When hotels are full or reach an oversold situation, they will often run all the credit cards for the day's reservations to see what cards decline. They will then cancel those reservations or put them "at the end of the list" for getting an available room.

Don't think for a minute that there aren't customers out there who deliberately reserve rooms with a bad credit card number knowing they will no show but don't care because they gave a bad card number. While I do agree status with a given chain should weigh heavily in these situations (call the customer who's card declines...), I don't think it always does.

I think the hotel displayed terrible customer service but the situation is complicated.