This happened to a friend of mine abroad. She and her husband made reservations to a supposedly famous hotel three months before they flew for their anniversary vacation. She told me that upon arriving, they were welcomed warmly which looked that everything was alright. When their reservation was being looked up, the staff got confused because of the mixed up dates of reservation. They did arrive on the day they were supposed to but someone already occupied the room they wanted. Of course the hotel manager was very sorry and offered them a refund instead. They could not be taken in since the hotel was fully booked. Fortunately, the couple ended up somewhere nicer.
This happened to me and my friend on our very first trip abroad. It was in HongKong, though. We booked online and chose this particular hostel because the pictures looked good. The reviews also were great. However, when we arrived at the hostel, we were given a room different from the one we booked online. The owner was Chinese and we had difficulty communicating. We ended up only staying for the night and chose to move out the next day to a different place. Unfortunately, the Chinese owner refused to give us a refund. Of course, we could have argued, and demanded for a refund, but the owner kept saying "no English, no English." So we were left with no choice and found a different accommodation. It was truly a bad experience.
This happened to us as well but in a different way. We were so excited for a trip so we booked it online a couple of months before the supposed trip. There was no problem about the booking though. Everything went smoothly and we just deposited the money on the hotel's bank account. A few weeks later, we found out that we cannot go through with the trip because my husband has a schedule for that month, which was just given to him that day. So we called the hotel and asked if we can get a refund since we won't be pushing through with the trip. They refused to give us a refund though even if the trip is months later. We only paid a downpayment but still, we thought that is a waste of money if we cannot refund it. Sadly, they didn't refund it no matter how much we explained our side. Thankfully, this is the only mishap that happened to us. We've never had issues with our rooms being used by other people on our trips. Or maybe our room being a different one than we booked of.
Not really, I'm pretty much reliable when I make reservations. I'm the type who is never late, and would never make excuses if I couldn't come. So I have never not used a reservation. I have had friends though, who were not as reliable, and I guess it's as simple as calling the hotel and canceling it. No harm, no foul, it's part of the business I guess when you are in the hotel business. You end up getting cancellations, and you have to open up the opportunity to other people who may want that room.