As someone who used to work in hotels for over a decade, I dealt with overbooking (of a bed type, room type, or the entire hotel) all the time. Trying to figure out exactly what happened will be impossible without interviewing the hotel employees. There are many different scenarios that could have resulted in this experience:

• The Front Desk Manager had a plan to avoid elite-level guests from being affected, but an employee made a mistake and gave away a room to a "regular" guest.
• The Front Desk tried to move a "regular" guest into a downgraded room but that guest started screaming.
• A maintenance problem caused one or more rooms to be unavailable. (In most cases, we wouldn't necessarily tell the guest they couldn't get their room because of a maintenance issue.)
• Everyone arriving that day was an elite-level guest. Somewhat rare, but it happens occasionally.
• The number of arrivals for the day is so low that everyone checking-in is going to get the wrong room type. Exceedingly rare, but can happen if nearly the entire hotel is booked by a multi-night group.
• A guest showed up without a reservation, but was accommodated because they were a repeat guest, super-duper elite-level, or visiting the hotel's largest corporate client.
• A guest showed up with a reservation for the wrong dates, but was accommodated because they were a repeat guest, super-duper elite-level, or visiting the hotel's largest corporate client.
• A guest showed up with a reservation for the wrong hotel, but was accommodated because they were a repeat guest, super-duper elite-level, or visiting the hotel's largest corporate client.
• One or more rooms refused to check out as scheduled and the hotel needs a court order (per local law) to evict a guest.
• A hotel Sales Manager forgot to make a reservation for potential client.
• The hotel owner needed a last-minute room.
• There was no plan because the hotel is poorly run.

With the exception of the last one, I've personally experienced all those scenarios.