They actually cannot receive an upgrade. It would be seen as some sort of corruption....therefore they receive what they pay for.
Now this resulted for me in a very funny event few months ago in Saigon. The Secretary of Defense was staying in the hotel for the last night while we checked in just past midnight. And guess what, the hotel was sold out and they put us in the Presidential Suite. I actually call them prior to my flight once I saw it in the system to let them know my exact check-in time. That was a fun three nights stay! So sometimes it can lead to funny events.
Another one was way years backward at the Sheraton Hua Hin. They were hosting the Asean Summit in the city and the Prime Minister of Singapore as well as the head of Malaysia were staying in the hotel. They arrived the afternoon we left. The last morning, they may have had 10 rooms occupied by tourists only. The fun part is we received the Prime Minister of Singapore suite. For the last 24/48 hours we had a body guard posted in front of our room. They let us kept the suite only till 10am and gave us another room for the day. We had a badge to park in the "media" car park...full security airport style security etc....but my son, at the time below 10 years old had a blast. Hotel and staff were simply amazing with us!