After ambassador support emailed the hotel and copied me in, it transpires that Lithuanian law prevents discount on alcohol, hence why they can't be applied. Would have been good if reception told me that on either of the visits to them to ask.
Regardless though, the IHG app still allowed me to apply the rewards to the full amount, leaving me with a decent "credit" on the hotel bill which I now won't use.
Hopefully ambassador support can help. Or I've just been a test case for everyone else!