Gross income before even starting a business plan

Most successful small hostels of that size are owner operated by someone living onsite.  Frequently they owned the building already before starting.  Perhaps it was their family home or inherited from a relative.  In that case, a small hostel is quite feasible as a business that affords a fun lifestyle and generates some income from the property instead of just draining cash with repairs and upkeep.  

Trying to start up a hostel like that when you don’t already have the property is MUCH more difficult and far less profitable.  This gets even more challenging if you want to hire a team and support your cost of living off-site.  Maybe consider living in the hostel until the business takes off?  

Is it fair to assume that you want to run a small hostel for the lifestyle that it provides more than the money you can make from it?  If the area has enough demand, a slightly bigger hostel might be a lot more financially stable.

It’s usually best to lean on the very conservative side when you estimate your income.  It will take a while to build a name and reputation, and until then your occupancy may be lower than you would expect.  Try calculating your income with really pessimistic numbers and then look for ways that you could make it work.  Accept that as your reality.  If those numbers turn out to be correct, then you’re already prepared.  If you end up with higher occupancy, then you’re in better shape than you planned for.  

Also, keep an eye on the other prices in town.  If the business potential isn’t really as good as you hope it is, then as soon as you open your doors the competition may drop their prices.  That might be a knee-jerk reaction to someone new entering the market, or it might be a tactic to run you into bankruptcy before you can get a firm footing.  Before you invest a cent, go talk to the competition.  Find out who they are and what kind of business they run.  They might turn out to be a lot more helpful than you expect.  Or they might indicate from the start what kind of competitive tactics they’re prepared to use against you.  Good to know either way!

As Stevecorica mentioned, looking for alternative sources of income in addition to accommodation is going to provide your best chances to make a 20-bed hostel work.  

1. Keep your day job (you might need to bring your own money from another job to make ends meet, especially at the beginning)
2. Organize tours or work with a tour company that pays you solid commissions
3. Open a complimentary business like a bar, cafe, co-working space, event hall, recruiting company, job placement service, or something else that can cater to locals as well as guests to maximize your income
4. Organize paid events like concerts, theatre performances, lessons or workshops, etc that are also open to the general public
5. Offer paid transportation to airports/train stations, and also to nearby cities so you can bring new guests back with you
6. Create a city map for your guests and charge local bars, clubs, restaurants, and shops to be listed on it

Here is a link to a previous discussion about supplemental hostel income that might also be helpful.