Last year I saw the same thing when going to the Grand Wailea. I checked into it and found out that as soon as any part of the room payment becomes money the resort fee kicks in. It is only on 100% points redemptions that the fee is waived. Paying the upgrade fee becomes a points and money rate. Sucks but that is what I was told by both Hilton Honors and the hotel. Believe I saw it in the terms and conditions also, but would have to dig into those again to confirm.

On a side note, it is sad that Hilton Waikiki Beach stooped to charging resort fees. Was there last July/Aug and no resort fee. Just another money grab.