I imagine Southwest contracted for a block of rooms at some undisclosed rate and then sold them to the public at a rate that would give them a profit. They can't go back and re-negotiate the rate. They took the risk that they might not be able to sell the rooms; you were also able to lock in the cost and know it wouldn't go up.

I got stung similarly once- booked a room in London on Orbitz at a "buy-it-now" non-cancellable instant purchase rate and found out later I could have done much better on my own booking directly with the hotel- didn't do my usual research because it was only one night. I considered it a lesson learned.