Fair points, maybe with some good marketing it can cater to the tourists. I have my doubts about people's desire to take a gondola to view the sites on this portion of the Don Valley tbh. But I guess as you've pointed out, it doesn't need to be busy to be successful.
Gondolas are one of the few modes of transport a private investor would dare invest in -- most transport are so heavily publicly subsidized but governments are generally gondola-averse -- yet capital costs are so low enough that a gondola line can be financed by a team of middle-class residents with already-paid-off homes.
The correct route, however, is needed, to lower investment risk further. The Don Valley Gondola is more highly touristy, but it is also being installed in a richer/more touristy city than Hamilton.
In Hamilton, there are parts of the escarpment (e.g. going from Gage Park to Mountain Drive park) that takes 1 hour by transit. Google mapped 35-50 min transit including transfer. But it doesn't include the initial wait time -- between 1 to 29 minute initial waiting time not included in Google Transit directions -- so on weekends you can easily wait 1 hour.
But gondolas have nearly zero wait time (off peak)! Ironically, the less "overly successful" it is (lack of lineup), the more tempting it is as a transfer. From just a mere 500 meter 100% privately funded gondola from approximately ten residential home remortgages, cuts the transit time from 1 hour to just 3 minutes, and still profitable at reasonably low fares (potentially matching bus fares). The Don Valley Gondola at $10 roundtrip is $5, not much more than a TTC fare, and that's a more expensive setup.
Transfers are an oft-quoted issue, but that's also why privately funded gondola must hit all bases -- tourists and transit -- to be successful. As long as fewer than 8 people walk up to the gondola every 8 seconds, there's no lineup.
Also, it should have a tapcard system (future Presto compatibility, but initially private reloadable card, similar to the ones for Playdium Arcade) as to keep frequent-commuter convenience maximized, operating costs low as possible. Heating and lighting are add-ons available for 365 day transit-hours-style operations (Tremblant's inexpensive mini-capsule gondola has these). Multiple methods of fare payments (online, offline, vending, tapcard, etc) to zero-out offpeak ticket booth staffing requirements to permit winter nighttime operations at operating costs palatable to investors.
To be acceptable to private investors for 365+nighttime operations -- I would see it as being "able to downscale" to be run by just 1 employee per station offpeak (boarding safety only), rainy and dark midwinter days, supplemented by a vending machine to offload gondola-watch/safety duty. Obviously for peak time, to rev-up the motor for higher speed operations (5 meter/second), it might be that 2-3 employees are needed -- one to help speed up payments to keep the gondola stuffed -- and one to mind boarding. But the increased gondola traffic obviously pays for a fleet of staff. Maintenance/cleaning/janitorial staff wouldn't be full time but could scale up if gondola exceeded demand. That way, break even easily throttles back to just mere low hundreds of users per day. Both ends of the gondola must have destinations useful to residents, as well as residents on both ends too, and that way, many residents are within walking distance of one end (e.g. either starting point or ending point) requiring only one transfer (e.g. to bus). Also reducing transfer pain, is the "fun" aspect of a low-fare gondola as well as the zero off-peak waiting time (8 seconds wait...!) somewhat mitigates the pain of doing transfers that involves a gondola connection very close to public transit. Obviously, fare integration is a thorny investor question (e.g. privately funded gondola transfers to a public transit system, and the need to negotiate with transit systems to reimburse them for the tax cost of the transfer). But that bridge can also be theoretically crossed in the future once the gondola is already up and running, too. I would presume it is a case-by-case and requires a negotiation process...
It is highly touristy/fun, which is why cash-strapped governments, backed by angry taxpayers, do not really want to touch gondolas. To top it off, the "white elephant" and "Simpsons monorail" screams from Joe Q Public. But just look at the wildly successful Brazillian "gondola metros" that move millions more people than expected, they are clearly also serving transit simultaneously with tourists.
For the next 10-20 years, it is my opinion that there is an excellent window of time for 100% private investment in certain Ontario cities for various gondola corridors that have difficult geography for other forms of transit.