I would start by just explaining to your grandchildren why you will not be able to pay for holidays in the future. It may be hard for them, but for them to learn now that life is not always easy and some times we have to accept that we cannot have everything they want and also that we have to match our life style to our available income will be a very good lesson
Then, if you possible can, plan something smaller and less expensive to all do together, a weekend away, a visit to a theme park. The important part to the children, as well as the holiday, is being with you.
Children are very resilient, handle it carefully and all should be well.