。
She's on vacation.
Literal
She [topic-は] vacation-middle is.
~中 ('mid-X, in the middle of X') is a versatile suffix for 'currently doing X / in the state of X.' Pin it to a noun and you get a temporal in-progress sense: 会議中 ('in a meeting'), 食事中 ('eating, mid-meal'), 工事中 ('under construction'). 休暇中 here marks her as currently in vacation mode. The reading is ちゅう (休暇中 = きゅうかちゅう) — the same character can read じゅう in some compounds (世界中 = せかいじゅう 'all over the world') depending on lexicalization.