They're probably just relying on the Peninsula's "brand name" now, and service is still top notch. Although yeah with their current hard product, there's no way they can match the MO, FS, or Capella's room rates. I doubt they'll be doing any major renovations soon though.
I cannot think of a hotel in Bangkok which has as huge a discrepancy between service (great) and hard product (weak) than Peninsula. So for people who value service a lot more than hardware this hotel must be considered.