Both are possible. "Was" situates his holiday as completed in the past. "Had been" also situates his holiday as completed in the past but in relation to a given point in time in the more recent past. Clearly, anything completed prior to a given point in time in the past can also be expressed as simply completed in the past.

If this is an exercise for your teacher or for an exam, you should make the required transformation from past simple to past perfect. 'He said his holiday had been..' However, bear in mind that in 'the real world' of English, it's perfectly acceptable to keep the second clause in the past simple 'He said his holiday was..'