Clothing that's trendy in Dubai on vacation (5)
I believe the answer is:
dhoti
'clothing' is the definition.
(dhoti is a kind of clothing)
'trendy in dubai on vacation' is the wordplay.
'trendy' becomes 'hot' (hot can mean trendy or fashionable).
'in' is an insertion indicator.
'on vacation' means to remove the middle letters (after the inside letters have vacated the word).
'dubai' with its middle taken out is 'di'.
'hot' placed within 'di' is 'DHOTI'.
'that's' acts as a link.
(Other definitions for dhoti that I've seen before include "Skimpy item of clothing" , "Lean over; end of loaf" , "Cloth round middle" , "Indian loincloth" , "Simple Indian garment" .)