In outline, that's not wrong, though in detail it might be because the $ are still, presumably, actually in your checking account. But that's correctable, with the right account structure. Instead of just "Checking" and "Holiday Budget", make it "Assets:Checking" and "Assets:Checking:Holiday Budget" (I'd prefer "Holiday Fund").
Because Holiday Budget isn't a real account, and my checking one is. If money didn't leave the checking account, it would show an incorrect budget if I marked that it had.
Why not move $x from checking to Holiday Budget every month, and then track holiday spending by moving money from Holiday Budget to Spent on Holidays?
Guess it throws off net worth calculations a bit, as you'd have to include the Holiday Budget as well in there. Are there other reasons?