It depends on what is important to you.

I don't understand how a $100 bottle of wine is twice as good as a $50 bottle of wine either because I don't value wine highly enough or know enough about wine to tell the difference. But I do know and value the difference between an upscale and luxury hotel.

It is certainly true that as you move up the quality scale, each extra dollar doesn't buy as much as the previous one. But this is true for all sorts of goods and services, not just hotel rooms. In the end, the answer to your question is very simple: if you can't see and value the difference, then you shouldn't be spending the extra money.