Future Urban Spaces (FUS)

Consultants
129 Main Road
Observatory, Cape Town
Sthmpn001@myuct.ac.za

Mr. and Dr. Blomkelk

Bongo Valley Backpackers’ (BVB)
Tamboerskloof
Cape Town

19 April 2024
Dear Mr. and Dr. Blomkelk

Completed report on which option BVB must choose going forward

Please find the completed report that is attached below on investigating and recommending the best
options for BVB going forward, focusing chiefly on the three options to either assist with the
homelessness crisis, consider tendering for investment in upgrading to a boutique hotel, or
remaining in operation as is.

In our investigation, we have dug into the homeless crisis in Cape Town, shedding light on the
challenges faced by those affected, especially concerning eviction orders. Also, we have explored the
competitive scene surrounding Airbnb and inspected techniques for overseeing this competition
successfully. Furthermore , we conducted an intensive evaluation of the achievability of converting
Bongo Valley Backpackers into a shelter to help the neighbourhood government intending to
homelessness. Alongside, we have distinguished both the challenges and benefits related with
inviting foreign investments. After a comprehensive review of all findings, we recommend upgrading
to a boutique hotel as the ideal choice for the company, considering its potential for development
and benefit within the advancing hospitality market.

We have used different sources to ensure that the report provides an acquainted conclusion and
recommendations for Bongo Valley Backpackers’ (BVB). The sources include the case study
information provided, Daily Maverick for full information on helping people off the street, the SA
people’s news. As well as Scielo Social work, providing comprehensive figures of the homeless
situations in western cape, specifically in the Observatory.

This report should assist the company in making the decision of choosing the right option. We hope
we have answered all the questions, if you have any questions please do not hesitate to contact via
the details listed above.

Kind regards,
Consultants
Future Urban Spaces (FUS)

1
INVESTIGATION INTO WHETHER BONGO VALLEY
BACKPACKERS (BVB) SHOULD ASSIST WITH
HOMELESSNESS CRISIS, UPGRADE TO BOUTIQUE
HOTEL, OR REMAIN IN OPERATION AS IS

Prepared for:
Dr Blomkelk
Chief Shareholder and Manager of BVB Operations
Bongo Valley Backpackers

Prepared by:
Kabelo Maponya
Sinalo Sithonga
Independent Consultants
Future Urban Spaces

Submission Date:
20 April 2024

Keywords: BVB, Lodge, Boutique Hotel, Cape Town,

2
TERMS OF REFERENCE
This report was commissioned by Dr. Blomkelk on [12 March 2024] , in order to investigate the
current problems faced by company Bongo Valley Backpackers’ (BVB) to focus on the three options
to either assist with the homelessness crisis, consider tendering for investment in upgrading to a
boutique hotel, or remaining in operation as is.He Requested that the final report be submitted on
[ 17 April 2024].

Mr.Mrs. Blomkelk ’s specific instructions were to:

1. Provide an overview of the homelessness situation in Cape Town, including statistics,

trends, and challenges faced by individuals and families affected by eviction orders.
2. Investigate any relevant competition from Airbnb on the short-term rental market, as
well as examples of how other establishments manage such competition.
3. Assess the feasibility of converting Bongo Valley Backpackers' into a shelter to assist the
local government with homelessness in Cape Town, including legal and regulatory
considerations, municipal requirements and community support.
4. Evaluate the potential benefits and challenges of inviting foreign investment to repurpose
the lodge for entry into a higher income bracket of international visitors
5. Draw Conclusions on all of the above in order to make Recommendations about the best
course of action for BVB, taking all stakeholders into account.

3
EXECUTIVE SUMMARY

Introduction
Bongo Valley Backpackers’ (BVB) is a Lodge operating in Cape Town and is looking for the best option
for BVB going forward .There are three options to focus on , to either assist with the homelessness
crisis, consider tendering for investment in upgrading to a boutique hotel, or remaining in operation
as is.This report was commissioned to decide on which option to choose between the three options
above , and that solution should be the one that best serves the interests of the Municipality, the
neighbourhood, and above all the safety of current and future residents of the property and
surrounds.

Homelessness Situation in Cape Town

The homelessness situation in Cape Town is complex, with challenges including the COVID-19
pandemic, economic impacts, and legal complexities surrounding eviction orders. Despite efforts by
the City of Cape Town to provide care and support for the homeless, there remain significant hurdles
in addressing the issue effectively.

Competition from Airbnb on the Short-Term Rental Market

The rise of Airbnb in Cape Town has disrupted traditional housing arrangements, leading to
discussions on regulation and concerns about housing affordability. Apartment complexes catering
to Airbnb have emerged, highlighting the need for balanced urban housing policies that prioritize
resident well-being.

Feasibility of Converting BVB into a Shelter Converting

BVB into a shelter for the homeless presents legal, regulatory, and community challenges. While
there is potential to provide dignified shelter and support services, there are also obstacles related
to funding, municipal requirements, and community support. The figure below demonstrates a bar
graph showing the increase in homeless population over time.

4
 Figure 1: The increase in the homeless population over time.

Benefits and Challenges of Acquiring Foreign Investment

Acquiring foreign investment to upgrade BVB to a boutique hotel offers benefits such as revenue
growth and cultural exchange opportunities. However, challenges include potential displacement of
local businesses and social inequities arising from redevelopment.

5
Conclusions
Cape Town faces challenges in addressing homelessness and regulating the short-term rental
market. While there are opportunities for BVB to contribute positively to these issues, each option
comes with its own set of challenges and considerations.

Recommendations
Based on the findings presented in this report, the recommendation is for BVB to upgrade to a
boutique hotel, which has multifaceted benefits for BVB, such as overall growth and increase in
revenue . This option offers multifaceted benefits, including revenue growth, employment
opportunities, and market differentiation. Implementing this recommendation will require strategic
planning and investment in amenities and maintenance to enhance BVB's competitive advantage in
the hospitality market.

6
TERMS OF REFERENCE................................................................................................................................................
Executive Summary......................................................................................................................................................
Conclusions..................................................................................................................................................................
Recommendations.......................................................................................................................................................
List of Illustrations........................................................................................................................................................
Glossary.......................................................................................................................................................................
1. INTRODUCTION........................................................................................................................................................
1.1 Subject of the Report.......................................................................................................................................
1.2 Background to the Investigation......................................................................................................................
1.3 Objectives........................................................................................................................................................
1.4 Method............................................................................................................................................................
1.4.1 Interviews...............................................................................................................................................
1.4.2 Site visit..................................................................................................................................................
1.5 Scope and Limitations......................................................................................................................................
1.6 Plan of Development.......................................................................................................................................
2. Homelessness situation in Cape Town.....................................................................................................................
2.1 Challenges faced by homeless.........................................................................................................................
2.2 Helping people off the streets.........................................................................................................................
3. Competition from Airbnb on the short-term rental market...................................................................................
5. CONCLUSIONS..........................................................................................................................................................
5.1 Advancing Dignified Solutions for Homelessness............................................................................................
5.2 Equitable Urban Housing Policies....................................................................................................................
6. RECOMMENDATIONS...............................................................................................................................................
6.1 Upgrade to a boutique hotel...........................................................................................................................
Based on the findings and conclusions for this report, the following recommendations can be
made. Upgrading to a boutique hotel has multifaceted benefits for BVB, such as overall
growth and increase in revenue. The introduction of Amenities and standard maintenance to
the boutique hotel could possibly lead to charging higher room rates. As a result, BVB will
achieve higher occupancy rates which overall increase revenue. Additionally, upgrading to a
boutique hotel promotes BVB’s competitive advantage. With the opportunity to
differentiate BVB from other accommodations, as a result attract unique and diverse guests.
Moreover, this has the ability and potential to increase BVB’s market value, leading to
property’s value appreciation................................................................................................................................
6.2 Attracting foreign investment..........................................................................................................................

7
List of Illustrations
Image 1. Homeless living alongside the road, Cape Town centre

Figure 1. The increase in the homeless population over time

Glossary
BCS: Best Case Scenario

SDG: Sustainable Development Goals

BVB: Bongo Valley Backpackers

FUS: Future Urban Spaces

8
1. INTRODUCTION
1.1 Subject of the Report
This report describes an investigation into the three options to either assist with the
homelessness crisis, consider tendering for investment in upgrading to a boutique hotel, or
remaining in operation as is in Cape town , to decide which is the best option for BVB going
forward.

1.2 Background to the Investigation

Dr. Blomkelk, as chief shareholder and manager of daily operations for the BVB lodge have
requested for an investigation to decide which best option forward for the company.BVB is
looking for a solution that best serves the surroundings .the focus is chiefly on the three
options to either assist with the homelessness crisis, consider tendering for investment in
upgrading to a boutique hotel, or remaining in operation as is.

1.3 Objectives
The objectives of this report are to:

● Provide an overview of the homelessness situation in Cape Town, including statistics

and challenges.
● Analyse the competition from Airbnb on the short-term rental market.
● Assess the feasibility of converting Bongo Valley Backpackers into a shelter.
● evaluate the challenges and benefits of leveraging foreign investment for targeting
high-income visitors.
● Draw conclusions and make recommendations for Bongo Valley Backpackers,
consider all stakeholders.

1.4 Method
1.4.1 Interviews

BVB Backpackers' owner, Dr. Blomkelk, discusses the value of community

involvement in difficult circumstances after witnessing another hostel's conversion
into a homeless shelter during lockdown. He looks into the potential of increasing
capacity to be eligible for city subsidies, but this will need an initial capital
expenditure, even if he values the neighborhood's security and financial stability. Dr.
Blomkelk emphasizes the necessity for connection with their principles and
community involvement, while being open to foreign investment for possible
upmarket change. This highlights a smart balancing between business viability and
social responsibility in guiding the hostel's future orientation.

1.4.2 Site visit

9
 The company was visited and the information of the rooms , current guests , how
the rooms look inside ,etc were recorded and used to conduct this investigation.

1.5 Scope and Limitations

The investigation will include an overview of the homelessness situation in Cape Town,
competition from Airbnb in the short-term rental market, legal and regulatory
considerations, municipal requirements, community support, and the implications of
repurposing historic buildings. It is important to note the limitations of this study, including
the availability and reliability of data, potential biases in stakeholder interviews, and the
dynamic nature of the hospitality and real estate industries. Additionally, the investigation
will primarily focus on financial projections and stakeholder interests, with limited
consideration of broader societal impacts.

1.6 Plan of Development

This report starts by providing an overview of the homeless situation in Cape Town ,
according to the terms of reference. Investigate relevant competition from Airbnb , assess
the feasibility of converting BVB into a shelter ,evaluate the potential benefits and
challenges of inviting foreign investment , then draw conclusions and make
recommendations about the best option for BVB going forward.

10
2. Homelessness situation in Cape Town
2.1 Challenges faced by homeless

Image 1: Homeless living alongside the road, Cape Town centre.

The COVID-19 pandemic and its associated economic impacts have contributed to an
increase in the number of homeless people in Cape Town. Mobility, identity concerns, and
substance misuse are among the challenges encountered when counting and supporting this
demographic. Due to the fact that many encampments are situated on property owned by
national government agencies, Cape Town's ability to address homelessness is limited by its
jurisdiction over land. Eviction orders necessitate careful planning and attention to complex
legal procedures, making legal navigation extremely difficult. The city's strategy places
eviction as a last choice and stresses using up all available care options and offers of
alternate housing before taking this action. The misery of those living on the streets is made
worse by delays in getting court orders and carrying out evictions. This highlights the
necessity for a well-balanced strategy that puts everyone's dignity and respect first.

2.2 Helping people off the streets

A comprehensive approach that prioritizes the care and dignity of individuals impacted by
homelessness has arisen as a result of the City of Cape Town's concerted efforts to address
homelessness. A large amount of funding is allocated to building and running "Safe Space" facilities,
which offer homeless people a place to stay and other necessary services. Despite not having
allocated funds for social welfare, this large expenditure demonstrates the city's dedication to
providing long-term solutions that go beyond the constraints of shelters managed by non-
governmental organizations. There will soon be a 300-bed Safe Space in Green Point, which is a
concrete step in the right direction in helping the homeless community.

The City of Cape Town is cautiously optimistic that it will be able to restore public spaces and offer
dignified solutions for the benefit of all citizens despite these obstacles. Recent achievements show

11
how effective the city's strategy is and provide hope for people to reintegrate into society and find
long-term solutions to end their homelessness. The city's commitment to providing care and dignity
for the homeless population highlights its determination to create a city of hope for all citizens,
despite the significant challenges faced.

3. Competition from Airbnb on the short-term rental market

The emergence of Airbnb in places like Cape Town is upending conventional housing arrangements
and changing urban landscapes. According to a data initiative by Airbnb that tracks the company's
global progress, Cape Town has an incredible amount of listings—more than all of the big cities
combined, including Singapore, Amsterdam, and San Francisco. Short-term rental proliferation has
led to discussions and conflicts over regulations like those in Berlin and Barcelona.A concerning trend
is the rise of apartment complexes catering particularly to Airbnb, such as The Station in Sea Point
and the Rockefeller on the Foreshore. These buildings, once prime living spaces, presently offer
unlivable studio apartments adapted toward buy-to-Airbnb entrepreneurs. The Rockefeller, for
occurrence, gloats "luxury" apartments, the measure of lodging rooms, missing essential
conveniences like cooking offices. Essentially, The Station offers studio apartments at extreme costs,
highlighting a genuine bequest showcase progressively driven by short-term rental benefits

This move in housing improvement not as it changes the physical landscape of cities but moreover
worsens housing imbalance. Whereas luxury apartments for Airbnb thrive, activities for reasonable
housing, just like the Tafelberg location supported by Ndifuna Ukwazi, battle for acknowledgment.
The estimating of these Airbnb-focused advancements, distant over advertise standards, assist
distant inhabitants from getting to satisfactory lodging.Eventually, this trend reflects a cityscape
prioritizing entrepreneurial benefit over the well-being and livability of its inhabitants. As Airbnb
proceeds to impact lodging markets, cities like Cape Town confront the challenge of adjusting
financial interface with the requirement for feasible, comprehensive urban improvement.

4. Feasibility of converting Bongo Valley Backpackers (BVB) into

a shelter for the homeless

4.1 Legal and regulatory considerations

Cities face the challenge of insufficient national funding for social welfare, necessitating
substantial investment in expanding transitional shelters. Legislation mandates obtaining

12
eviction orders through courts before displacing people from dwellings, a process that can
lead to delays and prolong the stay of people on the streets, impacting their wellbeing. This
is required to be done in compliance with the Prevention of Illegal Eviction (PIE) Act. Since
cities can only act on the land they own, while tented encampments often occupy national
government owned grounds. An estimate of 6,630 people living on Cape Town’s streets as of
2023/24, compared to 4000 people in 2019/19, highlighting the urgency of addressing
homelessness. The figure below demonstrates a bar graph showing the increase in homeless
population over time.

Figure 1: The increase in the homeless population over time.

4.2 Municipal requirements

Cape Town is investing a quarter of a billion rand to expand and operate safe space facilities,
offering dignified shelter and social support services. Recent census studies highlight the
need for increased capacity to accommodate the homeless group. There’s a call for other
avenues of government to address homelessness on their land, above their jurisdiction.

4.3 Community support

13
 Existing safe spaces lack transitional qualities, with people still being deprived of basic
facilities. Suggestions for enhancement or improvement include ensuring lockable spaces
and adequate shelter from the weather

5. Benefits and challenges of acquiring foreign investment to

upgrade the lodge
5.1 Benefits
With an increasing short-term rental market, exemplified by Cape Town’s 21,000 listed
Airbnb’s, Cape Town has now surpassed Berlin and Barcelona’s short-term rental market.
Moreover, upgrading the lodge through the foreign investment preserves the historic
significance while revitalizing it for modern use, thereby enriching the cultural heritage of the
area. Collaboration with international investors, such as the French Embassy, can foster
cultural exchange and diversity, offering new perspectives and experiences to the local
community. Upgrading the lodge into a cultural focused establishment may attract a new
demographic of tourists interested in art and history.
5.2 Challenges
Foreign investment may exacerbate redevelopment, leading to displacement of local
businesses and pricing out lower income people from the area. This is evident in the
development of apartment blocks tailored for short-term rental, which may contribute to
housing affordability issues and social inequities. Converting the lodge into a high-end
establishment may result in the loss of community support and disrupt the neighbourhood.
These buildings are evidence of the emergence of buildings that are designed, constructed,
and marketed for the short- term rental industry

14
5. CONCLUSIONS
5.1 Advancing Dignified Solutions for Homelessness
its commitment to tending to homelessness, the City of Cape Town has prioritized respect and care
for defenseless populaces through the development of "Secure Space" offices. In spite of asset
imperatives, significant advance has been made in giving protection and administrations to destitute
people. Be that as it may, exploring lawful complexities and information collection challenges
posture critical obstacles, dragging out the predicament of those on the lanes. Collaborating with
other government circles is basic to overcome these obstructions and actualize comprehensive
arrangements. Later victories illustrate the viability of the city's approach, advertising trust for the
reintegration of people into society and feasible pathways out of vagrancy. Maintaining standards of
respect and regard for all included remains foremost as Cape Town endeavors to make a cheerful
and comprehensive urban environment for its inhabitants.

5.2 Equitable Urban Housing Policies

The rapid extension of Airbnb in cities like Cape Town has significant implications for urban housing
flow, as proven by the surge in short-term rentals and the development of apartment complexes
catering particularly to Airbnb entrepreneurs. This trend not as it were modifies the physical scene
of cities but moreover worsens housing imbalance, sidelining activities for reasonable housing and
prioritizing benefit over resident well-being. As cities hook with the challenges posed by platforms
like Airbnb, there's a pressing need for impartial urban housing approaches that adjust financial
interface with the basics for comprehensive, decent communities. Moving forward, policymakers
and urban organizers must prioritize procedures that guarantee impartial access to housing for all
inhabitants while cultivating economical urban development.cities around the world.

5.3 Strategic Considerations for Upgrading BVB

Based on the findings of the investigation, it can be concluded that upgrading Bongo Valley
Backpackers presents both opportunities and challenges. Converting the lodge into a shelter could
contribute to addressing the homelessness crisis in Cape Town, providing safe accommodation for
those in need. However, this option may face regulatory hurdles and require significant investment

15
in infrastructure and social support services. Alternatively, inviting foreign investment to upgrade
BVB into a boutique hotel could stimulate economic growth and enhance the lodge's viability in the
competitive hospitality market. Nonetheless, this approach may exacerbate gentrification trends and
raise concerns about community displacement. Ultimately, the decision to repurpose BVB should
consider the interests of all stakeholders, including the municipality, the neighborhood, and current
and future residents.

6. RECOMMENDATIONS

6.1 Upgrade to a boutique hotel

Based on the findings and conclusions for this report, the following recommendations can
be made. Upgrading to a boutique hotel has multifaceted benefits for BVB, such as overall
growth and increase in revenue. The introduction of Amenities and standard maintenance
to the boutique hotel could possibly lead to charging higher room rates. As a result, BVB will
achieve higher occupancy rates which overall increase revenue. Additionally, upgrading to a
boutique hotel promotes BVB’s competitive advantage. With the opportunity to
differentiate BVB from other accommodations, as a result attract unique and diverse guests.
Moreover, this has the ability and potential to increase BVB’s market value, leading to
property’s value appreciation.

6.2 Attracting foreign investment

Evaluate the potential risks and benefits of inviting foreign investment to upgrade BVB into a
boutique hotel, considering the long-term impacts on the neighborhood's socio-economic
dynamics and cultural heritage. Moreover, upgrading to boutique hotels will increase and
improve economic growth in several ways, including creation of employment, hiring more
staff to manage operations. Management operations such as cleaning, front-desk services,
and maintenance which in turn could alleviate the unemployment rate in the neighborhood.

16