My towel is always falling in the kitchen, so I came up with a solution.
Both of my grandmothers had these. I only remember one of my Gramma's having one, but my mom tells me my other one did too. I assume they both made theirs too.
First I got a regular towel... This is a very cheap one. It's from a 2-pack at the dollar store. Then I cut the fringe off one end.
Next I poked holes every 3/4 inch at the base of the terry-cloth beneath the ribbing at the edge.
Once the holes are poked, you'll probably want to stretch them out a bit. I used my crochet hook and wigged it through the holes a few times, to make sure they were really big, for easy working. Then I would work through 2 holes at a time, to make it pleat a bit...and do 2 double crochets in each.
The back is not very pretty. If I were to sell this, or give as a gift, I'd probably find a way to clean it up a bit. But since it's going in my own kitchen, this is fine for me.
After a few rows, working back and forth, you can see that the towel wants to pleat on its own. I probably worked to this point 5 or 6 times ripping and redoing, until I got the desired pleated look I wanted.
Here's the finished piece, in it's new home.
So, again I'm bad about taking pictures of every step, but basically after crocheting along the holes, I'd work out and then decrease to a strap width, then made the strap and put on a button.