During holiday, Leonard and I head for ancient Spanish city (8)
I believe the answer is:
valencia
'spanish city' is the definition.
(I've seen this before)
'during holiday leonard and i head for ancient' is the wordplay.
'during' is an insertion indicator.
'holiday' becomes 'vac' (abbreviation for vacation).
'leonard' becomes 'len' (I've seen this in other clues).
'and' is a charade indicator (letters next to each other).
'head for' says to take the initial letters.
The first letter of 'ancient' is 'a'.
'vac' going around 'len' is 'valenc'.
'valenc'+'i'+'a'='VALENCIA'
(Other definitions for valencia that I've seen before include "Spanish port" , "Spanish city and region" , "European area" , "European city" , "somewhere in Spain)" .)