Another example to the one above is:

I'm a hotel manager/owner. You're checking in on a Thursday and checking out Sunday. There is a suite available for your entire stay. As of right now, my Friday and Saturday nights are pretty high occupancy, might sell out. Pretty soon, that suite will be one of the only bookable rooms and someone is likely to pay full rate for it. Do I give you the complimentary upgrade, losing out on that revenue? Or do I hold off and see if I can make a good amount on letting that suite ride through the weekend? This would especially be true if you booked on points and I'm already making less for your room than someone who paid cash rate for that same room. This is why it's not "available" for you at check-in.

I know to most people, they plug their ears (cover their eyes?) when the financial side of upgrade decisions is laid out. Elite members just want their upgrade, they don't care how much it cost the hotel. At the end of the day, though, it's the hospitality business. The business part comes first to shareholders... and to the year end bonus for the managers too.