I'd imagine that I am a flashpacker now, i don't want to share bathrooms though. I owned a guesthouse about 5 or 6 years ago and we were not flash at all and as that became the "new normal" we didn't have the funds necessary to keep up. We did alright with the really cheap I guess, traditional backpackers, but they are a dying breed these days.
one of the worst things that could happen would be when someone would book with us expecting us to be flash even though I was very honest on the websites we were listed on and posted undoctored photos and was very clear about how we are a very basic place and that is why our prices are low. We would still get the odd person coming in that was expecting luxury for $5 and we would just give them their money back and send them on their way.
in all my stays in scores of guesthouses around the world there is always going to be a few "wet blanket" people in the mix that have very strange expectations of what a budget guesthouse is going to be all about. These people are normally miserable all the time and probably would have been better off just staying at home.