Laugh with lady, wandering around island festival (7)
I believe the answer is:
holiday
'festival' is the definition.
(thesaurus)
'laugh with lady wandering around island' is the wordplay.
I cannot quite see how this works, but
'laugh' could be 'ho' (representation of a laughing sound) and 'ho' is found within the answer.
'lady' could be 'lida' and 'lida' is located in the answer.
A single letter 'y' remains which might be clued in a way I don't understand.
This may be the basis of the clue (or it may be nonsense).
Can you help me to learn more?
(Other definitions for holiday that I've seen before include "Vacation" , "rest" , "Time off work" , "Break from work" , "jazz singer" .)