I'd say: "so we put you in ....instead of the studio queen" So is it like 2 separate rooms? In the second sentence the it is okay, in sentence one it would sound funny, like studio queen was a person , to avoid this I would even turn around the sentences...

I'd say "So instead of putting you in a studio queen, we are putting you in a double suite." However...with the sentence structure you provided I would include the 'it'. 'It' would then refer to the room or the reservation. Without the word 'it' I read the sentence as if 'instead of being a studio queen' refers to 'we'. This gives us a rather odd meaning: "We, the management of this hotel, decided not to become a studio queen. Instead, we put you in a double suite."

'it' is a pronoun for 'your room'. Although there are different ways of rephrasing it, this is fine, particularly as spoken language. In the sentence you gave, the 'it' is necessary, both grammatically, and to make sense of the sentence.

please