Cool that Fairmont stuck with the erroneous promise. It would've been easy for them to say no and "well, sue us if you dare!" you, without any significant loss-of-sales effect on the bottom of their end-of-year Excel sheets. Implies some long-term thinking or just plain decency (which I wager are the same thing).
At the level of customer that the Fairmont deals with, losing any Platinum customer would be a major deal for them.
They also realize that one negative customer experience in their line of work gets retold over, and over, and over. Taunting customers with "go ahead, sue us!" would be a P/R disaster of even larger magnitude if it got public. Didn't we just see an HN discussion on how rage spreads faster than good news?
It was cheaper for them to honor the deal in the long run. Upgrades are one of the cheapest things hotels can give away, when you think about it.
And yet, many companies choose to act that way. The RIAA and MPAA companies come to mind, in particular. You might argue that they're just protecting their products from piracy, but when it comes to things like the blank CD-R tax and DRM keeping you from backing up your own files, they definitely are that bellicose in my opinion, and I think they've destroyed their goodwill.