Wow, this is really amazing on two fronts to me.
1. That a management rep. in a company that is clearly 100% in the service industry couldn't make the elementary decision to let you have the suite and correct the problem with his staff later. I call that bookending...we stop the problem right now and address it going forward. Anyone we (speaking for my company) biffed on in the past gets the benefit of our mistake since we missed the opportunity to do it correctly.
2. That you (OP) hold them harmless in this for not only making such a bush league mistake, but for extorting money from you...they pretty much mugged you in the hallway near as I can tell.
And I am very curious as to why Hyatt can't get their act together on their website with stuff like this. I find that to be unacceptable...publish one set of rules for your customers but a different (and 'real') set for those administering the rules. B.S.