That's just how hotels operate. Once the # of agreed-upon rooms are reached, all future reservations go to the normal rate. It gives groups and regular travelers a chance to make reservations. Plus, regular travelers are preferred, as they drive up income. Groups help fill a hotel, but bring down the average price, which mgmt doesn't love.
Some would rather book 100 rooms at $140/night than 150 rooms at $100/night.