Manufacturing, Small Business & Startups, and Technology

Towel Tracker wraps itself in technology

Grand Rapids-made technology helps health clubs, hotels and resorts in 17 states and Puerto Rico keep track of towel inventory.

April 14, 2017
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Towel Tracker
The Towel Tracker units, which dispense RFID-enabled towels, are in use at hotels, health clubs and resorts. Courtesy Towel Tracker

When Steven Molewyk started Towel Tracker in 2009, his goal was to help health clubs cut down on towel theft.

Molewyk said he used to wash towels for a local fitness center at one of the laundromats he owned at the time, and he started to notice a pattern.

“I noticed they were losing 900 towels a week,” he said. “I thought if it was this bad in Grand Rapids, it had to be worse elsewhere, and I was right.”

His fledgling company manufactured its first Towel Tracker unit in 2011, a 6 ½-foot-tall steel box with a shelf full of towels behind a locked door on the left side and a soiled towel depository on the right side.

Hotel guests or gym members access the clean towels in the unit by swiping their room card or ID badge on the card reader to open the door. Towel Tracker, or one of its suppliers, embeds each towel with a washable, rubber Radio Frequency Identification (RFID) tag sewn into the hem that tracks where the towel is, who is using it and whether they have checked it out or checked it back in.

When the guest or club member finishes using the towel, they must deposit it into a small door on the right side of the unit that looks like a book return or package deposit slot. If the user does not return the towel, the hotel or gym charges it to their account.

Towel Tracker, which was named one of Michigan’s 50 Companies to Watch in 2017, has grown from a one-man operation eight years ago to a full-fledged manufacturer with 16 full- and part-time employees and contractors and an annual growth rate of around 200 percent.

It is headquartered at 2100 Nelson Ave. SE in Grand Rapids, just south of Burton Street.

Since founding the company, Molewyk has stepped back from the CEO role and now serves as COO. In 2014, Matthew Cheng joined the company as CEO.

“I have a management consulting background and have consulted for the hospitality industry,” Cheng said.

Initially, the RFID industry told Molewyk several times there was no way to create the correct tracking algorithm technology — others had spent hundreds of thousands of dollars trying.

“I went to a company in the area called R.E.D. Stamp, owned by Bruce DeBoer — he’s still a partner in the company. I went to him to figure out where to start,” Molewyk said. “We became fast partners, and we built the first Towel Tracker in his plant here in Grand Rapids.”

DeWys Manufacturing in Marne now manufactures the steel container boxes and ships them to Towel Tracker, which then adds the card reader and other proprietary electronic components.

Towel Tracker also offers custom finishes for the unit to match the client’s brand colors or other preferences.

Cheng said one of the keys to Towel Tracker’s patented technology is something called duplicity.

“We built duplicity into the system to help us look for missing towels multiple ways, and it’s built throughout all the algorithms,” Cheng said.

“That helped us to secure a patent the first time around in 2013,” Molewyk said.

Towel Tracker’s first client was Walker Ice & Fitness Center in Walker. Molewyk expected the system would spread to other health clubs but was surprised to find hotels and resorts lining up, too.

“The hospitality market took off a lot faster because of demand and return on investment for them,” he said. “Saving $6,000 to $8,000 a month on pool towels starts to add up.”

Cheng said the company now has dozens of clients, many of which are in popular vacation destinations, such as Florida, Hawaii and Puerto Rico.

“We have about 40 clients and 70 machines in the field,” he said. “Some customers have more than one unit.”

“This year, in the first three months, we’ve already sold more than in all of last year,” Molewyk said.

The pair said that aside from helping companies save money, the Towel Tracker system also is good for the planet. Guests tend to take fewer towels when they know they are being tracked, which means fewer loads of laundry and fewer greenhouse gas emissions.

Molewyk added that Towel Tracker’s clients appreciate the system’s analytics capabilities.

Its back-end data analysis tool allows companies to track the names of guests using each towel, the number of towels used per guest, the age of each towel and how many towels each unit contains. When the units start getting low on towels, the system sends a notification to the hotel custodial staff so they can refill them.

Towel Tracker also monitors how much towel inventory is in use overall and how many unopened boxes of new towels the clients have in storage.

It tracks where each towel was manufactured, the price per towel and how many washes each towel lasts. One of the recently tracked U.S.-made towels was washed 311 times before it started to get ragged. Although it cost about twice as much as a towel manufactured elsewhere, it lasted three times as long. Such details can help clients decide what kind of towels to buy, Molewyk said.

Molewyk said the system also provides automated towel inventory management and reordering.

Cheng said different bits of data are useful for each client.

“We have different levels of (data) reporting based on what the facility is interested in,” he said. “With very posh resorts, they may not go after a customer after one towel loss, so we help them determine what the threshold for (charging for) a stolen towel is.”

He said the company is currently hiring, but as with any rapidly expanding business, there have been growing pains. Towel Tracker has 72 private investors, but he said it could use more.

“The biggest (challenge) is working capital, as with any business,” Cheng said. “We build typically in batches of 10 units, and for us to fund the build, we need just under $400,000 to put forward.”

Molewyk said the future for Towel Tracker looks bright.

“Pretty much all the major hotel chains are working with us,” he said. “One of the markets we did not expect was health clubs that did not offer towels. They are now able to offer towels and charge for the service. And they make a healthy profit on it.”

Currently, the Towel Tracker patent is licensed only in the U.S., so the company can’t go global just yet.

“One technical reason we are not ready to go around the world is service, and the other is patent coverage,” Cheng said.

Towel Tracker’s client list includes hotels and resorts affiliated with the Hilton, Hyatt, Intercontinental, Marriott and Wyndham brands, and fitness clubs such as the YMCA, Blink Fitness and Crunch Fitness chains. It also serves independently owned hotels, resorts and fitness clubs.

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