Your problem sounds exactly the same as our altered trip to Marsa Alam, a friend is going with us and she got a letter stating change of hotel and even though we are being moved aswell we still have not had the letter and it is now less than 2 weeks to departure.
We had a beach front suite booked at the Calimera Habiba with TC and they switched us to a standard room at the Brayka Bay, I tried to get other hotels but they wanted more money, I complained about the standard room but they said they could not upgrade us. I kept on at them, calmly stating at every opertunity how dissapointed we were at booking a suite 10 months in advance yet ending up with a standard room at a different hotel.
I had almost given up but on the last call before we accepted the change of hotel but then we were offered our room upgrade costs back, £308! Have not checked my invoice yet but I'm sure I got a discount on the upgrade but we have been given full cost back(I don't even feel guilty

)
The key to our negotiations was to request someone else to speak to, the girl dealing with our problem at first could not answer any question without speaking to someone else so I quietly ask to speak to that person. Nicola was put onto my case and she was very helpfull and eventually offered the refund and has given some advice on a letter of complaint.
Don't worry about upsetting anyone by asking to speak to someone higher up the chain, keep at them until you are a bit happier and no matter how hard it is, keep calm and play the sympathy/dissapontment card.
Hope you get some satisfaction.
Barry.