stay + vacation.
If you choose to stay home for vacation instead of going somewhere, (may be to a beach or mountains or another city) you are on staycation. Being on staycation doesn’t necessarily imply dearth of entertainment. You could catch up on your reading or spend more time with the kids. You could walk around the neighborhood and discover little shops that you never knew existed. You could do some gardening. Or simply enjoy being a couch potato. Here’s an example of how the word is used: http://plug-in.bestbuy.ca/t5/Check-out-the-Brand-Blog/Enjoy-a-staycation-comfortably-and-efficiently/ba-p/25142