For a hoist application
1) You can make a sensorless VFD (variable frequency drive) work on a Hoist however... If an encoder is not used and the VFD doesn't properly sense that there is a problem (it might be a rare occurrence but I've seen it), you could potentially drop the load. It only takes once to seriously damage equipment, hurt someone or worse.
2) With an encoder, and proper brake control (and torque proving) integrated into the VFD, if the motor rotates the VFD directly reads the speed and direction and takes appropriate action if control is lost (i.e. turn on the mechanical brake).
3) If proper brake integration is not incorporated into the VFD, an external monitoring mechanism needs to be used (e.g. a PLC that first proves torque then monitors an encoder and closes the mechanical brake in the event of improper operation) - i.e. the load is lowering faster than commanded, the load is lowering when the hoist should be lifting or stopped etc.)
4) Over and above the safety aspect, a suitable VFD with encoder feedback can provide stable zero speed torque and provide ideal brake integration (e.g. the motor can be at Zero Speed before the holding brake is applied. It can also be set up to hold at zero speed and 100% torque before the brake is released negating the load lowering at time of brake release. Also, when the brake is closed at zero speed, the VFD knows it is at zero speed and can keep the motor magnetized for a programmed period of time so there is no delay in motor magnetizing and torque proving if the load is brought to a stop then slightly lowered then stopped then moved again within a short period of time (e.g. if the load is being vertically positioned to a precise point). A VFD with encoder feedback can also provide very good speed control at very low speeds for more precise positioning.
In quick summary, you can make a VFD without an encoder work but this is a Hoisting application and it won't be as SAFE nor will it work as well as a suitable VFD with encoder feedback. Please don't just think about how you can make something work, think about does it make sense to make it work. Use a proper VFD with encoder feedback.