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It's a twist. Each character in the hotel is one of the Malcolm's personalities. This is made clear when it's discovered that they all have the same birthday, and all of their names are associated with a U.S. state (Ed Dakota, Paris Nevada, Larry Washington, etc.) In order for the judge to rescind the death penalty, the psychiatrist wanted to prove the personality that committed the murders 4 years earlier had been "killed". Malcolm's psychiatrist, Dr. Mallick, explains this to Ed when he makes him "surface". This is why at the end, Ed killed Rhodes. As the judge believed the serial killer personality was destroyed, leaving only Paris, he rescinds the death penalty and commits Malcolm to a secure mental institution. As Malcolm is being driven, along with Mallick, to the institution, in Malcolm's mind, Paris has driven away from the motel to her hometown in Frostproof, Florida. As she tends her orange grove, she discovers the room 1 motel key, and turns to find Timmy York behind her with a hand cultivator. Timmy, the true homicidal personality, had orchestrated all the deaths at the motel, and made it appear that he had been killed as well; he finishes his task by killing Paris, saying "Whores don't get a second chance". Now driven only by Timmy, Malcolm strangles Mallick, and the van runs off the side of the road. The obvious reason for Timmy wanting to kill "whores" is that his/Malcolm Rivers' mother, a prostitute, ignored and eventually abandoned him at the motel, where he was discovered, alone and traumatized. This also explains Larry's inexplicable decision to insult Paris repeatedly, calling her a whore and saying that he "doesn't talk to trash". Malcolm, still a child, is finally seeking revenge on his mother. It also explains the close, romantic relationship between Ed Dakota and Paris, the mother. This is stopped by Rhodes, the criminal, who shoots Ed, thus enabling Timmy to follow Paris/Mom and kill her. . Edit
As well having Dissociative Identity Disorder it appears that Malcom had other dissociatives disorders close to schizophrenia, mainly being in an altered state of conscienceness. The motel aspect happened entirely in his head. Since he was drugged with anesthetics, he was physically unable to act out his hallucinations.
Most of the murders he did commit were committed outside the main action in film, months or even years before. How and when those murders are not at all important to the the main story, with the exception of needing to know that they took place. Edit