I was in a similar situation about six months ago. We had paid a €1000 deposit to a hotel for wedding booking. Five months before the wedding the hotel sent us out new price lists. Price increases were in the order of 12-16%. After several attempts to negotiate with the hotel, to no avail, we cancelled our booking.
We looked around and found other hotels were willing to offer super discounts to get business. Hotels that were out of our price range two years ago, when we first booked our wedding, had decreased their prices. In the end we held our reception in a much nicer hotel (four star instead of three star), and the price of the food was substantially cheaper than the original, free corkage, free arrival reception, free afters food and free bar extension. We saved about €3000! And nothing was too much trouble for the hotel, even offered us two extra nights in the bridal suite.........again for free!
We have requested that our deposit be returned from the original hotel, but I’d say there is little chance of that.