I see on AA Vacations you can pay more to upgrade room types. I suppose from the FS perspective, the rooms they sell via the airline tour operators are problem bargain basement, run-of-house used to top up the occupancy at a low yield - also probably the lowest priority versus guests who pay rates via agencies or directly to the FS website or res.

Definitely not OPs fault that FS probable gives AA Vacations low rates, but perhaps why he was being treated so shabbily. The hotel views AA Vacations bookings that way.