All of Queenstown's emergency services attended the fire at Valet Services, in Gorge Rd, about 9am.
One part of the building was gutted by fire and another had smoke and water damage.
No-one was in the building at the time.
Alsco NZ-owned Valet Service provides linen to accommodation providers and restaurants in Queenstown and Alexandra, from its processing plant in Invercargill.
Alsco chief executive Tony Colenso, of Auckland, said the two full-time staff in Queenstown would continue to do their jobs and back-up stock was available.
The business leased the building and he understood the landlord had insured the structure.
He was waiting for an official report on the cause of the fire and wanted to hear about the extent of the damage before commenting further.
Some 14 firefighters, several using breathing apparatus, tackled the inferno as a crowd watched in the rain from the street and smoke billowed into the sky.
Firefighters were joined by Queenstown police, a Frankton fire appliance and a St John Wakatipu ambulance.
Allied Concrete batcher Peter Reinke arrived to see the smoke and raised the alarm about 8.45am.
"I had a look around and saw the flames . . . there were gas bottles there so we were a bit worried about that... There was no-one in the building."
Queenstown fire station officer Dave Christie said two gas cylinders outside the building were isolated.
A Delta technician temporarily switched off electricity to the units and rush-hour traffic was marshalled past the incident.
Fire investigator Mike Cahill, of Invercargill, told the Otago Daily Times a night store heater was on in the laundry service building.
A bag of towelling which was stored close to the heater for about four days, dried out and ignited, he said.
