Let's say a hotel has the following room types:
1. Basic
2. Deluxe
3. Junior suite
4. Regular suite
5. President suite
If you book #1-2 it is pretty clear that if #3 is available at check-in then an ambassador guest (or titanium, plat) should get an upgrade to #3 according to terms & conditions. However what if you book #3 and that #4 is available, are you technically eligible for an upgrade, or because you already booked a suite then the hotel can decide to upgrade but they don't really have to?
Personally if I book #4 I would not expect an upgrade to #5 (rate differences are often huge) however it seems far more realistic to expect an upgrade from #3 to #4 . Some hotels do so proactively, but if a hotel refuses, are they in breach or not?