We have a cat that did the hole I love towel thing. We bought him a bergan Turbo cat toy and he now devotes all of his mischief time playing with the turbo toy. The center of this thing has a corrugated cardboard scratching area that we can sprinkle a little cat nip on to keep his attention.
You just have to find something else that your cat will like better than a towel. We got lucky on the first try but you might have to experiment. Also note we tried putting chip clips on our towels to hopefully deter him but this did not work but you could try it!
