A Bathroom is a place where your patrons can wash themselves, provided there's a bathtub available. Bathtubs require water and a changing screen to work. Toilets ('thrones') work the same way as outhouses, the only difference being that they are inside the building.
Bathtubs can only be placed in rooms from the Lodgings category. Your guests can order this service by the counter. Your workers then carry water from a barrel to the bathtub.