I would wallpaper the back wall of the alcove.

Also upgrade the light.

The world is your oyster in terms of design choices for powder rooms. They are the place where one can go wild in terms of styles and colors.

Google or do a search for powder rooms and save the ones you like and see what the common threads are in terms of style and color.

My guest bath - actually it's a 3/4 bath as it has a shower - which I just finished remodeling. Not completely done so there is a stray lamp in there :-).

Since I was remodeling and I also have a shower, I did opt for tiled walls. I am using a lot of teal blue in my remodel and decor. The tiles are Encore Precocious Blue :-).

Agree with the wallpaper comment. Might also consider adding a painted wainscot to break up the expanse of painted wall. Paint it one of the accent colors from whatever wallpaper you chose. Like these, perhaps:

MA Residence · More Info

Southern Hills Residence-Powder Room · More Info

Custom New Build, Richmond Hill · More Info

My suggestion is the walls need to set the stage. If you find time watch some of the videos this company does. It is amazing what you can do with stencils. Then you can paint right over them later. Check out their Instagram.

https://www.cuttingedgestencils.com/

Highlight the alcove is my suggestion. What a fun powder room to design.

Teal wall paper samples

What style is in the rest of your home? Transitional, contemporary, Scandinavian, traditional etc.? You can do beautiful wall texture like the first comment-or, or shiplap,

Oh I left out that I would have added recessed lighting to alcove. Doesn’t necessarily have to be these colors

My home is traditional with eclectic touches. I don’t tend to stick to a particular style . I see something I like and I buy. Within reason of course.