I am surprised Priceline is offering any reimbursement at all as they are in no way responsible for this problem. Hotels manage their inventory and are able to close out Priceline rates in the system at any time - they allot a certain number of rooms/rates to Priceline - Priceline cannot overbook a hotel unless the hotel did not manage their availability in the system properly (in which case it is not truly Priceline overbooking the hotel, but rather the hotel overbooking the hotel). Priceline does not get all of the money from these reservations - the hotel is receiving revenue from their Priceline bookings; the hotel should not be able to wash their hands of this situation.
As others have mentioned, the best option is to take this up with the hotel and/or Marriott customer service. At the hotel directly, you could try the Reservations/Revenue Manager or Guest Services Manager (a.k.a. Front Office Manager) first; if they do not resolve to your satisfaction, then it needs to be escalated to the GM. If still no satisfaction, then Marriott customer service would be the next choice.
If you looked on the Priceline site and saw availability at other hotels in your bidding area that night, that does not mean other hotels had availability through the "name your own price" program. Going through the main Priceline site and just checking general rates is looking at regular availability, not availability through the bidding process. (If you could readily see what hotels were open for the "name your own price," that would take away from the "opaque" nature of the bidding system.)
As a former Revenue Manager at different resort properties plus a Revenue Consultant at the corporate level, I am appalled that this hotel pawned this off as somehow being Priceline's responsibility rather than their own error. Many hotels purposely overbook as part of their yield/revenue management strategy (and it can be a valid strategy if done with skill and prior historical data, overbooking a set number of rooms based on several factors), but they need to be prepared to face the consequences if they did not handle their inventory correctly. More than likely they were holding a reservation for you and a reservation for someone who a) is a regular guest and/or b) paid closer to rack rate and the front desk staff thought it would be less difficult to send you elsewhere than have to deal with the other guest(s). Sometimes it is just a matter of which guest shows up first.
I am sorry you had to experience this situation. You were not in fault in the least but you are having to deal with all of the repercussions of the hotel's mistake. That is not fair and the hotel absolutely should honor their reservation commitment to you by taking care of you now in regards to reasonable reimbursement.
I am no longer in the hospitality industry, but use Priceline frequently for hotel stays and have been happy with almost every single experience. I hope that in the future you might be able to try them again and have a much better result. My husband and I just came back from a few days out of town and we were talking about how Priceline has really spoiled us as far as rates. We stopped for the first night halfway between home at St. Louis - stayed in a middle-of-nowhere town at a budget chain and paid $59 (when we walked in, they initially wanted $70). Very basic hotel, nothing fancy, just a place to sleep for the night. We booked through Priceline and paid $48 for the Hyatt Regency in downtown St. Louis - nice property in historic Union Station, great room, great stay - for the next night.