You registered for four nights at Red Top Hotel at $250 per night. Red Top requested your credit card number when you registered. When you went to a restaurant, your credit card was denied since it was at the authorized credit limit. How was your credit card limit reached by registering at the Red Top Hotel? Red Top charged the card the full amount of your stay.
Red Top blocked your credit card when you registered.
Red Top charged the card $1000 plus the 20% overage allowed to cover possible damages.
Red Top made use of the card for payments other than paying the hotel tariff.