A few things to note before you get started. You want to make sure the head of the image isn't too much bigger than the average size head. I found this towel at Kohl's. But you can get your towel anywhere, it doesn't have to be this image.
matching twill tape
2 extra large grommets
Cut out face of towel. I just did it by freehand but you could mark if first. Yellow lines show where I cut it.
Start at the top center of the hole and fold twill tape on the front and back. Hand stitch the twill tape around the hole. Guide the tape and stitch as you go. This will cover up rough edges and prevent the towel from fraying. I didn't need to pin the twill down, but you could if you wish. You could also use a sewing machine as well.
Attach a large grommet to the two top corners of the towel. Grommets usually come in a kit with directions on how to attach them, it's pretty easy. Done