Being a former foster youth and basically getting fucked over by the system, I have had the unpleasant privilege of having to live out of a car for months. It is no picnic. Leave the guy alone in his misery. There is nothing you can do to help him and alerting the staff there is only going to make his suffering worse. As unpleasant as his odor is, it's just a symptom of a bigger problem that there is no easy solution to. You don't know why he ended up in that predicament so whether he's a recovering drug addict, or just got unlucky in a divorce or something, he's got enough bad shit going on to deal with to have to pile on judgment from others and harassment from a heartless establishment.
There aren't enough homeless shelters for all the homeless out there, there aren't enough recovery programs for the people who just need a little help to get back on their feet, and the people who are really just kind of beyond help are completely out of luck. It's fucked up, but if that guy is lucky enough to have a mobile shelter to cool his heels and sleep in, having done anything to report him could have cost him that and a lot more. And you'd probably never have known, so you may not have known the full weight of your decision if you had chosen route 1. Route 2...I don't think you could have helped even if you really, really wanted to. But odds are someone else reported it anyway. At least you have a clear conscience. Trust me, that guy is likely to endure nothing but harassment from cops, ostracism from other civilians and neglect from government programs that should be helping. Being on the other end of that, I know how dark it gets. If you were in that guy's shoes, and all you really wanted was to be somewhere no one could look at you, maybe take a shower and get rid of that B.O. for a while, you'd feel like killing yourself if someone reported you to the facility's management. And if you had, who knows, he might have.