I assume this happened in the US, but outside the US on award stays, half or more of the time the front desk tells me that because I am a Diamond they won't pre-authorise my card at all and just trust the card on file to be valid...

Some of the time, I can even charge things to the room with a card on file that I've blocked (of course if the hotel allows this, I will pay with another card before leaving, but if I wanted to say goodbye to Hilton I could theoretically run up a high amount and then just do a runner - especially if it's a country where no ID is needed on check in)

The OP says it was a lower-end brand. I did once have a Hampton try to pre-authorise a card the day before check in for an award stay, which failed as I had blocked the card. I didn't answer the hotel's phone call or emails as I was on a plane, but even so they didn't cancel the booking and just made me give another card when I showed up. I complained about this and they made up some excuse saying if I wasn't Diamond they would have cancelled the stay, which didn't seem particularly relevant but maybe it was a language problem.

Another strange incident happened on a paid stay at a Hampton. I did OLCI and requested a digital key, but a few hours later I got an email saying the card was declined and they might have to cancel the stay. I could see no reason for the card to decline and no charge had been attempted. As my flight was about to depart I couldn't do anything. But when I landed my card had been charged the correct amount and the digital key was on my phone. I didn't interact with any staff at the hotel and the points for the stay posted normally. Perhaps some sort of scam attempt.