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Festival is a day or time when people celebrate sth(especially a religious event)

Example: Christmas is an important Christian festival.

Holiday is a day of rest when people do not go to work, school, etc:

Examples:

  • Next Thursday is a holiday in some parts of Germany.
  • New Year's Day is a bank/public holiday in Britain.

So, the difference is in Festival there is an activity or specific actions happen as an orthodox thing but in Holidayjust rest and no work (stay home), however, it can be a festival in a holiday as a coincidence.

In addition, there is a little special meaning of Festival and Holiday in British and American English.

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Q: What is difference between holiday and festival?
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