Yes. The alternative is sending a message that there is no incentive to keeping people alive, so you should just kill us whenever you get the chance. You're not dealing with pirates here.
No, the alternative is sending them a message that there’s no utility in attacking in the first place because it will result in their complete destruction and taking hostages won’t mitigate the risk they are taking.
That logic applies when the options are a) take hostages for their value or b) do nothing. In this case, the options would be a) take hostages for their value or b) kill everyone on Oct 7 because live people have no value. I'm kinda ok sending the message that we'd rather you kidnap our people and keep them alive rather than just butcher them on the spot.
You are not merely incentivizing them to keep people alive. You are changing the entire risk/ reward paradigm of mounting an attack in the future when they might not have.
(As an aside, odds are that without the value of hostages Hamas would have devoted less time and resources to the festival and kibbutzim and more to their acknowledged goal of taking over bases and army positions and trying to establish a corridor to link up Gaza with the West Bank.)