Yet since opening in November, the hotel is having trouble filling even half of its 398 rooms, industry executives said. The Imperial is not making money and is up for sale.

``It'll be interesting to see how the Malaysian hotel industry survives 1999,'' research manager Loke Chee Kien at Sarawak Securities, told Reuters.The economic slowdown that began last July has started to choke most hotels in Kuala Lumpur, and comes after smog from regional forest fires drove tourists away in the second half of last year, industry executives said.

In the last two years, at least a dozen new hotels have opened in the Malaysian capital,including five-star chains JW Marriot, Ritz-Carlton, Rennaissance and Nikko. The Hyatt Grand Duta and Mandarin Oriental are on the way.

The new hotels were built by businessmen impressed with Malaysia's more than eight per cent annual economic growth in the last 10 years and the boom in the local hospitality industry.

Hopes that thousands of people will visit Kuala Lumpur this September for the Commonwealth Games also helped spur the growth in hotel rooms, said analysts.

``What no one anticipated, of course, is the economic slowdown,'' said Loke. ``There's already a glut, and it only looks like it's going to get worse in the next six months and after the Games.''

Industry officials said there were 16,989 hotel rooms in Malaysia as of September 1997, with 13,161 being built in 39 projects. ``There has been a 30 per cent increase in room supply in Kuala Lumpur since last year, but demand for rooms has dropped by 18 to 20 per cent," said vice-president of the Malaysian Association of Hotels, GeoffreyYork.