Numbers add up for Lauder’s AHS

It was during five years of managing a contract cleaning business at Burswood International Resort that Perth businessman Stephen Lauder had the idea to start a hospitality outsourcing business.

In 1993 the idea became reality when Mr Lauder established his own company to cater for the housekeeping needs of the accommodation industry, the first of its kind in Australia.

Twelve years later, the AHS Group employs more than 2,500 staff across 70 sites, has offices and senior management teams in Perth, Sydney, Melbourne and Brisbane, and is responsible for servicing three million rooms annually.

Mr Lauder is looking to achieve continued rapid growth, aiming to increase turnover by 200 per cent in the next five years and expand internationally.   

From a young age Mr Lauder has been driven to achieve business success on his own terms. In his late teens he resigned from his position at the then R&I Bank because management stopped his extra training, and at age 20 he bought one third of Big Red Carpet Cleaning.

“I have not slowed down since then,” Mr Lauder said.

In its first year the AHS Group grew rapidly and was servicing 10 hotels. And in 1995, Mr Lauder made the risky but rewarding decision to move into the Victorian market. 

His success was formally recognised last month when he was named an Ernst & Young Entrepreneur of the Year award winner for services inclu-ding financial business and property.

This followed Mr Lauder being named a WA Business News 40under40 award winner in January.

It does not look like a slower pace of life is on its way for the company’s managing director, who said the AHS Group had two-thirds of the 20 per cent of Australia’s accommodation hotels that currently outsourced housekeeping work.

“The growth factor is significant when 80 per cent of accommodation hotels have not outsourced,” he said.

“In the year ended June 2005 we turned over $50 million and we aim to increase this to $150 million in the next five years.

“We plan to do this by accelerating other areas of our business such as linen management and supply of amenities, and through acquisitions and strengthening our senior management team.”

This is already under way with AHS advertising for a chief executive officer.

With enough growth in the Australian market for the next five years, beyond that Mr Lauder believes the world’s markets are wide open for his business. Of particular interest are the UK, South Africa, Canada and New Zealand.

“Time will tell,” Mr Lauder said. “But future growth is one of the reasons we need to strengthen senior management.”

Having been in the accommodation industry since 1993, Mr Lauder has experienced the economic highs and mostly lows that world events have caused. He said the sector took until about 2002 to recover from the 1989 recession.

The 2000 Olympic Games in Sydney was good for that city but hurt WA, according to Mr Lauder.

“Then in 2001 there was September 11, SARS, and Bali – the industry was seriously knocked about,” he said. “2004 is the first times that rates have grown. Prior to this the rates didn’t grow but the expenses did.

“But all of this showed how resilient the industry was.”

What helped the AHS Group’s success was the early realisation that, just because someone owns a hotel does not mean they want to, or have to manage it.

Owners want to look after core aspects of the hotel such as sales and marketing, but it is more cost effective to outsource other areas such as payroll, reservations and housekeeping, according to Mr Lauder.

“There has been a change in the industry; competition is greater and general managers are getting smarter and more savvy,” he said.

“My research has shown that in 85 per cent of cases, outsourcing is cost effective.”