's the recovery.

Losing the OP's luggage afterwards is pretty bad.

The LP Officer, on the other hand, rates somewhere between stupid (unable/unwilling to understand the situation, and accusing the OP of a scenario that makes no sense) and malicious (attacking a guest you've already screwed over makes it pretty clear you don't want their business). I wouldn't feel safe staying in a hotel that treated me like that, so I'd probably eat the cost and go somewhere else.