OK, this is what I do and it works famously. Use iron on tearaway stabilizer and hoop the towel,iron on tear away and WSS tear away(on top of the towel) together.Then check the stitch count and slide either 1 or 2 layers of normal tear away under the hoop, depending on the amount of stitches.Towels are usually made from cotton, but are much looser woven then normal cotton fabric, so the iron on will really stabilize it and also reduces the bulk when hooping.
If the out come seems a little stiff, that is fine because towels are usually washed very often and you will find the embroidery will remain nice and firm.If you don't stabilize sufficiently the embroidery will become loose and distorted after several washes.
Take your towel out of the hoop as soon as you have embroidered it and this should stop the hoop leaving markings the towel
I forgot to add- yes you do use different needles. For my Jamone I use red tipped no.14.
If you are not planning to use the towel(s) for a gift, I recommend that you pre-wash them. Towels can shrink and make the embroidery look puckered. For that matter, I recommend pre-washing anything that you are going to embroider on, if possible. I have had a few projects ruined by shrinking or by the material bleeding dye onto the embroidery the first time it is washed.
You don't need special needles to embroider on towels, but it may be easier to do something different when hooping. Towels tend to be very bulky, so they are hard to hoop. Plus, you can get "hoop burn" which is when there is an ugly mark left behind after you have finished it. For that reason, I recommend that you hoop your stabilizer ONLY and then use long pins to attach the towel to the stabilizer, making sure that the pins are not where you are going to be sewing (meaning, keep them at the outer edge). Likewise, you could use spray adhesive, but I don't care for it so much, which is why I recommend the other way. My best results have been using a "melt-away" stabilizer, one that disappears with the heat from an iron. That way, you don't have any left-over stabilizer sticking out on the back of your towel. However, you can also use a water-soluble stabilizer, especially if it isn't going to be a gift (you can just wash it before using it). The fabric type (like Viline or H2O-gone) are your best bet here, although the heavy plastic type could also be used if that is all you have. If push comes to shove, you can even use a cut-away and just trim it as close as possible to the stitching when you are done. I don't really recommend using tear-away because the weight of the towel can cause it to start tearing away before it is finished, but it could be used if you are careful.
And speaking of the weight of the towel, be sure that it is supported so that it doesn't pull unnecessarily on the arm of your machine, making the design "walk" and leaving things out of alignment.
If you are embroidering on the looped portion of the towel (as opposed to just on the band) you will probably also want to use a "topper". The topper can be a melt-away or it can be the water-soluble stabilizer that resembles plastic food wrap. You place it over the top of the towel where it will keep the stitches from "disappearing" into the pile of the towel and keeps the loops of the towel from peeking through your design.
Since towels are washed frequently (unless it is just for display) you will probably be happier if you use polyester thread for your design. Polyester is much more color-fast than rayon, although some people never seem to have problems with the rayon anyway.
You can even use the same colors on top and in your bobbin. The back won't look exactly like the front, but can still look really good if you go to the effort. It probably won't matter a bit, but it is up to you.
How was that for an overload of information? If you have any further questions, don't hesitate to ask, ok? :)
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