This looks like a total gut job to me. If there is another bathroom in the home with a bathtub you don't need one in this bathroom. I would go to a kitchen & bath showroom for ideas and have a plan drawn up

Only you can determine whether you need/want a shower and/or tub. Think about what your needs are. Always consider function first. Then look around on-line for bathrooms that appeal to you. You'll get a clearer sense of what style you like. Then talk to a professional once you've got a clearer idea of what you want.

I agree with the above posters! In my house, we only take showers and we will eventually get rid of the bath tub so that the bath tub alcove can be one large shower. There are lots of great ideas on Houzz!

Absolute gut job to the studs. It looks like there is water damage. If you have a bathtub elsewhere, you don't need a bathtub/shower. But you do need one bathtub in the house for resale as small children don't take showers. The biggest issue on what to do is your budget, the value of your home and the homes in your neighborhood. And most people do not want a shower that is small and closed in enough to be a coffin like - it's claustrophobic and creepy.