I emailed my hotel contact re: La Palapa and this is the reponse I got:

Well the Palapa indeed is not here anymore it burned down. At this moment we have remodeled the area and have not found the perfect cover for this location. That the Palapa will not be rebuilt is true because we are looking for a new idea to put there. The Palapa was beautiful but its time has come and now with the Westin modern looks we would like the Palapa area to fit in the whole picture also.
So in a sense the rumors are true but not completely, we have not yet found the perfect substitute for the Palapa that used to be there. But hope to have this up as soon as possible. I will keep you posted and do not worry I have every brides interest as my first priority and am pushing big time for a new Palapa replacement!