If that is tile that is failing it most likely needs to be gutted and start over including the pan. Proper waterproofing system will be applied over the cement board or a proper waterproofed board system can be used. Then and only then can the tile be installed. Hie smart, hire once.

The edges of the shower are currently the same material as the vanity top. Are you open to changing that as well? The floor looks like a good, neutral color. Are there any spare pieces that you could take to a tile store to look for complementary tile for the shower walls? If not, bring home samples so you can look at them next to each other. It is always a good idea to see things in your natural light before committing yourself in any case. The lighting in showrooms is rarely the same as what you have at home. Using a shower pan is a good idea. It doesn't appeal to me, but it is certainly grout free. Shower wall tile with grout hasn't been a problem for me ever - I have always had it. I can't say I'm a clean freak, either. Certainly you have to wash the walls regularly, but not any more than a solid surface. You can use larger tile and have fewer grout lines, but I think you will have better luck getting something to go with the floor if you use a plain white/off-white subway. By subway I just mean rectangular - there are multiple sizes available. Because of the molding and your vanity, I would say the style of the bathroom is traditional. Subway would be consistent with that style.

My final suggestion is to go to a tile store if there is one near you and to stay away from the big box stores. They will have more professional help available. Ask your contractor for a recommendation. Is your contractor a tile setter? Is he going to subcontract the tile job to a real tile setter? This is an art as well as a trade, and your average GC shouldn't be laying tile. This forum is full of postings about bad tile jobs. You don't want someone learning on the job (your job).

A properly done tile shower, which must be completely waterproofed, is unlikely to be cheap. Since budget seems a priority, look at preformed shower bases and fiberglass walls.

Even a high quality preformed pan is not cheap. Our MTI pan, 3' by 5', was something like $1.5k.

Thank you for the comments so far! Yes, the existing shower will be gutted, we are concerned that there is water damage in the half walls etc so our contractor wants to look at that. He will fully waterproof the new shower and has a tile subcontractor.

I like the idea of a pan instead of tile on the floor, so I'll see what he says. The current tile is actually not too bad to keep clean, except in the areas where it has failed. There are dark lines in the floor grout that is not mildew, it's just space. And there are a few spots near the drywall that have persistent mold.

We are probably going to have to change out the vanity too, as it won't really match and it was installed incorrectly years ago and is too low. I am so aware of project creep, which is why I am trying to be as affordable as possible. I don't mind spending the money to do it right, but I don't need to make it luxurious or top of the line.

I would hope those half walls are ok. If they need to be removed, that will effect the bench and the millwork of the wainscot would need to be fix.

Assuming the half walls stay and you can reuse your shower glass, I would suggest doing large format tiles for the walls ( 24"h x 48" wide ) . More economical than gull slab material and minimal grout lines because of the tile size. You can get porcelain tile and special grout for eased of maintenance.

Good luck!

"affordable and EASY TO CLEAN. Grout scares me LOL"

Sounds like you should consider a solid surface (Corian) shower. Yes, the pans are expensive, but they install much more quickly than tile, so you have to look at the total costs.

No grout; you can't get a more easily maintained or more sanitary shower. And inconspicuously repairable if something goes wrong.

If you end up with tile, consider epoxy grout. I have it in 2 bathrooms and it is totally bombproof. Nothing stains it, nothing grows on it. I have never had to 'scrub' it, just squirt cleaner around and let it do its thing, rinse and you're good. I love it so much!

@olychick I will definitely look into this!

I second the Olychick's statement about the epoxy grout! We've used it in two showers in a charcoal color. No problems at all after about 10 years.