Specialty towel racks allow you to use as much wall space as possible for storage. Look for towel racks similar to those found in hotels that hold several folded towels between metal slats. Heated towel racks add the bonus of heat to give you warm towels when you step out of the shower. For a distinct rack, find an old rustic ladder to lean against the wall. Look for a basic ladder with small round rungs so the towels hang easily over them.
Shelves make use of the vertical wall space that otherwise is unused. A number of shelving options work for the towels. Attach several cube-shaped shelves around on the wall for an artistic towel holder. Roll or fold the towels, and tuck them in the cubes. Simple shelves also work. Place the cubes at a height that won't interfere with other bathroom tasks but that are still within reach when you need a towel.
Small containers like baskets and buckets give you a storage area for some of your towels. Roll the towels to make them fit the best into the container. Place the towel container in a corner on the floor, on top of another cupboard, on the countertop or in another free spot in the bathroom. Choosing a small container makes finding a spot to store the towels within the bathroom easier.
Using a dual-purpose piece allows you to maximize your use of space in the small bathroom. Choose a small bench or ottoman that opens to reveal storage inside. Dead space under a window or another area that doesn't interfere with the bathroom fixtures is an ideal location for the piece. Roll or fold the towels, and tuck them inside the seating item. Another option is a small freestanding cupboard that fits between existing fixtures in the bathroom. Use the cupboard for towels and other items in the bathroom.