Holiday island, rank Corsica after vacation (7)
I believe the answer is:
majorca
'holiday island' is the definition.
(I've seen this before)
'rank corsica after vacation' is the wordplay.
'rank' becomes 'major' (military rank).
'after vacation' suggests removing the centre (the inside letters must vacate).
'corsica' with its centre removed is 'ca'.
'major'+'ca'='MAJORCA'
(Other definitions for majorca that I've seen before include "Tourist destination" , "holiday destination ..." , "Palma its capital" , "Main Balearic island" , "Largest of the Balearic Islands" .)