I see a couple of concepts here. Tiles can be used as sanitary surfaces and for ease of cleaning (grafitti), since they're not as easy to damage as a textured sheetrock wall.
Some rooms might use tile up to around chest or neck level, then some other form of cleanable surface up to a point where a patron can't easily damage the wall. There's a laminate (I don't remember what the exact name is) that's popular for restroom walls. It's like formica, but I don't think it's that brand. Or, if it doesn't make the room look cheesy, you can just run tile up to the ceiling and cover sanitary and sturdiness issues with one surface material.