Spot on holiday in decline (4,3)
I believe the answer is:
drop off
'decline' is the definition.
(drop-off is a kind of decline)
'spot on holiday' is the wordplay.
'spot' becomes 'drop' (drop is a kind of spot**).
'on holiday' becomes 'off' (I've seen this before).
'drop'+'off'='DROP-OFF'
'in' acts as a link.
(Other definitions for drop off that I've seen before include "Fall < or crash" , "Decline, decrease" , "delivery of goods" , "Fall asleep" .)