europe – Can a hotel cancel a confirmed reservation?

I booked a hotel yesterday if Booking.com for a special occasion in Barcelona (I come from another European country). The reservation only lasts a few months.

The reservation includes:

The hotel confirmed the reservation this morning but a few hours later, it sent this message via the website booking.com to raise the rate of about 40 € / night (if I try to book it again on Booking.com, the price is around 265 € / night and they now offer the hotel at 165 € / night)

Message:

Dear XXXXXXX,

We will contact you with reference to your reservation, made
in the last hours at the hotel XXXXXXXXX.
Unfortunately we have
to inform you that there was a serious human error and therefore
the price of your reservation does not correspond to this category of hotel.
Because of this situation, we would like to offer you the opportunity to
cancel your reservation, obviously without any fees, or to reconfirm
your reservation at the special rate of 165 EUR per night / room VAT
included. We appreciate your understanding and cooperation in these areas.
circumstances and we ask you to accept our sincere apologies in hoping
do not cause any inconvenience. We are waiting for you to indicate
which of the two proposed alternatives is from your larger
convenience.

Regards,

xxxxxxxxxxxx

Do I have to accept their new booking conditions, accept their new price / cancel or do I have the right to keep the original price?

I would not want to arrive there with a sour taste, nor to be able to cancel the reservation at the last minute, without recourse, while I had originally planned 140 € / night, we want the trip to be special and without problems.