I don't spend that much, and never really have done, but holidays are, and always have been a top priority for me because it is a complete break. A chance to all be together and just breathe.
That has included a caravan in the rain, and even, when we've been really broke a few days staying with family or friends. We've Youth hostelled, camped and we've stayed in plenty of cottages over the years, as well some foreign trips.
It is something I'd prioritise over other things people spend their money on, because just getting away and completely relaxing does me such a lot of good.
Others with the same budget might spend money on make up, getting nails done, I've seen incredible amounts people spend on getting their haircut on here, getting newer cars, buying clothes, having the heating on higher, 'gadgets', TV packages, hobbies, memberships of clubs or gyms, going to gigs, smoking, drinking, buying lunch out, or regular coffees out, or 1001 other things. All are fine. We all get our 'treats' in life in different ways.