Althought this is not related to spacing, the best tip I can suggest is the use the same colour in the bobbin. Much crisper looking (especially on finer/smaller fonts).

From Embroidery Library:
Monogramming and Placement on Towels

Bath Towel 4 inches above the hem, if the towel is unbanded; if banded, place monogram 2 inches above the band. Use large letter size; 3 - 4 inches in height

Hand Towel
2 inches above the hem, if the towel is unbanded; if banded, place monogram 1 1/2 inches above the band. Use medium letter size; 1 1/2 to 2 inches in height

Washcloth
1 1/2 inches above the hem, if washcloth is unbanded; if banded, place monogram 1 inch above band. Use small letter size, 1/2 inch to 1 inch in height

Spacing between the letters depends on the font size, towel thickness, and what you are writing. Always try it on a scrap first. I use old towels or cheap ones from bargain bins. Don't forget to use a wash away stabilizer on top if you are not embroidering on the band.

Thanks for the tips

Hope this site helps you, it has many other things other than just towels too.

Do you have software, that you could print out the individual letters, or do tests of how the spacing looks in the software? Different fonts need to be spaced differently to look correct when it's all done. I would do small stuff in my software, larger images by printout from the software, and I personally would eye it up, but most people would probably measure. What font are you using? I hope you get more answers, cause I've seen some great towels in Projects! Best of luck, Marji