It happened to me: I arrived at a hotel, exhausted, with a firm reservation, only to have the desk clerk tell me the hotel was full and it couldn’t honor my reservation. This can happen for several reasons – maybe the hotel overbooked, some guests stayed longer than expected, or somebody bought out the whole hotel for an event. Something has to give: A hotel can’t quickly build another room for you to occupy, and it can't throw a current guest out.
The "why" doesn't matter; the hotel is simply unable to honor a reservation. What you need to know is how the hotel plans to fix the problem and what rights you have if it doesn't find an acceptable fix. As far as I can tell, at least in most of the country, you have no specific right, as you do with an overbooked airline flight.
Normal industry practice is to try to fix the problem: What to do? As with most such situations, if the hotel offers you an acceptable fix, take it if it’s at all reasonable. If the offer isn't great, ask for some extra compensation. Even when a proposed fix is a disappointment, shrug it off, just say "kismet," and go to dinner or bed rather than hassle into the wee hours.
If the offered fix is unacceptable, or there is no fix, your options are meager. You can't even demand to be walked. Some folks – even supposedly experts – seem to believe that walking is an enforceable legal requirement.
But I've never been able to locate any such specific laws or regulations, nor have I seen any hotel contr.