Originally Posted by HadesNL

That is really shrewd business tactics!

Normally if you book a room type with view, balcony, whatever special feature,
You would expect the Diamond upgrade to move a category up but keep the view, balcony, whatever special feature.

If the next category up does not have the view, balcony, whatever special feature,
Normally reservations would get in touch with the guest to explain the situation and let the guest choose / offer alternative.

In your case where they upgrade you to a "better" view but into a smaller room,
is a sure case for debate and discussion.

It would grace them to offer you a larger room after you emailed them to state you prefer a bigger room over the view.

Reservations might not be empowered so maybe escalate ?
Bit sloppy from this Kimpton, but as you said their high summer occupancy could have made them cocky.