That may be, I'm not a lawyer. Nevertheless, I find it legally tricky to reduce the guaranteed upgrade - an essential part of the contract - with a mere reference to the terms and conditions. For me that is only an upgrade depending on availability on the day of arrival.
At least I was refunded the difference to the lower room category anyway and if even the standard room made no upgrade possible, I went somewhere else and had my money back on the account within a few weeks after calling the bank.
50 USD F&B credit for the whole stay for a guaranteed (double) upgrade... The specific hotel did not even bother to contradict the claim.